7 ms·

Is the Montreal Metro Profitable? (2017)

17 points by luu 6y ago

redis_mlc 6y ago
It doesn't hurt to do some calculations, but I doubt if you'll ever get a useful model. In the case of the SF Muni, the main reason to look at privatization isn't directly cost, but to replace the union whose members don't even show up 33% of the time despite 6-figure salaries even for ticket booth operators. The Caltrain was privately operated, until it was dropped by the railway and it became a publicly-operated service (it's essential for Stanford U. staff and students, and reducing 101 and 280 highway traffic, so simply can't be discontinued. But wifi is optional, so it doesn't have it.)
unixhero 6y ago
Societal benefits of a mass transit system eclipse any such calculations.
joe_the_user 6y ago
Any implication that public transition should be profitable is pernicious. If you look at a system like BART or the New York subway system, the system provides value for the whole of the city and so everyone, notably employers, should pay for it. I think Strong Towns were the ones who noted that transit system expected to "pull their weight" get cut in every budget crunch and finally being gutted to total uselessness. It should simply be expected a public transit should be paid from state in one form or another.
- colechristensen 6y ago
  But why? When I commuted from Mountain View to the financial district, it was cheaper to drive by myself than to take public transit including the lifetime cost of my car. (not to mention being immensely more pleasant) I simply do not get the economics of public transit losing so much money. I get that I'm not paying myself a salary to drive the vehicle and that the roads I drive on are "free" and the railroad track isn't... but still one would expect the efficiency of rail and economies of scale to make up for this. Instead BART costs hundreds of millions of dollars per year more than received fares. I just don't understand.
  - panta 6y ago
    When you consider the total cost of ownership (initial car cost, maintenance, insurance, storage, etc.), the cost per km/mile is way higher than the fuel cost. Also there are many externalized costs that are not taken into account when considering the bare cost of driving a car, just to name a few the environmental impact, the related healthcare costs (pollution kills more people per year than COVID), parking space, road infrastructure, car accidents, ... Some of these grow non linearly when reducing/eliminating public transport. (edited to add TCO considerations)
  - donjoe 6y ago
    As you already mentioned: roads and gas is heavily subsidized. Politicians focus on building roads rather than public transport systems. The true costs of road infrastructure including parking, bridges, land use, public space usage, health system costs, economic losses due to wasting time while driving and more is just something no one dares to discuss. Once u start looking at all costs car traffic truly is responsible for, you'd have to immediately switch to another system such as... public transport.
  - vishnugupta 6y ago
    I don't think public transits lend themselves to such "unit-economics" level individual centric analysis. There are many indirect second/third order benefits which I conjecture outweigh the primary benefit of transporting people from A to B. To name a few 1. They attract a section of population to the region who prefer public transit which in turn leads to more business. 2. A string of businesses spring up in/around intermediate stations. Then you have service businesses that support those; like restaurant etc., 3. It creates employment for thousands. 4. Cost savings w.r.t. parking space, reduced accidents etc., 5. It makes car ownership that much less of a requirement for jobs in the city. This is what I noticed in Amsterdam, Netherlands where car commute is considered almost as a last resort. Obviously there are other things that need to fall in place to make public transit work but I believe it on its own is quite beneficial. From the view point of an individual I don't doubt that economically car commute is perhaps cheaper than mass-transit, but I don't think think that's the goal of a public transit. The benefit to the society is at an aggregate direct and indirect.
- brigandish 6y ago
  > It should simply be expected a public transit should be paid from state in one form or another. Unfortunately, that often means it becomes a subsidy for the already wealthy. Not only are mass-transit systems more likely to be built in already wealthy areas, commercial and residential, (at least before other areas) it also increases land value. This leads to the true problem of non-state supplied transit, if a transit system truly has to bear its own cost then people - even wealthy ones - are far less likely to use it and will move to cheaper forms of transport like car, or you end up with a transit system for those who can afford it. Then you'll have the circular argument begin again about the need for affordable mass-transit, and so the only way to get it built is to get the state to pay for it and we end up with a better system overall but also an inequity in the system. You could say it was verging on corruption. This is why I would advocate a land value tax, as it attacks both parts of the problem, not just one favoured by statists. As someone of a more libertarian bent (and an admirer of Georgism), I do rankle somewhat at the implication exposed via the non-payment of tax, that the state in truth owns your land because they can kick you off, but everything has a trade off. Edit: typo
  - CorrectHorseBat 6y ago
