SOURCES OF RISING OPERATING DEFICITS IN URBAN BUS TRANSIT

Annual operating expenses incurred by U.S. urban transit systems rose more than $5 billion from 1960 to 1980, of which a rapidly declining fraction was covered by farebox receipts. As a result, the industrywide operating deficit approached $4 billion by the end of this period. Although rail transit systems first incurred large operating losses, by 1980 the motor bus segment of the U.S. public transit industry accounted for three-quarters of its aggregate deficit. Recent growth in bus transit operating deficits can be traced to escalating costs per unit of service, rapid service expansion despite declining utilization of existing service levels, and decisions to simplify and reduce fare structures. A detailed examination of each of these sources of rising operating losses is presented, and attempts are made to assess both their individual contributions to deficit growth and their respective underlying causes. Following this examination, an illustration of how these developments interacted to produce the explosive growth in bus transit operating deficits that occurred during the 1970s is given. Specific recommendations are made for bringing growing losses under control.