Measuring Cost Variability in Provision of Transit Service

The cost of producing public-transit service is not uniform but varies by trip type (e.g., local or express), trip length, time of travel, and direction of travel, among other factors. However, the models employed by public-transit operators to estimate costs typically do not account for this variation. The exclusion of cost variability in most transit-cost-allocation models has long been noted in the literature, particularly with respect to time-of-day variations in costs. This analysis addresses many of the limitations of cost-allocation models typically used in practice by developing a set of models that account for marginal variations in vehicle-passenger capacity, capital costs, and time-of-day costs. FY 1994 capital and operating data are used for the Los Angeles Metropolitan Transportation Authority (MTA). This analysis is unique in that it combines a number of previously and separately proposed improvements to cost-allocation models. In comparison with the model currently used by the Los Angeles MTA, it was found that the models developed for this analysis estimate (a) higher peak costs and off-peak costs, (b) significant cost variation by mode, and (c) lower costs for incremental additions in service. The focus is on the limitations of the rudimentary cost-allocation models employed by most transit operators and not on the Los Angeles MTA per se. This analysis found that an array of factors addressed separately in the literature can be incorporated simultaneously and practically into a usable cost-allocation model to provide transit systems with far better information about the highly variable costs of producing service.