Public Transport Success Stories
San Diego Cuts Bus System Costs 40%
With Competitive Tendering

Situation: In 1980, the San Diego area began a gradual conversion of its public transport bus system to competitive tendering (competitive contracting). Approximately 44 percent of bus service was competitively tendered as of 1999.

Results: Competitively tendered bus services have routinely been less expensive than the non-competitive services offered by the former public transport monopoly, San Diego Transit. In 1997, competitively tendered bus services were 30.7 percent less expensive than services that have not been competitively tendered. As a result:

  • From 1979 to 1997, bus service levels have been expanded 82.3 percent (vehicle hours)

  • At the same time overall bus operating costs, competitive and non-competitive, have risen less than one-tenth the rate of service expansion, at 7.0 percent (all financial information is inflation adjusted, using the San Diego area Consumer Price Index).

  • Unit costs --- the cost per vehicle hour --- for the entire bus system have declined 41.3 percent.

  • In response to the competition, San Diego Transit, the former public transport bus monopoly, has reduced its cost per vehicle hour 36.3 percent. In the decade before competitive tendering, San Diego Transit's cost per vehicle hour had risen 45 percent.
Since 1997, costs have continued to decline. Available data indicates that costs per service mile have declined 6.4 percent. If that rate applies to the cost per vehicle hour, the 1979 to 1999 cost reduction will be 45.1 percent.

7 Years Free: It is estimated that San Diego has saved nearly $550 million in operating costs compared to if its costs had risen at the inflation rate. At the annual operating expenditures rate of $82 million, competitive tendering paid for the equivalent of nearly seven years of bus operations over the last twenty years.

In response to the service increases, bus ridership has increased more than 50 percent.

Note: All data calculated from San Diego Metropolitan Transit Development Board and National Transit Database information.

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