    >Unfortunately, that often means it becomes a subsidy for the already wealthy. Not only are mass-transit systems more likely to be built in already wealthy areas, commercial and residential, (at least before other areas) it also increases land value. Not necessary. I know of several examples where wealthy areas actively blocked mass transit because they only see it as a way to introduce poor people into their neighborhood. >This leads to the true problem of non-state supplied transit, if a transit system truly has to bear its own cost then people - even wealthy ones - are far less likely to use it and will move to cheaper forms of transport like car, or you end up with a transit system for those who can afford it If every transit system has to pay for all externalities then cars will not end up being cheaper than mass transit. Subsidy of mass transit is a way to correct for that. >As someone of a more libertarian bent (and an admirer of Georgism), I do rankle somewhat at the implication exposed via the non-payment of tax, that the state in truth owns your land because they can kick you off I really don't see the link between the state being able kick you off and paying taxes, nor do I see the relevance. The state being able to kick you of your land is a necessity for an effective government. How else would they be able to get anything build?
- eandre 6y ago
  It seems to me that it should be possible to operate a public transit system profitably if you assume a steady state, meaning no need to expand. But when cities grow, public transit systems must continually expand to continue to service the population which requires massive amounts of up-front capital, which each takes decades to pay back through rider fees.
  - m_mueller 6y ago
    to provide some example to your point: https://asia.nikkei.com/Business/Transportation/Tokyo-Metro-tackles-87bn-global-market-with-IPO-in-mind https://asia.nikkei.com/Business/Transportation/Tokyo-Metro-... "The company recorded a net profit of 61 billion yen ($560 million) for the year ended March, up 0.6% from the previous year thanks to external factors such as the increase in foreign visitors to the Japanese capital. It posted revenues of 435 billion yen." I don't think there's something fundamentally different about Tokyo compared to other dense metropoles like NYC or London. Low density cities like LA might be a different story.
    - input_sh 6y ago
      > I don't think there's something fundamentally different about Tokyo compared to other dense metropoles like NYC or London. As others have pointed out, there is. It's about owning the land where you set up your stations. You don't make money on the tickets themselves, you make money by charging rent to companies in highly convenient locations. Some European cities do this on a smaller scale (like a shop or two right at the station), but nowhere near as much as they do in SE Asia.
      - m_mueller 6y ago
        I guess my point is, given that we know that this strategy works, why aren't more Western cities' transport companies/departments copying that model? Why not trying to buy up or lease property in strategic locations and converting them into malls integrated with a metro/train station? In Tokyo you often find nearby malls connected to the station by underground walkways - I'm sure there's also a business model to be had where a percentage of revenue goes to the transport provider if they connect stations in that way.
- starfallg 6y ago
  Maybe it's time to seriously consider the East Asian model where transit companies also operate as property developers. This pretty much ensures that cities are designed with mass transit at its core and mass transit construction is part subsidized by the market. That doesn't completely remove the need for public funding, just changes the dynamics so that it is more balanced. It also results in cities that organically grow with mass transit, making it an integral part of the infrastructure rather than an afterthought.
  - pmyteh 6y ago
    The Metropolitan Line of the London Underground was partly funded on that model. They bought farmland, built out a commuter railway to it, then either built housing or sold land at a profit in order to get capital receipts to part-pay for the railway and customers to ride it in perpetuity.
    - rob74 6y ago
      Yup (see also https://en.wikipedia.org/wiki/Metro-land https://en.wikipedia.org/wiki/Metro-land). But that was before city planners in the West started catering almost exclusively to the automobile...
  - lqet 6y ago
    Wasn't this model a reason for the decline of the US public transit system? I remember reading somewhere that in cities like LA, transit companies build little frequented lines to properties they themselves developed, just to drive house prices up. After the properties were sold, the companies lost interest in maintaining the lines, and the system quickly deteriorated.
- csomar 6y ago
  > Any implication that public transition should be profitable is pernicious. Really, or is it a failure of the western cities to run profitable, efficient and ,eh, clean transport networks. Japan, Hong Kong, Singapore are running private, profitable and efficient metros for a much cheaper fare than what other cities can do. The reality is that these massive infrastructure projects have turned into huge embezzlement schemes of public funds from different players (politicians, consultants, unions, etc...); and they are holding the public hostage: Otherwise, are you going to stop/disrupt public transportation?
  - TazeTSchnitzel 6y ago
