I’ve written a lot about urban rail construction costs per kilometer, but from time to time, my colleagues and I have been asked about what happens if we compare costs, not per kilometer, but per rider. There’s an intuition among people in transportation advocacy (including anti-transit activists who prefer cars) that the construction costs of urban rail lines per rider are a meaningful measure of cost-effectiveness. This intuition is true, and yet, it must be interpreted delicately.
First, modes of transit with different operating cost structures should tolerate different levels of capital costs; in particular, the current practice in which subways are built at higher cost per rider than light rail, which in turn is built at higher cost than bus lanes, reflects real differences in operating costs and does not mean there is overinvestment in subways and underinvestment in buses. And second, costs per rider can be too low, in a sense – if a city’s construction costs per rider are very low, indicating a very high benefit-cost ratio, then it shouldn’t be lauded for its fiscal prudence but scolded for not having built these lines long ago and for not building more today. In truth, places with healthy decisionmaking about infrastructure expand their networks to the limit of cost-effectiveness, which means that costs per rider averaged over an entire region vary less than costs per kilometer, and this just reflects that cities build what they can, so low-cost cities can afford to build lines to lower-ridership areas, which higher-cost cities would reject as too expensive for the benefit. This way, costs per rider are not too different in New York and in cities that build for an order of magnitude lower cost per km than New York.
The meaning of cost per rider
In the remainder of this post, the meaning of “cost per rider” is “cost divided by the ridership on a working day.” In Europe, workers get around six weeks of paid vacation, and tend to take them in the summer, leading to depressed ridership around July or August, depending on the city; daily counts usually avoid this period, so for example Stockholm specifies that daily ridership figures are taken in winter. This, as I will explain shortly, does not unduly make European lines look more cost-effective than they actually are.
The cost per rider is best understood as a cost-benefit measurement. All benefits of public transportation scale with ridership, generally linearly: higher ridership indicates tighter economic and social ties if it comes from more travel, and better environmental outcomes if it is at the expense of car travel. What’s more, raw ridership measured in trips is better at capturing these benefits than passenger-km. The issue is that focusing on p-km overrates the success of extremely suburban systems, which have low environmental benefits for their p-km (the users are typically park-and-riders and therefore drive extensively, just not to their city center jobs) and usually also high net operating costs since they are peaky and tend to charge low per-p-km fares. Conversely, the short-hop trip is a net profit to the system – even subways with distance-based fares charge degressive rather than linear fares – and comes from dense networks that cut out car-based travel entirely. These effects roughly cancel out to the point that ridership is a good proxy for actual benefits.
That said, all outcomes need to be scaled to regional or even national incomes. Economic benefits are usually measured relative to worker wages anyway; in some business case analyses, such as that of the United Kingdom, the economic benefit is even scaled to rider income rather than regional or national income, which favors lines built to rich neighborhoods over lines built to poor ones, and isn’t really how cities need to think about their public transit networks. Social benefits are usually taken on a willingness-to-pay basis, and the same is true of health benefits including reduced air and noise pollution from cars and reduced car accidents.
The next step is then to compare the cost per rider with GDP per capita, which is not perfect but is good enough as a proxy for incomes. This also takes care of the issue of Europe’s synchronized summer troughs in local travel: those six weeks of paid vacation are visible in reduced GDP per capita, so the apparent bonus to the European system of using cost per daily trip where “day” means “workday outside the summer vacation season” rather than cost per annual trip cancels out with reduced annual GDP per capita.
The rough rule of thumb I use is that the absolute limit of cost-effectiveness for a subway or commuter rail line is when the cost per rider is equal to GDP per capita. This is a coincidence: a one-time cost has no reason to be equal to an annual income – this just follows from Börjesson-Jonsson-Lundberg’s estimate of the Stockholm Metro’s benefit-cost ratio compared with its cost per rider relative to the GDP per capita of 1960s’ Sweden. In practice, infrastructure is never built down to a benefit-cost ratio of 1, due to construction risks; in countries that make decisions based on benefit-cost analyses, the minimum is usually 1.2 or 1.3. In this schema, the United States can afford to build up to an envelope of $85,373/1.3 to $85,373, which is $65,000-70,000/rider in 2024 prices. The frontier lines, like the Interborough Express, are fairly close to this limit already; in practice, there’s a range, with some lines in the same city built well over the limit for political reasons (often airport connectors) and others built far below it.
