Not All Transit Lines Cover Their Costs, and That’s Okay
Summary
TLDRThe video script from RMTransit challenges the notion that profitable transit lines are the sole measure of a successful public transport system. It argues that while some lines may generate more revenue than their operational costs, this doesn't account for the interconnected nature of transit networks. The script emphasizes the importance of considering the entire system, including less profitable but essential services like buses, which feed passengers into profitable lines. It also highlights that public transit's purpose is to provide affordable mobility, not to generate profit, akin to public schools.
Takeaways
- 🚇 The concept of 'profitable' transit lines is often discussed but may not be as straightforward as it seems.
- 💡 Profitability in transit lines usually means that the line generates more in fare revenue than it costs to operate.
- 🔄 There is a risk in isolating a single transit line's profitability without considering its role within the entire network.
- 🔗 Passengers often use multiple transit modes, including buses, to connect to profitable rail lines, which may not be accounted for in profitability discussions.
- 🌐 The profitability of a transit line can be influenced by the overall transportation ecosystem and land use patterns.
- 🏙 Hong Kong's MTR is an example of a profitable transit system, but it benefits from unique factors like convenient alternative transportation options and strategic urban planning.
- 🛤️ Building more 'profitable' lines may not always be sustainable or beneficial, as it could oversaturate the market and reduce the profitability of existing lines.
- 💰 High costs of building and maintaining rail networks mean that profitability is not the only measure of a transit system's success.
- 🔄 The value of transit services extends beyond direct profitability, including the broader benefits to public mobility and urban connectivity.
- 🚍 Feeder services like buses are essential for the success of rail lines, and their costs should not be overlooked in profitability discussions.
- 🌟 Public transit exists to provide affordable mobility and public benefits, not solely to generate profit, similar to other public services like schools.
Q & A
What is the common misconception about profitable transit lines discussed in the script?
-The common misconception is that if a transit line, such as a subway, brings in more revenue than it costs to operate, it is considered profitable and thus a model for success. However, the script argues that this perspective is flawed because it overlooks the interconnectedness of the entire transit network.
Why is it risky to view transit lines in terms of profitability?
-It is risky because it can lead to undervaluing services that are essential to the overall network but may not be profitable on their own. This could result in cutting back on these services, which in turn would negatively impact the efficiency and reach of the entire transit system.
What does the script suggest about the relationship between rail lines and other transit routes?
-The script suggests that rail lines often rely on other transit routes, such as buses, to feed passengers into them. Without these feeder services, which may be more expensive to operate, the rail lines would not be as profitable.
How does the script describe the operation of the Hong Kong MTR?
-The Hong Kong MTR is described as an entire system that makes money, but this is attributed to specific factors such as the city's layout and the convenience of alternative transportation methods, rather than the profitability of individual lines.
What is the issue with focusing on building more 'profitable' lines?
-The issue is that if too many profitable lines are built, they may no longer be profitable due to market saturation. Additionally, rail networks are costly to build and maintain, and their success often relies on other transportation modes and dense land use.
Why might a busy transit line be successful?
-A busy transit line might be successful because it serves a unique purpose within the network, absorbing ridership from connecting lines. However, its success is also structural and part of the overall network, not just because it exists on a 'higher plane of existence'.
What is the structural reason behind some rail lines being able to bring in more fares than their operational costs?
-The structural reason is that these lines are part of a larger network where they benefit from the feeder services provided by other, potentially less profitable, modes of transport.
How does the script view the idea of a transit system being profitable if all government funding was cut?
-The script suggests that if all government funding was cut, a transit system that appears profitable might not be able to sustain itself, as its profitability could be reliant on other, less profitable transit lines.
What does the script imply about the purpose of public transit systems?
-The script implies that public transit systems exist to provide affordable mobility and other public benefits, not to make money, similar to how public schools exist to educate, not to generate profit.
Why might making a transit line less expensive benefit the overall system?
-Making a transit line less expensive could increase ridership and potentially lead to greater efficiency and connectivity across the entire network, even if it means individual lines operate with lower profit margins.
What is the script's stance on the importance of efficiency versus profitability in transit systems?