    Japan's systems were privatised after they were built. Would they be as successful if they were private from the beginning?
    - csomar 6y ago
      I don't think the success of private/public is a universal thing and probably depend on how low corruption the government is. A metro system has to be bootstrapped by the government at the end of the day, to be able to appropriate of some private lands you are going through.
    - pydry 6y ago
      They're successful because they own the land around the stations. This is where all the real money is made. In most other countries that land was sold off and somebody else (e.g. private equity) profits.
  - Retric 6y ago
    Your facts are incorrect. Singapore's MRT subway lines are constructed and the assets owned by the Land Transport Authority (LTA), a government entity. Tokyo Metropolitan Bureau of Transportation (Toei Subway) is owned by the government of Tokyo. MTR Corporation Limited which runs Hong Kong's Mass Transit Railway (MTR) is a majority state-owned Hong Kong company (75.09%).
    - 6y ago
- choeger 6y ago
  Of course they need to be profitable. A working public mass transport system is the sine qua non of dense cities. Dense cities reap many economic benefits so naturally the cost of providing mass transportation must be weighed as well. It's outright unsustainable to ignore the cost sinks of cities as much as it is to ignore the cost sinks of suburbs or rural areas.
  - igammarays 6y ago
    Of course they should NOT be profitable, because remote routes are not profitable to operate, yet it is in everybody's interest to prevent overcrowding and excessive density. Give me one example of a successful metro that was built on "profitability". It may become profitable in the end, but only because the initial intention was public service, not profit. This kind of capitalistic short-term thinking over long-term public interest is precisely what is wrong with America today.
    - choeger 6y ago
      "public service", my ass. The purpose of mass transit is to gather the cheap workforce from around the city so a banker can have their Starbucks coffee for about the same price as everywhere else, offices get cleaned properly, and millions of employees can waste hours every day rushing into their cubicles that have to be in some "representative" location so the CEO can jerk off with their golf buddies. The goal of ever denser cities is first and foremost to move the profits from the economic benefits of densification to rent seekers, in particular owners of ever scarcer real estate. Mass transit is a tool to make that possible. Mass transit is almost certainly profitable, if priced correctly. It enables massive value concentration. One could easily introduce a property tax on real estate to fund it. But right now the profiteers managed to argue that it is a "public good". As if square meter prices measured in the tenths of thousands of dollars are in any form normal. Just to make this crystal clear: No one would build a mass transit system to move around a few tourists or get the inhabitants from their apartments to the latest fancy restaurant. Mass transit exists to fill the city with a workforce it cannot or doesn't want to house properly.
- mgerullis 6y ago
  Here in Germany you will sometimes read about discussions on making public transport free, making it a completely public utility. I’d be more than happy to pay taxes for that.
  - jariel 6y ago
    'Totally free' is usually a bad idea because the asymmetries inherent in the system are multiplied. The OP argument 'everyone uses it' is also not super rational argument either on it's face - we all 'use food' and 'water' but we pay for those - the former in market terms, and the later is socialized on some level but still paid for by individuals on a usage basis. 1) You'd be happy to have people in villages and in the countryside pay for your transportation, who wouldn't? It's not fair or ideal, to have some people's tax money pushed heavily into systems that don't benefit them. 2) When things are 'free' we tend to use them in a way that does not reflect their true cost. Imagine if toilet paper were 'free' for everyone. We'd probably use a lot more of it, unnecessarily so. The issue with metros is the intense capital costs and de facto monopoly status. If there were 20 metros too choose from we wouldn't even think of socializing them, you'd just have to 'pay for it' literally like everything else. The 'Strategic Advantage' in the metro is that it's actually a very efficient way to move people, but those efficiencies may not be realizable without subsidy. So instead of 'free' - a reasonable solution might be to subsidize expansion while requiring regular Ops to be paid for out of revenue. Some investment in urban facilities is warranted vis-a-vis the countryside due to the big upside i.e. a large bit of social/industrial gain can be had by government investment that could not be had otherwise.
    - mgerullis 6y ago
      > 1) You'd be happy to have people in villages and in the countryside pay for your transportation, who wouldn't? It's not fair or ideal, to have some people's tax money pushed heavily into systems that don't benefit them. I know this is not the case in the US but here, it is common to have public transport on the country side as well to some degree. Most villages have bus transport. Yes, there is a lot more in the city but it grows with density. > 2) When things are 'free' we tend to use them in a way that does not reflect their true cost. Imagine if toilet paper were 'free' for everyone. We'd probably use a lot more of it, unnecessarily so. I do not think there is such thing as an excessive/unnecessary use of public transport when the alternative is to use a car which pollutes the planet. I cannot imagine using the tram in cases where it would be unnecessary, but maybe thats just me. If it is in the interest of the people to get rid of cars, offering public transport at no cost is not so far fetched, considering the amounts of money we will have to spend to combat carbon in the air and are spending on road systems.
