Subject: "Save the Subways" (October 5, 1995 editorial)
Transit is crucial to New York. But more money is not the answer. NYCTA costs per mile have risen at well above competitive market rates, and are much higher than necessary. The problem is not management, it is rather the lack of competitive incentives. Without competition, unit costs will continue to rise over the long run, necessitating higher fares and service cuts, and ridership will decline.
Around the developed world, public transit systems are being converted to competitive contracting --- an approach that maintains full public control of services and fares, but which relies services provided by the lowest responsible and responsive public or private bidders. To riders, there is no difference, other than lower fares and higher service levels that are made possible by the savings.
Entire transit systems have been or are being converted in London, Copenhagen, Stockholm, Goteborg, Helsinki, Melbourne, Adelaide, Perth, Auckland, and elsewhere. Unit cost savings are typically 20% to 40%. Stockholm has just competitively bid part of its subway system. The US experience has been less extensive, but the cost savings percentages have been greater.
NYCTA officials have estimated that $160 million could be saved annually by competitively contracting bus service. That is a very conservative figure. The international experience suggests that savings could exceed $500 million annually.
For transit to achieve its potential, unit costs must be minimized, to avoid fare increases and expand services. Because to achieve its potential, New York needs more transit, not less.
Sincerely,
Wendell Cox,
Principal,
Wendell Cox Consultancy
and
Former Member, Los Angeles County Transportation Commission
(1977-1985)