-The script argues that while efficiency is important, as seen in the case of profitable lines, the ultimate goal of a transit system should be to provide valuable services that enhance public mobility and offer other benefits, rather than solely focusing on profitability.
Outlines
🚇 The Misinterpretation of Profitable Transit Lines
The video script discusses the common misconception that certain transit lines are profitable, which can lead to a skewed perspective on public transit infrastructure. It emphasizes that while it's interesting to note that some lines generate more revenue than their operational costs, this doesn't necessarily mean they are economically independent. The script argues against the idea that profitable lines should be the sole focus of transit systems, as they are part of a larger network that includes less profitable but equally important services like buses. The profitability of a line is often due to its role within the network, not because it's inherently superior. The video also points out that transit systems are not meant to make money but to provide efficient and accessible transportation for the public.
🚌 The Importance of a Comprehensive Transit Network
This paragraph further explores the importance of viewing transit systems as interconnected networks rather than a collection of individual lines. It challenges the notion that profitability should be the primary goal of public transit, highlighting that public services like transit and schools are meant to serve the community rather than generate profit. The script suggests that even profitable lines rely on other, less profitable services for their success, and that reducing fares could increase accessibility and benefit the public. It concludes by emphasizing that the value of a transit line goes beyond its financial performance and includes its contribution to the overall mobility and well-being of the community.
Mindmap
Keywords
💡Public Transit Forums
💡Profitable Transit Lines
💡Basic Infrastructure
💡Cost Efficiency
💡Fare Revenue
💡Transit Networks
💡Hong Kong MTR
💡Feeder Services
💡Rail Networks
💡Land Use
💡Public Mobility
Highlights
Discussion on the profitability of certain transit lines in cities and the caution against viewing transit networks solely through this lens.
The idea that a transit line being profitable means it recovers more in fare revenue than it costs to operate.
Critique of the notion that profitable transit lines should be the focus, as it overlooks the interconnectedness of transit systems.
The importance of recognizing that transit systems are networks, with various modes of transport feeding into and supporting each other.
The fallacy of attributing a line's profitability to its own merits without considering the supporting services and infrastructure.
The interconnected nature of transit services, where passengers often transfer from more expensive to operate routes to profitable ones.
The unique case of Hong Kong MTR, where the entire system is profitable, and the factors contributing to this success.
The argument against the idea that building more 'profitable' lines is a sustainable solution for a city's transit needs.
The high costs of building and maintaining rail networks and their reliance on other transportation modes.
The structural role of profitable lines within a transit network and the misconception of their inherent superiority.
The undervaluation of services that provide value beyond what can be captured through fares, such as feeder buses.
The flawed perspective of viewing transit systems as profitable entities, similar to how public schools are not meant to make money.
The importance of affordability in public transit and how profitability should not overshadow the need for accessible mobility.
The point that transit lines should be valued for their efficiency and importance within the network, not just their profitability.
The broader implications of focusing on profitability in public transit and the potential neglect of other essential services.
The conclusion that transit systems should be evaluated on their ability to provide public mobility and other benefits, not just on profitability.
Transcripts
In high school and university, I spent a lot of time on public transit forums.
Yes, that is a thing.
And something I remember being brought up again and again is
how certain transit lines in certain cities are profitable.
This way of looking at transit networks can be interesting, but I caution that I think
it's a risky way of looking at the basic infrastructure that so many of us rely on.
Just because a piece of information is true doesn't make it helpful.
So let's look at transit lines and talk about why them being "profitable" doesn't really matter.
Welcome to RMTransit, a channel about public transit as a network.
The phrase about a transit line being profitable usually goes something like this:
“agency x makes so much money from line y that it actually pays for itself”.
I think this is interesting of course.
The line usually talked about is a subway or other rail line.
And yes, obviously rail lines are powerful.
I've talked about how rail is cost efficient to operate per passenger in other videos.
But what do people mean when they say this line is profitable?
Well, what I think they mean by this is that
a given line recovers more in fair revenue than it costs to operate.
And by saying this, there's almost a call to action being made about this particular line.