- deleted 6y ago
  [deleted]
CapriciousCptl 6y ago
Looking at the spreadsheet subsidies make up fully half of the revenues. I suspect those are adjusted as needed to zero out the metro budget, which explains why, after subsidies, the bottom line is “barely profitable.”
keiferski 6y ago
Regarding metros and profitability: someone can correct me if I'm wrong, but I believe that the Tokyo subway system (which is operated by a byzantine-like variety of companies) does turn a profit, specifically because it owns the real estate around the stations. This seems like a better route than a blank check "it shouldn't need to be profitable", which, when comparing American public transit to Tokyo's, doesn't seem to actually make service any better.
- hobofan 6y ago
  The MTR of Hong Kong is also a prominent example of a profitable transit system.
- namdnay 6y ago
  yeah but it's hard to determine "real" profitability when all the initial investment was made by the state and hte company itself is partly state-owned. i think the profitability or not is a bit of a red herring
dusted 6y ago
When I lived in Tartu, Estonia, there were two free, privately operated bus routes circling through town, they had several convenient stops, one of them happening to be the large shopping center that operates the line. We often used these busses, just to get around town, and, well, sometimes to get to the shopping center. Seen isolated, these bus lines were losing money, they made literally no profit, all expense, no ticket sales. Them being free, however, was not charity, their presence generated so much additional revenue in the respective shopping-centers that it made sense to run them. As far as I understand, they were funded through the rent paid by the shops in the centers. So "transporting customers to your shop location" was included in the rent, neat. Now, in more taxed countries, like Denmark, a goverment-run model would work as well in more populated areas, as transportation becomes free, people become more mobile, and will travel more often to buy goods, and more sales-taxes result.
- jariel 6y ago
  This argument has to work against the fact that the 'stuff' in the shops is x% more expensive because they are paying for their bus on the backend. Do you think a transportation system that is perversely incented and controlled by 'the shopping mall' to do specific things, subject to all sorts of weird policies ... is going to be more efficient than simply reducing the price of goods and allowing travellers to pay themselves - and decide for themselves where they want to travel and for what purpose? Getting the capital costs sorted out for these things is hard, the shopping mall would have been one of the few places to foot the initial bill - that's probably why it happened the way it happened. But it probably would have been more efficient for some state actor to step in and provide the means for it to work more broadly.
  - dusted 6y ago
    Yes, of course the money is coming from the goods sold, and so is the money for all other expenses the shops have. This is highly offset by the lower property price of being able to place the shop outside the city center (and the additional convenience of being located right next to the highest-traffic road). So goods were still cheaper in the shopping center than in the stores located in the city-center. I didn't say this would be the most efficient solution, I just wanted to point out that asking if a transportation infrastructure is profitable, and only looking at it in isolation is silly, because the value it adds to the areas around its stops can highly outweigh the cost of operating it.
TazeTSchnitzel 6y ago
If you crunched the numbers for road-building, wouldn't it look even worse?
turbinerneiter 6y ago
* buy plot of land * build public transportation to reach land * sell land for higher price due to good access with public transportation * use profit to pay back loan for building public transportation There is some city in Asia (I know^^) that uses this playbook very successfully, sadly I can't find the article where I learned about it anymore.
- pharmakom 6y ago
  This is what Hong Kong does. It can never be a fully private system though bevause the government must apply zoning and permits to potential new lines.
  - turbinerneiter 6y ago
    I have no problem with _public_ transportation not being private. There is too much private anyway when it comes to land-use. Obviously you have to ensure to avoid the common pit-falls of government run (or intervened) companies, but we have decades of knowledge about this now and should be able to design better systems.
hannob 6y ago
Strangely noone ever asks this question: Is there any city that has a private car street and parking network that is profitable?
- redis_mlc 6y ago
  There's some edge cases around the globe. For example, all new highways in Jakarta are toll roads, operated by a dedicated company. There are no public parking lots. https://theinsiderstories.com/indonesias-jasa-marga-to-operates-1292km-toll-roads-in-2021/ https://theinsiderstories.com/indonesias-jasa-marga-to-opera...
pharmakom 6y ago
the government subsidies roads so why not trains too?

