Falling Skies
Posted by Fred Jandt
Editor, Mass Transit magazine
Despite all of the increased connectivity given us by modern conveniences, it still can be pretty easy to insulate yourself from the outside world. Try turning off the television and not watching the news — or just watching what your kids want to watch. Leave the computer off the Internet for a couple days. And only answer the phone if it is someone you know. Suddenly the world becomes what is directly related to your daily routine.
Then again, life has a way of butting itself in and not being ignored. And what about the transit industry? Business as usual, right? Wrong.
Take, for example, the current economic crisis — actually, let’s call it a global economic crisis because that is what it’s quickly becoming. If you don’t own a home, already have yours paid off, or don’t have an adjustable rate mortgage, the housing crisis feels kind of distant. Same goes for other economic struggles. But suddenly someone you know loses his or her job due to a company going bankrupt. But that couldn’t happen to a transit agency, could it?
It’s becoming more and more likely every day. Washington Metro is seeking protection from the federal courts to stave off paying $43 million in debt to a Belgian bank due to the AIG collapse and it could be faced with more than $400 million in payments if every lender came calling. And agencies around the country are waiting with bated breath to see what the court decides as 30 transit agencies in 18 states had similar deals.
Then there is the MTA New York situation. Due to the poor economy, transportation bonds not performing the way they were expected (among other factors), MTA is looking at a more than $1 billion shortfall in its budget next year. According to Lee Sander, MTA CEO, the service cuts to balance the budget could be “draconian.â€
We’re in a situation where Chicken Little may be correct; the sky is indeed falling. Transit agencies across the nation are being squeezed more and more between the rock and hard place of increased ridership with limited to no way to pay for the service. And it’s going beyond being able to purchase new vehicles or expanding routes, it is now about keeping essential services going just to keep a system afloat.
As we move into 2009 with the funding bill reauthorization looming and a new, transit-friendly administration about to take office, let’s hope the old adage is correct — it’s always darkest before the dawn.
Thanks for reading the MT Position updated every Friday,
November 14th, 2008 at 12:08 pm
Why don’t you provide a link to this article about the MTA New York situation that shows that other things can be done to help the budget situation besides service cuts and raising the fare like eliminating waste for example.
November 16th, 2008 at 5:37 pm
Too true.
For years — as many as I can remember, the attitude with major transit systems was always “There will always be money for that!”
Since the mid-1970′s, when the federal government began to take a vested interest in mass transit, there was an expansion (bloat) of office positions and personnel. As a front-line soldier-in-the-trenches employee (read: bus operator), there were new and mind-numbing departments opening up in the agency…accountants, auditors, advisors, specialists, analists, assistants, special assistants…or, from where I sat, “suits”. OMG! There were siuts to watch the suits to watch the suits, and several layers of ‘suits’ under them.
During the Reagan years of the very early 1980′s, it was discovered that our transit agency was WAY over budget. Somebody had to go. Funny, the operating employees went first.
So, there I was. Terminated from the only job I’ve ever loved. I still recall the pent-up anger of having to go back to the head offices to apply for benefits and seeing a vast nuber of people sitting around doing absolutely nothing and having a great time while the service on “the street” suffered because the extra boards had been depleted. Business as usual. Have a nice day.
IMHO, many transit systems (and the fine people that manage them) get seduced into the mindset that government money will always provide. There will always be grant money for this or that. Sorry to bust your bubble, but as we say, “End of the line, as far as we go. Everyone off the train.”
Time to back up and regroup.
Not that the Titanic is sinking, but we’ve woken up to the fact that it is NOT unsinkable. Are we really preparing for the iceburg, or are we going to rearrage the deck chairs again? Looking closer at the budget and then looking at expendatures is key. Are we quick to replace when we should repair? Do we need to purchase ‘new’ when slightly used (or recycled) can do for now?
And…what do the guys in the trenches think?
Consider your operations and maintenance staff. Surely THEY have an opinion and would gladly help save money today that might be an investment in (their) tomorrow.
November 17th, 2008 at 11:40 am
Very intelligent comments Vince. I guess what was happening in New York was also happening across the country.
One thing that always upset me about Mass Transit Magazine as well as the other similar magazines, is that you never publish anything negative. It’s always that every system is doing everything right and making great progress.
How about letting us hear about some of the failures occasionally and some of the wrong decisions that were made. Perhaps, then transit systems will be able to learn from the mistakes of others.
November 19th, 2008 at 4:37 am
Guys,
The real problems associated with mass transit funding are never discussed because the people who provide the money do not understand mass transit cost and revenue models.
To that end there are many myths that industry outsiders (and I’m afraid to say many industry insiders)need to have corrected.
We’ll assume that all transit systems operate a deficit (ie revenue less expenses (including capital) is negative. I’ll talk about profit but only in as much as one thing producing less deficit than another is more profitable.
Myth 1
Peak Period Services must be profitable because they are always crowded.
It’s hard to describe a mass trasit cost model without using a graph but I’ll try. Peak services can be split into two elements. Vehicles that are used only in the peak (am peak and pm peak) and vehicles used throughout the day (ie early am, am peak, between peak, pm peak and pm late) lets call them base load vehicles. Depending on your city and population density lets say three quarters of your fleet makes two trips per day (1 in the am and 1 in the pm peak. Each trip takes an hour. So three quarters of your fleet has earned money for 2 hours in the day whilst your base laod vehicles have been earning money 18, 19 or 20 hours per day.
Myth 2
Early AM and Late PM services lose money.
Their costs may be higher in terms of drivers wages if penalty rates are paid but because these vehicles are base load and because they will only require 2 drivers fully used for the whole day these services are more profitable than peak services where the vehicles are used for 2 hours per day and the drivers are paid a minimum amount of hours irrespective of how much time they spent working.
Saving costs is easy and can only go so far. The real key to profitability (and also increasing mass transit’s relevance to its customers and governement) is, initially, revenue generation between the peaks.
Unfortunatley the provision of mass transit services has been seen as an engineering problem with planning taking a back seat. Compounding that is many transit planners see their role as only providing services (ie drawing lines on maps and time tables).
The profession most likely to create ideas on revenue generation is marketers (and by that I mean more than brand marketing).
Once you understand how mass transit cost and revenue models work and how they interact generating revenue is a whole lot simpler. Also revenue generated using existing vehicles is much more profitable than revenue generated using a bigger fleet. This new revenue reduces the deficit and allows transit companies to keep people on.
In fact the current economic situation represents an opportunity to reduce deficits, not be laying people off but by generating revenue. It’s easier than you think.
November 20th, 2008 at 1:51 am
I agree wholeheatedly with Vince! At least someone in the transit industry is speaking for the little people who are rarely mentioned in industry publications.
No Vince, you certainly won’t get any dissent from me. In fact, I talked about this same incident earlier today at the watercooler when my transit agency began to talk of making service reductions without any regard to asking around what WE in the general office might cut back on.
March 30th, 2009 at 4:51 am
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