Not All Transit Lines Cover Their Costs, and That’s Okay

Summary

The 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

00:00

🚇 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.

05:02

🚌 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.

Keywords

💡Public Transit Forums

Public Transit Forums are online communities where individuals discuss various aspects of public transportation systems. In the script, the speaker mentions spending time on these forums, indicating a personal interest and knowledge base in the subject matter. These forums are where the concept of profitable transit lines is often discussed, which is central to the video's theme.

💡Profitable Transit Lines

The term 'profitable transit lines' refers to transportation routes that generate more revenue from fares than their operational costs. The video script challenges the notion that profitability is the sole or primary measure of a transit line's value, emphasizing that even profitable lines are part of a larger network and rely on other, potentially less profitable services.

💡Basic Infrastructure

Basic infrastructure encompasses the fundamental physical and organizational structures needed for a society to function, such as roads, bridges, and in this case, public transit systems. The script cautions against viewing transit as merely a profitable enterprise, highlighting its role as a critical piece of societal infrastructure that people rely on.

💡Cost Efficiency

Cost efficiency in the context of the script refers to the economic benefit of operating a transit line, where the costs per passenger are lower compared to other modes of transportation. The speaker acknowledges the cost efficiency of rail lines but argues against focusing solely on this aspect when evaluating their overall value.

💡Fare Revenue

Fare revenue is the income generated from passengers paying to use a transit service. The script discusses how some lines may appear profitable because their fare revenue exceeds operational costs. However, it also points out that this view may not account for the interconnectedness of the entire transit network.

💡Transit Networks

Transit networks are comprehensive systems of transportation routes and services that work together to provide mobility across a region. The video emphasizes that transit lines should be viewed as part of an interconnected network rather than in isolation, as each line contributes to the overall functionality and efficiency of the system.

💡Hong Kong MTR

The Hong Kong MTR is mentioned in the script as an example of a transit system that is profitable overall. It serves to illustrate the point that profitability can be influenced by various factors, including efficient operations and strategic planning, but also that such profitability does not necessarily translate to a universally applicable model for other cities.

💡Feeder Services

Feeder services are transit routes that transport passengers to and from main lines or hubs within a transit network. The script argues that these services, even if they operate at a loss, are essential for the overall success of the network, as they help fill the main lines with passengers.

💡Rail Networks

Rail networks consist of rail lines and associated infrastructure for train services. The video discusses the high costs of building and maintaining rail networks and how they rely on other forms of transportation for effective operation. It also touches on the unique success of certain rail lines due to their structural role within the network.

💡Land Use

Land use in the context of the script refers to how the physical development of an area, such as housing density, can influence the demand for and efficiency of transit services. The speaker notes that high-density housing near transit lines can reduce the need for feeder services and contribute to the profitability of certain lines.

💡Public Mobility

Public mobility is the ability of the general public to move freely and efficiently within a city or region, often facilitated by public transportation. The script concludes by questioning whether the profitability of a transit system is more important than its role in providing affordable and accessible mobility to the public.

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.