Cash-strapped consumers take advantage of Transit in Record Numbers
A record number of Americans are saving thousands per year by using public transportation from one day per week to living car free. In 2007, a 50-year record of 10.3 billion trips per year, saving over 4 billion gallons of car gasoline use. 2008 will set a new record that may approach 11 billion trips as more commuters leave their cars parked to brave standing-room-only train and bus rides.
Fifteen thousand who run global transportation systems convened in San Diego from October 6 to 8 to examine a range of strategic issues and to review 800 exhibitors at the American Public Transportation Association (APTA) Expo.
As transportation managers accommodate record numbers of passengers, they face challenges. Most transportation funding is spent on highways, not on public transportation. Fare revenue is only a fraction of budgets. Loss of property and sales tax funding is forcing operators to cut budgets. Diesel fuel prices have increased 166 percent in four years.
Buses designed to stay on the road for 12 years are being kept in operation longer. When new buses are ordered, reduced fuel cost is a priority. 63 percent of buses ordered in 2007 were alt-powered using hybrid technology, natural gas as a fuel, or both. City light-rail is typically powered by electricity. Public transportation is increasingly using renewable energy (RE) by installing more solar power and contracting for RE with public utilities.
The shift to fewer car miles on highways and alt-powered transportation is helping the nation need less oil. U.S. use of oil refined products in transportation is estimated to be reduced 5 percent this year. Should rail and public transit resolve their budget crises, oil use will drop further.
Member organizations were encouraged to overcome all obstacles in accommodating record riders by Dr. Beverly Scott, APTA’s new Chair and also CEO of MARTA in Atlanta. When federal funding of public transportation expires in 2009, APTA will ask the new Congress for a $123 billion 6-year funding package.
Pushed to the wall, several major transit systems are making politically unpopular fare increases. Some are cutting routes, frequencies, and making layoffs.
In his speech, Jim Simpson, Federal Transportation Administration (FTA) Administrator encouraged executives to consider public-private partnerships (PPP). At the Expo, I visited with Veolia (NYSE: VE), the world leader in transportation service contracts and management. Veolia has 120 contracts to run transportation in 30 countries for annual revenues of about $8 billion.
A good example of an effective PPP since 1993 is Veolia’s partnership with the Regional Transportation Commission (RTC) of Southern Nevada. I have personally been impressed in using their bus rapid transit while attending Las Vegas conferences. During the life of this partnership, ridership has increased from 15 to 60 million per year. At the APTA Expo, on of Las Vegas’ new 62-foot rapid transit vehicles was on display, looking more like a bullet train than a bus. The vehicles are designed by Wright with ISE doing the hybrid-electric drive systems using Siemens components. Fifty of the new vehicles will be delivered to Las Vegas.
For transportation operators that cannot make capital expenditures, PPP can provide a way for private corporations to buy needed equipment, then utilize the rail and buses as part of service contracts. Unfortunately, the expansion of public-private partnerships (PPP) envisioned by the FTA goes in the face of some of its obsolete legislated rules for funding.
In the long-term public transportation will serve a growing number of Americans because of increasing oil prices, plus increased preference for urban living by the young, by families, and by retiring boomers. As transit stops being a neglected child compared to highway funding, it will meet the financial challenge of expanding routes and increasing frequency by adding rail, adding buses and employing more drivers and maintenance professionals. Significant growth will reduce or oil dependency, make people more productive, and unclog the streets and freeways. Even those who never use transit will benefit from lower gasoline prices, less time in gridlock and breathing cleaner air.
Significant growth will be supported by high speed rail linking suburbs and linking transportation systems. Jim Simpson, (FTA) Administrator, regularly takes the 3 hour Amtrak Acela regularly from New York to Washington, D.C. Often he cannot get a seat as record demand soars ahead of investment in more rolling stock. Amtrak carried a record 28.7 million people in fiscal year 2008. The company has posted six years of ridership and revenue growth, recently benefiting from high gas and airline prices. The number of trips over the past year increased 11% and revenue 14%.
On November 4, voters in 33 states will be making decisions about approving transportation funding. In California, voting on Proposition 1A will decide if the nation has a second high-speed rail system that could cover 800 miles and carry forecasted ranges of 32 to 68 million annual rides by 2020. It will cost far less than the alternative of expanding highways and airports. Should voters give the system the green light, the $10 billion of California taxpayer funded bond will need to be matched with $10 billion federal and $10 billion of public-private partnership money. The system will be electric, using no petroleum.
A study by the American Automobile Association (AAA) shows that the average cost of owning and operating a passenger vehicle is 54.1 cents per mile. The IRS allows you to deduct 58.5 cents per mile for business. This is over $8,000 per year per vehicle, based on 15,000 miles of driving. Depreciation is part of that cost. Anyone who has bought a car for $20,000 and later sold it for $5,000 understands depreciation. Fuel, maintenance, tolls, parking, insurance, and tickets add up. Most households have two vehicles, costing them over $16,000 per year.
More Americans will save thousands by using public transportation. For some it will be one day per week, for others it will be the primary way that they travel. City and regional systems are offering trip-planners, dynamic maps, and realtime GPS information to those using the Internet, text messaging, and smart phone technology. I have frequently used Google Transit to plan trips that have several transit legs. Enjoy the savings of time and money from public transportation.