This study examines the New York City bus transit system and analyzes the potential cost savings of applying a competitive-contracting approach to bus service, using the model of various major American and European cities. The study finds that:
- In addition to dedicated taxes and toll revenues, New Yorkâ€™s bus operations consume at least an additional $345 million in state and city operating subsidies.
- The use of competitive contracting in major transit systems in the U.S. and Europe has produced reductions in operating costs ranging from 20-51%, with savings in excess of 35% being the norm.
- Replicating even the least impressive of those results, a 20% cost reduction, would save New Yorkâ€™s bus transit system the $340 millionâ€”enough to nearly eliminate the city and state operating subsidies.
- Competitive contracting can work in a high-wage environment like New York City. For example, bus routes put up for competitive bidding by the New Jersey Transit Authority have expenses 35% lower than the routes the Authority operates itself.
- New Yorkâ€™s transit costs are exceptionally high. Depending on whether the figures are adjusted for higher regional labor costs, New Yorkâ€™s publicly operated bus routes have the either the 5th or 6th highest operating expenses among the 30 largest American bus transit systems. New Yorkâ€™s private bus franchisees, selected without any bidding process, have either the 7th or 12th highest expenses.