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TinotopiaLog → Hazards of Transit Subsidies ( 8 Sep 2003)
Monday 08 September 2003

Hazards of Transit Subsidies

Last Thursday, the NFL football season kicked off in Washington with a gala concert on the Mall featuring Britney Spears. Or, more properly, it kicked off near Washington, out in the suburbs, with the Redskins playing the Jets. In any event, the football game was preceded by a gala concert on the Mall.

Now, neither the Mall nor the football stadium has enough parking to accommodate all the people who showed up on Thursday. In the case of the Mall, this makes sense; there usually aren’t that many people there. In the case of Fedex Field, the football stadium, it’s a bit sillier. The stadium was built, after all, for events that bring close to 100,000 people together in the same place; it was built in 1995; and it was built miles from the nearest Metro station.

Because there isn’t enough parking at Fedex Field, though, a lot of people take the Metro anyway, and take $5 shuttle buses from the station to the stadium. (Just for comparison, the maximum fare you pay to get from any Metro station to any other Metro station in the Washington area is $3.60 during rush hours, $2.20 all other times.)

You’d think that the gala concert and football game would be good for Metro, the agency that runs Washington’s mass-transit systems. Increased ridership! Thousands upon thousands of people riding the train!

Well, if you think that, you’d be wrong, apparently. Metro is billing the NFL for $64,000 for its trouble on Thursday night.

Anticipating large crowds, Metro ran six-car trains and closed down at 2 a.m., instead of following their usual practice of running four-car trains and closing at midnight. When Metro proposed doing this ahead of time, and asked for $64,000 for the service, the NFL turned them down. Metro did it anyway, and now wants to be paid.

The NFL is telling Metro to get stuffed, and rightly so. I hope that the NFL has the resolve to stick with this, and to not give in to what is nothing more than extortion by Metro.

But that’s not the real problem here. The problem is that Metro quite clearly sees the service that is its entire reason for existence as a burden Keep the trains running to actually handle the demand? Aw, jeez, Edith!

It’s not entirely Metro’s fault, of course: running the trains longer does cost more, and while longer operating hours mean more riders, Metro’s costs are not covered by the fares that passengers pay. The difference is made up by a subsidy, but it’s not a per-passenger subsidy.

So Metro is not particularly anxious to have more demand for its trains. We ordinarily don’t even think about this; more customers mean more revenue, and in a for-profit system, this means more profits. In the world of subsidized transit, though, more customers mean bigger losses.

This might actually explain a lot about the Metro system.

Clearly, this is a broken subsidy. Far from encouraging use of mass transit, it puts the transit agency itself in the position of discouraging wider use. While I’d like to see people pay for their own transportation, the reality is that all forms of transportation are currently rather heavily subsidized. It seems to me that it would be possible to subsidize the Metro in a way that would also lead to the operating agency welcoming more business.

There’s nothing that makes Metrorail particularly expensive to operate. A Metro train has a single employee driving it (and even he’s not really needed; all he actually does in normal operation is make sure that nobody’s caught in the doors before pushing a button that tells the train to drive to the next station); each station has an employee or two in a booth near the entrance(s).

Nobody sets up in the subterranean-railroad business, though, because as a practical matter you just can’t build something like that as a private company. You’d never be allowed to dig the tunnels, to begin with, and even if you got permission, you’d have a very hard time coming up with the billions of dollars of up-front capital investment.

In this case, though, the government has already made that investment, and it’s already subsidizing the operation of the Metro.

If they were to sell off the operating agency lock, stock, and barrel, and lease the use of the tunnels and stations for, say, a 99-year period, there might be hope. The government could still be in charge of supplying capital for the infrastructure, much as it does now for roads. Instead of recouping some of its costs through fuel and vehicle taxes, it would collect lease payments from the mass-transit company.

The company, for its part, would be obliged to maintain the infrastructure and operate trains. It could charge as much or as little, and run as few or as many trains as it liked. It could buy real estate near stations and develop it into housing, shopping, and offices, and make money both on rental property and on train fares.

It would probably be a good idea to initially sign a short lease for the infrastructure, or to have a probationary period during which the whole experiment could be called off in case of poor performance by the operating company. But it would be important not to have too many controls, beyond requiring that they run trains, on what the company could do, and no subsidies other than the effectively discounted access to capital that’s represented by the lease on the tunnels. It’s important that the company be subjected to, and able to respond to, the forces of the market.

I’m under no illusion that any of this is going to happen, of course. Mass transit is seen as a “public service”, not a business. Until that changes, though, out mass-transit systems are going to continue to cost a fortune to operate, and to disappoint us with their apathy.

Posted by tino at 18:52 8.09.03
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Excerpt: D is for deficiency. As in, the parking that was not available for last week's NFL season kickoff in Washington. That's all I got, but there's more....
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Tracked: September 10, 2003 03:24 AM