While public-transit costs outpaced inflation over the past two decades, private bus industry costs per mile declined relative to inflation. From 1970 to 1985, real private-sector costs per mile declined 8.3 percent[9] compared to the 64 percent real increase in public transit. If public-transit costs had risen at the rate of increase in the private bus industry, service levels now could be more than double the 1989 level.[10]

The private bus industry operates more than 120,000 vehicles (four times the number of active public transit vehicles) and includes more than 3,000 firms, ranging from small local operations to large national companies[11] (see Table 1). In addition to charter, tour, shuttle, and intercity service, the private bus industry provides under contract to transit agencies and school districts one-third of the nation's school bus services, more than 60 percent of dial-a-ride service for the elderly and handicapped, and 10 percent of regular transit route services.[12]

Table 1

COMPETITIVE CONTRACTING OF TRANSIT SERVICE IN LARGE U.S. METROPOLITAN AREAS

Competitively Contracted*

1992

20% or more

Austin

Dallas-Ft. Worth
Denver-Boulder
Las Vegas
San Diego   Atlanta Area

15% to 19%

Houston-Galveston-Brazoria

Minneapolis-St. Paul

10% to 14%

Atlanta Area

Los Angeles-Anaheim-Riverside
Kansas City Area
San Francisco-Oakland-San Jose

5% to 9%

Baltimore

Chicago-Gary-Lake County
Miami-Ft. Lauderdale
Phoenix
Sacramento/Seattle-Tacoma Area
Washington Area

*Does not include demand-response services for the elderly and handicapped, management services, maintenance-only services, or non-competitive contracting.