Cost per rider by mode
The above analysis works for subways and commuter rail. It does not work for trams or buses. The reason is that surface transit never achieves the same low operating costs as metros, so in practice, the total cost to be truly comparable needs to be incremented by the additional operating costs.
To be clear, this is just a rule of thumb. There are different metro lines, even with the exact same technology in the same city, with different projected operating cost profiles; for example, in Vancouver, the Broadway extension of SkyTrain toward UBC was projected in the 2010s to reduce net operating costs as many buses would be replaced by fewer, larger trains, but the outward extension of the same system deeper into Surrey and Langley is projected to increase net operating costs. There are different ways to interpret this – for example, the Surrey extension is in a more auto-oriented area, with more likely car-to-train switchers (this is still much denser than an American park-and-ride); on net, though, I think the differences are not huge and could to an extent even be folded into the notion of cost per rider, which is substantially better on Broadway than in Surrey and Langley.
That said, metros consistently have much lower operating costs than light rail and buses in the same city; here are American cost profiles. As far as I can tell from CoMET data, most European and Asian metros cluster toward the bottom end of the American cost profile (such as the Chicago L; the New York City Subway is the top end among the big systems); bus operating costs are more or less proportional to driver wages times operating hours throughout the developed world. Here we need to briefly switch to cost per p-km, since mature urban rail networks use buses as short-hop feeders – the counterfactual to a bus-based network for New York isn’t people riding the same bus routes as today but at higher intensity, but people riding longer bus routes, so the cost would roughly scale to cost per p-km, not per passenger.
In rich Asia, metros are profitable. In Europe, it depends – the London Underground operationally broke even in the early 2010s, and the Berlin U-Bahn was said to do the same in the late 2010s. In healthy European systems, it’s never reported directly, since there’s fare integration across the region, so financial data are reported at metropolitan scale without much breakdown between the modes, but the farebox operating ratios in at least Germany and Scandinavia, and probably also Paris (which has much higher ridership density than London or Berlin, comparable costs per car-km, and higher fares than pre-2022 Berlin), suggest that metros and the inner sections of commuter rail systems can break even, and then the subsidies go to the buses and to suburban extensions.
Individual bus systems can be profitable, but never at metropolitan scale, not in the first-world cities I’m aware of. In New York, the buses between New Jersey and Manhattan are profitable and run by private companies, but that’s one specific section of the system, and on net the bus system in New Jersey, including not just these cross-tunnel buses but also internal buses within the state, loses money, covered by New Jersey Transit subsidies, and the financial performance of buses within New York is, frankly, terrible.
One potential complication is that BRT infrastructure is usually installed on the highest-performing individual routes, and those can have rather low operating costs. But then, the operating costs of the buses on Broadway in Vancouver are extraordinarily low, and still the projections are for the SkyTrain extension that would replace them to, on net, reduce systemwide operating subsidies. If your city has a bus corridor so strong that ordinary BRT would be profitable, the corridor has high enough ridership for a subway.
Light rail is essentially a via media between metros and buses: higher operating costs than metros, in theory lower ones than buses. I say in theory, because in the United States, light rail as a mode comprises different things, some behaving like lower-efficiency subways with shorter cars like the Boston Green Lines, and others running as mostly grade-separated urban rail in cities like the Los Angeles and Portland cities with extremely low ridership and high resulting operating costs. But a light rail system with serious ridership should comfortably obtain better operating outcomes than buses, if worse ones than metros.
Costs per rider can be too low
In New York, as mentioned above, the current urban rail extensions under construction (Second Avenue Subway Phase 2) or discussion (Interborough Express) have costs not far from the frontier relative to American incomes. In Berlin, the extensions instead are far cheaper; U8 to Märkisches Viertel was projected to cost 13,160€ per daily rider in 2021, which is a fraction of Germany’s GDP per capita.
This does not mean Berlin builds cost-effectively. It means Berlin builds too little. A line that costs less than one third the country’s GDP per capita should have been built when the GDP per capita was one third what it is now. If there are a lot of such possibilities in the city, it means there was a crisis it’s only now recovering from or there has been too much austerity, or both, in the case of Berlin.
Healthy construction environments – that is, not Germany, which has normal costs per kilometer and chooses to barely build intercity or urban rail – will instead build to the frontier of what’s cost-effective. In New York, it’s Second Avenue Subway; in Madrid, it’s extensions into deep suburbia making the system almost as long as that of New York, on one third the metro area population. Rational yes/no decisions on whether to build at all can coexist with good construction practices or with deeply irrational ones.