OPERATING SUBSIDIES FOR BUSES - THE CASE OF CONNECTICUT

This study took root during the "Connecticut Bus Crisis" of 1972-73. At that time, a massive strike crippled the privately-owned public transportation in the state. Only by the granting of an interim State subsidy was bus service resumed. Numerous questions were left unresolved relating not only to the organization of any future subsidy but also to the reasons behind the apparent need for subsidy funds. This study addresses itself to these questions. The reasons underlying the failure of the bus companies to earn a profit deal both with declining demand and with the stifling effects of state regulation of the industry. Company cost control and management do not appear to be at fault. While demand is an important factor in the fall of profits, the decline of demand is not a general phenomenon. A number of routes are still fully capable of generating healthy profits. These findings suggest that subsidy and a relaxation of regulatory constraints are among the appropriate bus transit policies which could be pursued. Of course, there are a number of possible subsidy schemes which could be adopted. This study argues the merits and faults of many of them. Both reimbursement and formula-based subsidies are found wanting either because they introduce perverse incentives to bus operations or because they fail to indicate the extent of the need bus operators have for subsidy. The one subsidy scheme which offers both theoretical and practical appeal is a scheme whereby individual routes are auctioned off to bus operators by a public coordinating agency. This route-by-route bidding scheme exhibits many advantages and few, if any incorrigible faults. A strategy for implementation is given.

  • Corporate Authors:

    Yale University

    Institute for Social and Policy Studies
    New Haven, CT  USA 

    Department of Transportation

    Office of University Research, 1200 New Jersey Avenue, SE
    Washington, DC  USA  20590
  • Publication Date: 1974-8

Media Info

  • Features: References; Tables;
  • Pagination: 141 p.

Subject/Index Terms

Filing Info

  • Accession Number: 00084985
  • Record Type: Publication
  • Source Agency: Highway Safety Research Institute
  • Report/Paper Numbers: DOT-TST-75-26 Final Rpt.
  • Contract Numbers: DOT-OS-40099
  • Files: NTIS, TRIS, USDOT
  • Created Date: May 1 1982 12:00AM