Privatizing, partnerships future of public transit

Montreal celebrates the 50th anniversary of its metro Friday.

An anniversary is a time for celebration, but it is also a good time to appraise the past and look forward to the future.

In 1951, public authorities took control of Montreal’s transit system by municipalizing the private company that was until then offering transit services. Before municipalization, real costs per kilometre travelled, corrected for inflation, were decreasing, while the number of kilometres was increasing, all without subsidies.

Since 1951, the number of kilometres is still increasing but costs per kilometre travelled have tripled, and subsidies now represent more than half of the Societe de transport de Montreal (STM)’s revenue, even though the inflation-adjusted fare has skyrocketed by 272% over this period.

Since the launch of the metro in 1966, the STM’s total cost per distance travelled has increased by 163% in real terms. During the same period, the reliability of the service hasn’t gotten better: From 1983 to 2015, major delays in the metro service have gone from 6.3 per million kilometres travelled to 12.2.

Of course, the arrival of the metro and of adapted transport represent major improvements. But there is no room for complacency. Public transit has become a financial bottomless pit, even though the number of passengers per year is practically the same today as it was in 1950.

How can we do better? Numerous foreign or Canadian experiences can show us how to make this essential service more efficient, improving service quality and reducing costs.

Over the past 35 years, in response to often mediocre public performance, public transit has been privatized totally or in part in the United Kingdom, France, Australia, New Zealand, Sweden, the United States, and in parts of Canada too. In some cases, the task of planning routes and operating service has been left to the private sector; in other cases, such as Montreal’s suburbs, only certain portions of these activities have been delegated to private companies.

The results are clear, in North America as well as in Europe: Costs per kilometre travelled have decreased, subsidies have come down, and user fares have been stabilized or have decreased. This is not surprising, since public monopolies are rarely efficient, especially if they are lavishly subsidized.

Some real life examples: In London, England, operating costs per bus-kilometre came down 28% between 1985-86 and 2008-09. According to U.S. studies covering hundreds of transit agencies, close to 40% have switched to competitive tendering and have seen inflation-adjusted costs reduced by up to 70%.

In many cities, even more innovative experiments are taking place in order to deliver a better service at a lower cost. A nice example comes from St. Petersburg, Fla. Facing a large deficit, the Pinellas Suncoast Transit Authority has recently decided to eliminate two little-used bus routes that cost $140,000 in operating costs, and has replaced them by a partnership with Uber and local taxis. This new way of delivering service has reduced the cost to $40,000. The result is so positive that the PSTA is planning to expand the experiment across the county.

Such innovations, including privatizing, delegating, and creating partnerships, are the future of local transit. They lead to increases in the quality and the quantity of services to users, a quicker adaptation to changes, and better alternatives for people who wish to reduce car use.

All aboard for better public transit!

Germain Belzile is senior associate researcher and Vincent Geloso an associate researcher at the Montreal Economic Institute. They are the authors of "Transiting to Privatization." The views reflected in this op-ed are their own.

Back to top