17 points by luu 6y ago

It doesn't hurt to do some calculations, but I doubt if you'll ever get a useful model. In the case of the SF Muni, the main reason to look at privatization isn't directly cost, but to replace the union whose members don't even show up 33% of the time despite 6-figure salaries even for ticket booth operators. The Caltrain was privately operated, until it was dropped by the railway and it became a publicly-operated service (it's essential for Stanford U. staff and students, and reducing 101 and 280 highway traffic, so simply can't be discontinued. But wifi is optional, so it doesn't have it.)

unixhero 6y ago

Societal benefits of a mass transit system eclipse any such calculations.

joe_the_user 6y ago

Any implication that public transition should be profitable is pernicious. If you look at a system like BART or the New York subway system, the system provides value for the whole of the city and so everyone, notably employers, should pay for it. I think Strong Towns were the ones who noted that transit system expected to "pull their weight" get cut in every budget crunch and finally being gutted to total uselessness. It should simply be expected a public transit should be paid from state in one form or another.

colechristensen 6y ago
But why? When I commuted from Mountain View to the financial district, it was cheaper to drive by myself than to take public transit including the lifetime cost of my car. (not to mention being immensely more pleasant) I simply do not get the economics of public transit losing so much money. I get that I'm not paying myself a salary to drive the vehicle and that the roads I drive on are "free" and the railroad track isn't... but still one would expect the efficiency of rail and economies of scale to make up for this. Instead BART costs hundreds of millions of dollars per year more than received fares. I just don't understand.
- panta 6y ago
  When you consider the total cost of ownership (initial car cost, maintenance, insurance, storage, etc.), the cost per km/mile is way higher than the fuel cost. Also there are many externalized costs that are not taken into account when considering the bare cost of driving a car, just to name a few the environmental impact, the related healthcare costs (pollution kills more people per year than COVID), parking space, road infrastructure, car accidents, ... Some of these grow non linearly when reducing/eliminating public transport. (edited to add TCO considerations)
- donjoe 6y ago
  As you already mentioned: roads and gas is heavily subsidized. Politicians focus on building roads rather than public transport systems. The true costs of road infrastructure including parking, bridges, land use, public space usage, health system costs, economic losses due to wasting time while driving and more is just something no one dares to discuss. Once u start looking at all costs car traffic truly is responsible for, you'd have to immediately switch to another system such as... public transport.
- vishnugupta 6y ago
  I don't think public transits lend themselves to such "unit-economics" level individual centric analysis. There are many indirect second/third order benefits which I conjecture outweigh the primary benefit of transporting people from A to B. To name a few 1. They attract a section of population to the region who prefer public transit which in turn leads to more business. 2. A string of businesses spring up in/around intermediate stations. Then you have service businesses that support those; like restaurant etc., 3. It creates employment for thousands. 4. Cost savings w.r.t. parking space, reduced accidents etc., 5. It makes car ownership that much less of a requirement for jobs in the city. This is what I noticed in Amsterdam, Netherlands where car commute is considered almost as a last resort. Obviously there are other things that need to fall in place to make public transit work but I believe it on its own is quite beneficial. From the view point of an individual I don't doubt that economically car commute is perhaps cheaper than mass-transit, but I don't think think that's the goal of a public transit. The benefit to the society is at an aggregate direct and indirect.
brigandish 6y ago
> It should simply be expected a public transit should be paid from state in one form or another. Unfortunately, that often means it becomes a subsidy for the already wealthy. Not only are mass-transit systems more likely to be built in already wealthy areas, commercial and residential, (at least before other areas) it also increases land value. This leads to the true problem of non-state supplied transit, if a transit system truly has to bear its own cost then people - even wealthy ones - are far less likely to use it and will move to cheaper forms of transport like car, or you end up with a transit system for those who can afford it. Then you'll have the circular argument begin again about the need for affordable mass-transit, and so the only way to get it built is to get the state to pay for it and we end up with a better system overall but also an inequity in the system. You could say it was verging on corruption. This is why I would advocate a land value tax, as it attacks both parts of the problem, not just one favoured by statists. As someone of a more libertarian bent (and an admirer of Georgism), I do rankle somewhat at the implication exposed via the non-payment of tax, that the state in truth owns your land because they can kick you off, but everything has a trade off. Edit: typo
- CorrectHorseBat 6y ago
