The M86 earned an operating surplus of about five million dollars in 2009. Photo: bijoubaby / Flickr.
To begin with, the agency has to make a profit on the route. Even if private operators believe they can make money, it is not always profitable for public operators. Sometimes this is for legitimate reasons: if the private operators can only make a profit through exploitative wages or hours, or by not offering a reasonable set of benefits, we don't want to encourage that exploitation. But if the profits earned by the private operators come from reducing costs in other ways, from offering a better value, or even from being able to raise fares on people who can afford it, the only objection is the skimming one.
How many routes make any operating profit, let alone an overall profit? I'll look at the New York MTA because it's my hometown transit monopoly, but I'm interested to hear about other systems. In early 2010 the MTA released ridership and cost figures for each of its bus routes, based on data from Labor Day through the end of November 2009. There were 22 routes that brought in more in fares than they cost to run.
If we extrapolate those figures to the whole year, these 22 routes combined brought in $27,400,000. Of that, most came from just five bus routes that netted over $2 million apiece: the Bx12, the M86, the Bx19, the M23 and the M79. The remaining 166 routes lost a combined $276 million, more than ten times as much as the 22 top routes brought in.
To put this in perspective, that $27 million surplus was 3.3% of the total $823 million grossed by New York City Transit buses. It's 0.87% of NYC Transit's overall $3.1 billion in farebox revenue, and 0.33% of the total $8.3 billion operating expenses for 2009. In other words, it's a drop in the bucket. Nobody at NYC Transit or the State Legislature would miss it.
There may be good reasons not to allow private buses to run on New York City streets, but skimming the consumer surplus is not one of them.