If I Had A Billion Dollars

[With apologies to The Barenaked Ladies]

From time to time I get asked “Is There Any Hope For Transit?” (it’s a question that deserves caps on all the words).

Everything these days is doom-and-gloom, horrendous deficits, downloading, uploading, fiscal inbalance, and nobody is giving an inch.  I was asked this while sitting in a bar today talking about the TTC, and in the best tradition of all good bar conversations, started to work something out on a used napkin.

This post is a cleaned up version of that napkin.

The infamous Ridership Growth Strategy got us 100 net-new buses that may actually start providing additional service sometime late in 2007.  That’s as far as we got.  No buses for 2008, 2009, to the horizon and beyond.  Nobody wants to plan for it because the numbers scare them to death.  More accurately, the thought of the numbers scares them to death because nobody has bothered to work this out yet.  You saw it here first!

Meanwhile, some members of Council, not to mention developers, construction companies and other boosters of ways to waste public money, want to build one, no two, no THREE new subway lines.  Cost: somewhere around $4-billion plus inflation.

What happens if we spend some money on the surface network, on the lowly bus system?  Let’s not worry for the moment about reserved lanes or anything else, let’s just get the fleet back to its 1990 level.  Our peak service in 1990 was 1,550 buses and by 2001 this had fallen to 1,302 (248 buses).  Allowing for spares, this is a drop in the active fleet of about 300 buses.

What would happen if we started buying 100 new buses (over and above our needs to replace old, worn-out ones) for the next five years?  How much would it cost?  What would happen to the level of service?  How would this scheme compare to subway construction as a way to increase ridership in the system?

I’m not going to burden you with the calculations here (this will be included in a much longer paper now in the works about how to figure out how much transit service really costs), but the results are startling.  To understand this, you only need to know a few things:

  • A new bus costs about $750,000 today.
  • We will assume 4% annual inflation (probably conservative).
  • For every 250 buses, you need a new bus garage at a cost of, say, $50-million.
  • If we have a newer fleet, on average, the number of spares required for maintenance should go down and we can get more service with the same number of buses.  I have assumed that a fleet of 100 buses yields 85 active buses for service.
  • To operate a bus, on average, costs about $435,000 (2006 dollars) per year.
  • We will recover some of the operating cost through increased fare revenue.  I have used a 60% recovery rate which is lower than the current system average of 80% and therefore conservative.

From this basic information, it’s a short hop to figuring out the capital and operating costs, year by year, as we build up the fleet.  Wait for it … the total cost, net of additional revenue is … $750-million over five years.

Net operating costs would be up by about $90-million annually by year five.

Let’s put this in perspective.  The additional operating AND capital costs, combined, are about HALF of the projected capital cost of the Spadina Subway to York University or the Sheppard Subway to Scarborough Town Centre.  We would add 425 buses to the current peak service (the other 75 are spares for maintenance) taking the peak service up by about one third.  This would likely be concentrated on major routes with good growth potential, but would also allow us to implement things like a policy headway of no service running less often than 15 minutes in the peak, maybe even as low as 10.

This sort of change would transform the current surface bus operations and would show a real commitment to transit.  (A similar exercise is needed for the streetcar system, but the math is a bit more complex there for various reasons.)

Our problem today is that nobody wants to commit to anything because running around yelling “the sky is falling” neatly avoids actually doing something, to consider alternatives, to lead.  Public policy is taken hostage by people who only want to tell you what they cannot do, not what they could do if the resources were made available.  We can’t have an intelligent debate because we don’t know what our options are.

If you want to read about how I estimated the cost of operating a bus, follow the more link here.

The Back of the Envelope 

The TTC publishes annual statistics for all its routes purporting to show the operating cost and revenue allocations to each route and the financial viability of each part of the system.  For now, I will restrain my desire to tell you how large and numerous are the holes in the TTC’s analysis.

Any bus route’s operating costs are related to several factors:

  • vehicle hours (operator wages, mainly)
  • vehicle kilometres (routine repairs, fuel, regular wear and tear)
  • vehicles (garaging costs, daily cleaning, regular inspection and maintenance)

It’s really a little more complicated, but for this sort of exercise, everything will come out in the wash and we will get a good, if rough, estimate.

Assuming that the new buses will run on routes with similar operating characteristics to existing heavy routes (Dufferin, Steeles, etc), I picked out 20 major routes that collectively use 560 buses in the peak period (notice how nearly half the fleet goes to a very small number of routes).  The TTC assigns these routes a daily operating cost, and I summed these to get the cost of running 560 buses. 

Note:  There is quite a variation in the daily cost per vehicle assigned to different routes due to factors such as operating speed and the ratio of peak to offpeak service.  The important issue here is that we are averaging many routes to get a composite for large scale estimation.

For planning purposes, we can treat a typical year as having 300 days.  The reason for this is that Saturday and Sunday each count for about half a day given their level of service.  Therefore, the annual cost of a bus is, roughly, 300 times the daily cost.  The average daily cost of a bus (2003 data) is around $1,300, and so the annual cost is around $390,000.

Finally we add inflation as appropriate for each year in the projection, but we also deduct the additional revenue from new riders that all of this new service will generate.  I will be the first to admit this could be a bit of a fudge, but we really have no idea of the latent, potential ridership waiting to be tapped if only the service were attractive.

If we recover 60 percent of our operating costs, then the net annual operating cost of a new bus is 40 percent of $390,000 or about $160,000 (2003 dollars).

This ends today’s lesson in back-of-the-envelope transit planning.