  >Unfortunately, that often means it becomes a subsidy for the already wealthy. Not only are mass-transit systems more likely to be built in already wealthy areas, commercial and residential, (at least before other areas) it also increases land value. Not necessary. I know of several examples where wealthy areas actively blocked mass transit because they only see it as a way to introduce poor people into their neighborhood. >This leads to the true problem of non-state supplied transit, if a transit system truly has to bear its own cost then people - even wealthy ones - are far less likely to use it and will move to cheaper forms of transport like car, or you end up with a transit system for those who can afford it If every transit system has to pay for all externalities then cars will not end up being cheaper than mass transit. Subsidy of mass transit is a way to correct for that. >As someone of a more libertarian bent (and an admirer of Georgism), I do rankle somewhat at the implication exposed via the non-payment of tax, that the state in truth owns your land because they can kick you off I really don't see the link between the state being able kick you off and paying taxes, nor do I see the relevance. The state being able to kick you of your land is a necessity for an effective government. How else would they be able to get anything build?
eandre 6y ago
It seems to me that it should be possible to operate a public transit system profitably if you assume a steady state, meaning no need to expand. But when cities grow, public transit systems must continually expand to continue to service the population which requires massive amounts of up-front capital, which each takes decades to pay back through rider fees.
- m_mueller 6y ago
  to provide some example to your point: https://asia.nikkei.com/Business/Transportation/Tokyo-Metro-tackles-87bn-global-market-with-IPO-in-mind https://asia.nikkei.com/Business/Transportation/Tokyo-Metro-... "The company recorded a net profit of 61 billion yen ($560 million) for the year ended March, up 0.6% from the previous year thanks to external factors such as the increase in foreign visitors to the Japanese capital. It posted revenues of 435 billion yen." I don't think there's something fundamentally different about Tokyo compared to other dense metropoles like NYC or London. Low density cities like LA might be a different story.
  - input_sh 6y ago
    > I don't think there's something fundamentally different about Tokyo compared to other dense metropoles like NYC or London. As others have pointed out, there is. It's about owning the land where you set up your stations. You don't make money on the tickets themselves, you make money by charging rent to companies in highly convenient locations. Some European cities do this on a smaller scale (like a shop or two right at the station), but nowhere near as much as they do in SE Asia.
    - m_mueller 6y ago
      I guess my point is, given that we know that this strategy works, why aren't more Western cities' transport companies/departments copying that model? Why not trying to buy up or lease property in strategic locations and converting them into malls integrated with a metro/train station? In Tokyo you often find nearby malls connected to the station by underground walkways - I'm sure there's also a business model to be had where a percentage of revenue goes to the transport provider if they connect stations in that way.
starfallg 6y ago
Maybe it's time to seriously consider the East Asian model where transit companies also operate as property developers. This pretty much ensures that cities are designed with mass transit at its core and mass transit construction is part subsidized by the market. That doesn't completely remove the need for public funding, just changes the dynamics so that it is more balanced. It also results in cities that organically grow with mass transit, making it an integral part of the infrastructure rather than an afterthought.
- pmyteh 6y ago
  The Metropolitan Line of the London Underground was partly funded on that model. They bought farmland, built out a commuter railway to it, then either built housing or sold land at a profit in order to get capital receipts to part-pay for the railway and customers to ride it in perpetuity.
  - rob74 6y ago
    Yup (see also https://en.wikipedia.org/wiki/Metro-land https://en.wikipedia.org/wiki/Metro-land). But that was before city planners in the West started catering almost exclusively to the automobile...
- lqet 6y ago
  Wasn't this model a reason for the decline of the US public transit system? I remember reading somewhere that in cities like LA, transit companies build little frequented lines to properties they themselves developed, just to drive house prices up. After the properties were sold, the companies lost interest in maintaining the lines, and the system quickly deteriorated.
csomar 6y ago
> Any implication that public transition should be profitable is pernicious. Really, or is it a failure of the western cities to run profitable, efficient and ,eh, clean transport networks. Japan, Hong Kong, Singapore are running private, profitable and efficient metros for a much cheaper fare than what other cities can do. The reality is that these massive infrastructure projects have turned into huge embezzlement schemes of public funds from different players (politicians, consultants, unions, etc...); and they are holding the public hostage: Otherwise, are you going to stop/disrupt public transportation?
- TazeTSchnitzel 6y ago
  Japan's systems were privatised after they were built. Would they be as successful if they were private from the beginning?
  - csomar 6y ago
    I don't think the success of private/public is a universal thing and probably depend on how low corruption the government is. A metro system has to be bootstrapped by the government at the end of the day, to be able to appropriate of some private lands you are going through.