It's as if it's being suggested that we're not looking at the line in the
right way and that we should be doing something about this.
For example, if our transit system didn’t have all of these pesky buses,
then it would clearly cost less to operate than it makes in fare revenue.
So clearly the transit agency is just operating all of these superfluous services
when it has a profitable business it could be making money off of.
Or there's the other side of the coin: rail lines are profitable,
thus we only need to build more rail lines.
But these things make no sense.
It's true that there are lots of lines out there
that bring in more revenue than they cost to operate.
That's even true of some bus routes and entire systems like the Hong Kong MTR,
which is valuable information to be sure.
But the issue is that it's very
hard to draw a line around a particular service and say this one makes money.
Because with a business, you can’t pretend that the profitability of
a single product represents your entire business’s profitability.
Often the influence of one "product" on the "market" has an impact on the demand for others.
For one thing, passengers often connect onto subway lines and train routes from
other transit routes, often ones which are much more expensive to operate, like buses.
So when you hear people talking about how the subway costs so little to operate
and brings in so much in fare revenue,
they may well be including the fares or parts of the fares from the buses, but not the costs,
which is kind of like if a business were to say
“we have so much profit” when you don't consider the losses.
And even if they aren't, without the buses losing money dropping passengers off,
most subway and train routes wouldn't make nearly as much money.
Even in Hong Kong, where the entire system makes money,
there are clearly outside factors influencing things.
There are obviously alternative transportation methods,
but they often aren't as convenient or aren't as low cost as taking transit.
And of course, Hong Kong is one of the world’s best cities for
putting the people where the transit already is.
So the need for feeder services is just dramatically diminished.
And so why not just build more "profitable" lines?
Well, typically, a very busy line, which absorbs
tons of ridership from connecting lines is so successful because it is unique.
It's pretty obvious that if your city has 100 bus routes and just one subway route,
that subway route is probably going to be much better used.
But if you saturate the transportation market with profitable lines,
those lines will probably turn out to not be profitable for long.
Rail networks cost a lot to build and to maintain,
and they rely on other modes of transportation and dense land use feeding passengers into them.
Indeed, even high density housing doesn't come for free.
It requires a ton of supporting infrastructure, transportation being just one form of that.
The reason that some rail lines bring in more fares than they cost
to operate isn't because they lie on some higher plane of existence.
It's just a structural thing, a part of the network.
I think the ultimate problem with this line of thinking is it causes
people to undervalue services, which do have a lot of value,
even if it's not all value that we can easily capture or represent.
Transit systems are networks.
Subway lines rely on buses and other modes of transport to feed them.
And sometimes those other modes of transport are
only attractive because they'll get you to a fast subway line.
Feeder buses and transit lines in general can't
just be extricated from the lines they feed into or connect with.
If the subway makes money but the bus loses money,
or if one lines in the red, but another is in the green, it's a wash.
And that's before we ask why one particular line should get credit for
all of the passengers delivered by other services, or even the built form itself.
Of course, the degree to which the fares you recover cover your costs
can be a decent metric of your efficiency, but it's not really helpful beyond that.
For example, if you think that a transit system being profitable means that if all
government funding was cut, then things would go on just fine, well, probably not,
because some of that profitability of your transit line was probably
reliant on other not profitable transit lines.
At the same time, if we cut back any given transportation system enough,
I'm sure we could create a profitable segment.
But a single profitable route does not connect an entire city.
It satisfies people who want a profitable transit line,
not people who want transit that connects an entire city.
It's a situation that only exists when people demand a service to make money,
as opposed to taxpayers exchanging their tax dollars for services that provide dividends,
in terms of public mobility and all kinds of other benefits.
As I talk about in my "Transit Doesn't Need to Profit" video,
any transit line which makes money could not make money if it charged less in fares,
and a lot of transit services could benefit from being less expensive.
Does a public transit system making money really matter more than it providing affordable mobility?
Public transit doesn’t exist to make money in the same way that public schools don't exist to
make money, and transit routes that bring in more fares than they cost to run aren't special beyond
the fact that they are particularly efficient and important within their given network.
These lines matter, but that doesn't mean that others do not.
Thanks for watching.
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