Number 16 December 1997
New Urban Rail In America:
The new rail systems have been very costly. On average, rail transit systems have construction cost
overruns of nearly 50 percent.(1) Operating costs for rail transit systems are, on average, 80 percent greater
Generally, new US rail systems have attracted fewer than 40 percent of their riders from cars. Ridership
has been below projections. Combining poor ridership levels with excessive operating costs, operating
costs per passenger mile have exceeded 250 percent of projections (this excludes capital overruns).(3)
On average, the new rail systems require operating subsidies that range from 50 percent to 90 percent
and capital subsidies of 100 percent. Even the established rail systems in older eastern and midwest cities
require substantial subsidies. Worldwide, urban rail systems lose money except in the most densely
populated Asian cities, where urban densities are far higher than in the US and automobile ownership is
Busways and high-occupancy vehicle (HOV) lanes can be built for one-fifth the cost of rail systems.(5)
Operating subsidies are far lower. Car pools require no subsidy. Competitively operated bus services
require little or no subsidy (such as in New Jersey and the Chicago area). Competitive express bus
services are much more cost efficient than rail systems.(6)
Transit plans have systematically underestimated the capacity of busways by a factor of up to four.(7)
Planners have also assumed that rail service is more attractive to passengers than bus service. Research,
however, demonstrates no preference for rail.(8)
Busways and HOV lanes can provide transit to more of an urban area. Rail transit is able to effectively serve only downtown work destinations. Downtown represents less than 10 percent of employment in virtually all US urban areas. Moreover, car pools are more fuel efficient than rail transit.(9)
1. Don Pickrell, Urban Rail Transit Projects: Forecast Versus Actual Ridership and Costs (Washington, DC: US Department of Transportation, Urban Mass Transportation Administration, 1989).
2. Don Pickrell, Urban Rail Transit Projects: Forecast Versus Actual Ridership and Costs (Washington, DC: US Department of Transportation, Urban Mass Transportation Administration, 1989).
3. Wendell Cox, Jean Love, and Stephen Moore, Analysis of the Chicago Central Area Circulator (Belleville, IL: Wendell Cox Consultancy, August 1994).
4. Secretary of Transportation, Report on Funding Levels and Allocations of Funds: Report of the Secretary of Transportation to the United States Congress Pursuant to Section 3(j) of the Federal Transit Act, As Amended, US Department of Transportation (Washington, DC: April 1994).
5. John Kain, Ross Gittell, Amrita Daniere, Sanjay Daniel, Tsur Summerville, and Liu Zhi, Increasing the Productivity of the Nation's Urban Transportation Infrastructure (Washington, DC: US Department of Transportation, Federal Transit Administration, Technology Sharing Program, January 1992).
6. Wendell Cox and Jean Love, "The Competitive Future of Passenger Transport," presentation to the Third International Conference on Competition and Ownership in Surface Passenger Transport (Toronto, ON: September 1993).
7. Calculated based upon Kain.
8. Moshe Ben-Akiva and Takayuki Morikawa, Ridership Attraction of Rail Compared with Bus (Washington, DC: US Department of Transportation, Urban Mass Transportation Administration, December 1991).
9. Wendell Cox, Jean Love, and Samuel A. Brunelli, "The Livable American "City:" Toward an Environmentally Friendly American Dream," The State Factor, Vol. 19, No.3 (Washington, DC: American Legislative Exchange Council, August 1993).