  - pydry 6y ago
    They're successful because they own the land around the stations. This is where all the real money is made. In most other countries that land was sold off and somebody else (e.g. private equity) profits.
- Retric 6y ago
  Your facts are incorrect. Singapore's MRT subway lines are constructed and the assets owned by the Land Transport Authority (LTA), a government entity. Tokyo Metropolitan Bureau of Transportation (Toei Subway) is owned by the government of Tokyo. MTR Corporation Limited which runs Hong Kong's Mass Transit Railway (MTR) is a majority state-owned Hong Kong company (75.09%).
  - 6y ago
choeger 6y ago
Of course they need to be profitable. A working public mass transport system is the sine qua non of dense cities. Dense cities reap many economic benefits so naturally the cost of providing mass transportation must be weighed as well. It's outright unsustainable to ignore the cost sinks of cities as much as it is to ignore the cost sinks of suburbs or rural areas.
- igammarays 6y ago
  Of course they should NOT be profitable, because remote routes are not profitable to operate, yet it is in everybody's interest to prevent overcrowding and excessive density. Give me one example of a successful metro that was built on "profitability". It may become profitable in the end, but only because the initial intention was public service, not profit. This kind of capitalistic short-term thinking over long-term public interest is precisely what is wrong with America today.
  - choeger 6y ago
    "public service", my ass. The purpose of mass transit is to gather the cheap workforce from around the city so a banker can have their Starbucks coffee for about the same price as everywhere else, offices get cleaned properly, and millions of employees can waste hours every day rushing into their cubicles that have to be in some "representative" location so the CEO can jerk off with their golf buddies. The goal of ever denser cities is first and foremost to move the profits from the economic benefits of densification to rent seekers, in particular owners of ever scarcer real estate. Mass transit is a tool to make that possible. Mass transit is almost certainly profitable, if priced correctly. It enables massive value concentration. One could easily introduce a property tax on real estate to fund it. But right now the profiteers managed to argue that it is a "public good". As if square meter prices measured in the tenths of thousands of dollars are in any form normal. Just to make this crystal clear: No one would build a mass transit system to move around a few tourists or get the inhabitants from their apartments to the latest fancy restaurant. Mass transit exists to fill the city with a workforce it cannot or doesn't want to house properly.
mgerullis 6y ago
Here in Germany you will sometimes read about discussions on making public transport free, making it a completely public utility. I’d be more than happy to pay taxes for that.
- jariel 6y ago
  'Totally free' is usually a bad idea because the asymmetries inherent in the system are multiplied. The OP argument 'everyone uses it' is also not super rational argument either on it's face - we all 'use food' and 'water' but we pay for those - the former in market terms, and the later is socialized on some level but still paid for by individuals on a usage basis. 1) You'd be happy to have people in villages and in the countryside pay for your transportation, who wouldn't? It's not fair or ideal, to have some people's tax money pushed heavily into systems that don't benefit them. 2) When things are 'free' we tend to use them in a way that does not reflect their true cost. Imagine if toilet paper were 'free' for everyone. We'd probably use a lot more of it, unnecessarily so. The issue with metros is the intense capital costs and de facto monopoly status. If there were 20 metros too choose from we wouldn't even think of socializing them, you'd just have to 'pay for it' literally like everything else. The 'Strategic Advantage' in the metro is that it's actually a very efficient way to move people, but those efficiencies may not be realizable without subsidy. So instead of 'free' - a reasonable solution might be to subsidize expansion while requiring regular Ops to be paid for out of revenue. Some investment in urban facilities is warranted vis-a-vis the countryside due to the big upside i.e. a large bit of social/industrial gain can be had by government investment that could not be had otherwise.
  - mgerullis 6y ago
    > 1) You'd be happy to have people in villages and in the countryside pay for your transportation, who wouldn't? It's not fair or ideal, to have some people's tax money pushed heavily into systems that don't benefit them. I know this is not the case in the US but here, it is common to have public transport on the country side as well to some degree. Most villages have bus transport. Yes, there is a lot more in the city but it grows with density. > 2) When things are 'free' we tend to use them in a way that does not reflect their true cost. Imagine if toilet paper were 'free' for everyone. We'd probably use a lot more of it, unnecessarily so. I do not think there is such thing as an excessive/unnecessary use of public transport when the alternative is to use a car which pollutes the planet. I cannot imagine using the tram in cases where it would be unnecessary, but maybe thats just me. If it is in the interest of the people to get rid of cars, offering public transport at no cost is not so far fetched, considering the amounts of money we will have to spend to combat carbon in the air and are spending on road systems.
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CapriciousCptl 6y ago

