Rail vs. Bus and What Farebox Recovery Is/Isn’t

In previous posts, I had looked at how transit agencies’ goals can impact their financial performance, which agencies had the highest (and lowest) farebox recovery ratios, and what drove those farebox recovery ratios. This will be the last post in the series on farebox recovery ratios where I’ll show the differences in farebox recovery between bus and rail systems and wrap up with some thoughts about why farebox recovery is or is not a good metric for public transit.

So to start off, let’s look at the National Transit Database (NTD) data for farebox recovery ratios for bus and rail modes of large transit agencies across the country.[1] For purposes of this analysis, I took only those agencies that had at least $100 million in operating costs either for buses or for rail in 2014.

Farebox by Mode

Clearly, rail generally has a higher farebox recovery than buses do. In fact, for these agencies rail earned $8.2 billion in fares in 2014 to cover a cost of $15.4 billion while buses earned only $3.7 billion to cover a cost of $12.6 billion leading to the 25% difference in overall farebox recovery for rail versus bus systems. But while rail outperforms bus on this metric, it’s important to understand what this truly means.

As I discussed in previous posts, farebox recovery is a useful way of seeing the financial performance of a given system but it does not tell the whole story. As public agencies and not private companies, transit operators often make decisions to prioritize the overall public welfare even if that costs some more money or may generate a bit less in farebox revenue. There is nothing wrong with that and each region can always make its own choice about what services should be provided and whether public transit’s benefits to the entire region should be paid for by just the users of the services or by the region as a whole. So when looking at the data in this series of posts, let’s remember the decisions and choices that have been made and that a low farebox recovery is not necessarily a sign of poor management or poor decision making.

 

[1] Note that many agencies also provide paratransit or other services that I have excluded from this analysis so their overall farebox recoveries will be somewhat different from what I show here for just bus and rail modes.

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