Looking at the spreadsheet subsidies make up fully half of the revenues. I suspect those are adjusted as needed to zero out the metro budget, which explains why, after subsidies, the bottom line is “barely profitable.”

keiferski 6y ago

Regarding metros and profitability: someone can correct me if I'm wrong, but I believe that the Tokyo subway system (which is operated by a byzantine-like variety of companies) does turn a profit, specifically because it owns the real estate around the stations. This seems like a better route than a blank check "it shouldn't need to be profitable", which, when comparing American public transit to Tokyo's, doesn't seem to actually make service any better.

hobofan 6y ago
The MTR of Hong Kong is also a prominent example of a profitable transit system.
namdnay 6y ago
yeah but it's hard to determine "real" profitability when all the initial investment was made by the state and hte company itself is partly state-owned. i think the profitability or not is a bit of a red herring

dusted 6y ago

When I lived in Tartu, Estonia, there were two free, privately operated bus routes circling through town, they had several convenient stops, one of them happening to be the large shopping center that operates the line. We often used these busses, just to get around town, and, well, sometimes to get to the shopping center. Seen isolated, these bus lines were losing money, they made literally no profit, all expense, no ticket sales. Them being free, however, was not charity, their presence generated so much additional revenue in the respective shopping-centers that it made sense to run them. As far as I understand, they were funded through the rent paid by the shops in the centers. So "transporting customers to your shop location" was included in the rent, neat. Now, in more taxed countries, like Denmark, a goverment-run model would work as well in more populated areas, as transportation becomes free, people become more mobile, and will travel more often to buy goods, and more sales-taxes result.

jariel 6y ago
This argument has to work against the fact that the 'stuff' in the shops is x% more expensive because they are paying for their bus on the backend. Do you think a transportation system that is perversely incented and controlled by 'the shopping mall' to do specific things, subject to all sorts of weird policies ... is going to be more efficient than simply reducing the price of goods and allowing travellers to pay themselves - and decide for themselves where they want to travel and for what purpose? Getting the capital costs sorted out for these things is hard, the shopping mall would have been one of the few places to foot the initial bill - that's probably why it happened the way it happened. But it probably would have been more efficient for some state actor to step in and provide the means for it to work more broadly.
- dusted 6y ago
  Yes, of course the money is coming from the goods sold, and so is the money for all other expenses the shops have. This is highly offset by the lower property price of being able to place the shop outside the city center (and the additional convenience of being located right next to the highest-traffic road). So goods were still cheaper in the shopping center than in the stores located in the city-center. I didn't say this would be the most efficient solution, I just wanted to point out that asking if a transportation infrastructure is profitable, and only looking at it in isolation is silly, because the value it adds to the areas around its stops can highly outweigh the cost of operating it.

TazeTSchnitzel 6y ago

If you crunched the numbers for road-building, wouldn't it look even worse?

turbinerneiter 6y ago

* buy plot of land * build public transportation to reach land * sell land for higher price due to good access with public transportation * use profit to pay back loan for building public transportation There is some city in Asia (I know^^) that uses this playbook very successfully, sadly I can't find the article where I learned about it anymore.

pharmakom 6y ago
This is what Hong Kong does. It can never be a fully private system though bevause the government must apply zoning and permits to potential new lines.
- turbinerneiter 6y ago
  I have no problem with _public_ transportation not being private. There is too much private anyway when it comes to land-use. Obviously you have to ensure to avoid the common pit-falls of government run (or intervened) companies, but we have decades of knowledge about this now and should be able to design better systems.

hannob 6y ago

Strangely noone ever asks this question: Is there any city that has a private car street and parking network that is profitable?

redis_mlc 6y ago
There's some edge cases around the globe. For example, all new highways in Jakarta are toll roads, operated by a dedicated company. There are no public parking lots. https://theinsiderstories.com/indonesias-jasa-marga-to-operates-1292km-toll-roads-in-2021/ https://theinsiderstories.com/indonesias-jasa-marga-to-opera...

pharmakom 6y ago

the government subsidies roads so why not trains too?