Portland: Tri-Met Adds Service, Gains Passengers, Demonstrates Rail “Economy of Scale”
publictransit.us Special Report 13
 
Leroy W. Demery, Jr. • Michael D. Setty • Mayl 1, 2005
 
 
Copyright 2005-2007 Publictransit.us
 
 
Abstract
Portland’s Tri-Met increased transit service levels between 1997 and 2001, coinciding with opening of its new “Westside MAX” light rail (LRT) line. Annual revenue service hours (RSH) were increased by 41 percent systemwide (adjusting for relative vehicle size). This generated a 28 percent increase in annual boardings and a 27 percent increase in annual passenger-miles. Inflation-adjusted total operating cost did increase, but not out of proportion to the ridership increase. Therefore, inflation-adjusted unit operating costs remained stable. LRT unit operating costs (per RSH) fell sharply, reflecting economies of scale provided by a significant increase in service intensity (annual vehicle-miles per route-mile). Bus unit operating costs (per RSH) increased by an annual rate about two percent greater than the economy-wide increase in consumer prices.
 
Introduction
The Tri-County Metropolitan Transportation District of Oregon (Tri-Met), Portland’s principal transit operator, significantly increased overall transit service levels between 1997 and 2001, coinciding with the opening of the “Westside MAX” light rail line. Adjusting for inflation and relative vehicle sizes,a 41 percent increase in revenue service hours generated a 28 percent increase in annual boardings and a 27 percent increase in annual travel (passenger-miles). Total operating cost did increase, but not out of proportion to the overall increase in ridership. However, unit operating costs remained stable.
This service increase also provided a demonstration of rail “economy of scale.” This permitted overall “consumption-side” unit operating costs to remain stable in spite of the large increase in service supplied and service consumed. Tri-Met expanded light rail service significantly in September 1998, shortly before opening of Westside MAX, using newly-delivered rolling stock. In response, inflation-adjusted LRT “production-side” unit operating costs plummeted. No such economy of scale was apparent for bus operations. Tri-Met was not able to hold the rate of increase in bus production-side unit operation costs below the economy-wide consumer price inflation rate. The following comparisons use data for 1997 and 2001 from the National Transit Database (NTD).
 
1)  Data and Statistics, Tri-Met (NTD, FY1997 and FY2001)
 
1997
(2001$s)
2001
Change
Annual Operating Expense
Bus
$118,527,989
$129,195,508
$153,860,651
19.1%
LRT
$20,021,800
$21,823,714
$40,035,484
83.4%
Total
$138,549,745
$151,019,222
$193,896,135
28.4%
Annual Boardings
Bus
60,260,000
  
65,427,872
8.6%
LRT
10,432,400
  
24,976,610
139.4%
Total
70,692,400
  
90,404,482
27.9%
Annual Passenger-miles
Bus
229,358,500
  
216,054,689
-5.8%
LRT
54,727,700
  
144,023,605
139.4%
Total
284,086,200
  
360,078,294
26.7%
Annual Operating Expense
per Boarding
Bus
$1.97
$2.14
$2.35
9.8%
LRT
$1.92
$2.09
$1.60
-23.4%
Total
$1.96
$2.14
$2.14
nil
Annual Operating Expense
per Passenger-mile
Bus
$0.52
$0.56
$0.71
26.8%
LRT
$0.37
$0.40
$0.28
-30.0%
Total
$0.49
$0.53
$0.54
1.9%
Annual Revenue Vehicle-hours
Bus
1,665,120
  
1,856,166
11.5%
Adjusted - 40’ Equivalents
  
1,581,864
  
1,924,730
21.7%
 
LRT
105,536
  
286,115
171.1%
Adjusted - 40’ Equivalents
  
229,321
  
621,704
“
Adjusted - 40’ Equivalents
Total
1,811,185
  
2,546,434
40.6%
Annual Revenue Vehicle-miles
Bus
21,239,993
  
22,957,607
8.1%
Adjusted - 40’ Equivalents
  
20,177,933
  
23,805,625
18.0%
 
LRT
1,578,182
  
5,051,406
220.1%
Adjusted - 40’ Equivalents
  
3,429,258
  
10,976,284
“
Adjusted - 40’ Equivalents
Total
23,607,251
  
34,781,909
47.3%
Directional Route miles
(annual average)
Bus
1,384
  
1,454
  
LRT
30.2
  
64.9
  
Vehicles in p.m. Peak Service
(annual average)
Bus
515
  
568
  
LRT
25
  
58
  
Annual Operating Expense
per Revenue Vehicle-hour
Bus
$71.18
$77.59
$82.89
6.8%
LRT
$189.71
$206.78
$139.93
-32.3%
Annual Operating Expense
per Revenue Vehicle-mile
Bus
$5.58
$6.08
$6.70
10.2%
LRT
$12.68
$13.82
$7.93
-42.6%
Note: Adjustment to 40-foot equivalents based on weighted average of gross vehicle length. See Appendix 1 for metric equivalents.
 
 
 
2)  Ridership and Expenses - Trends
 
 
 
3)  Service Levels and Unit Operating Costs - Trends
Annual Revenue Vehicle-miles per Directional Route-mile (rounded to nearest thousand)
 
1997
2001
Change
Absolute
Percentage
Bus
15,000
16,000
+1,000
+3
LRT
52,000
78,000
+26,000
+50
(Note: Conversion to metric units does not change the value of the statistics above.)
 
Annual Revenue Vehicle-miles (km) per p.m. Peak Vehicle (rounded to nearest thousand)
 
1997
2001
Change
Absolute
Percentage
Bus
41,000
(66,000)
40,000
(65,000)
-1,000
-2
LRT
63,000
(102,000)
87,000
(140,000)
+24,000
+38
 
Annual Operating Expense per Revenue Vehicle Hour, 2001$s (rounded to nearest dollar)
 
1997
2001
Change
Absolute
Percentage
Bus
$78
$83
+$5
+7
LRT
$207
$140
-$67
-32
 
Annual Operating Expense per Revenue Vehicle Mile (km), 2001$s
(rounded to nearest dollar)
 
1997
2001
Change
Absolute
Percentage
Bus
$6
($4)
$7
($4)
+$1
+10
LRT
$14
($9)
$8
($5)
-$6
-43
Annual Operating Expense per Directional Route-mile (km), 2001$s
(rounded to nearest $100,000)
 
1997
2001
Change
   
Absolute
Percentage
Bus
$93,000
($58,000)
$106,000
($66,000)
+$12,000
+13
LRT
$723,000
($448,000)
$617,000
($383,000)
-$106,000
-15
 
 
 
4)  Summary
During the four-year interval between FY1997 and FY2001, Tri-Met increased LRT service intensity (annual vehicle-miles per directional route-mile) by 50 percent, and increased vehicle utilization (annual revenue vehicle-miles per annual peak vehicle) by 38 percent. Inflation-adjusted unit operating costs fell: per vehicle revenue-hour by 32 percent, per vehicle revenue-mile by 43 percent, and per directional route mile by 15 percent. These changes came about as the result of "spreading" of fixed costs over a larger number of revenue service hours. The data provide strong evidence for economy of scale for rail transit operation.
No such economy of scale is apparent for Portland bus operations. During the four-year interval between FY 1997 and FY 2001, Tri-Met increased bus service by about 11 percent (revenue vehicle-hours). Bus fleet utilization (annual revenue vehicle-miles per annual peak vehicle) decreased slightly (-2 percent). Inflation-adjusted unit operating cost increased at an annual rate about two percent greater than the economy-wide rate of consumer price escalation from 1997 to 2001.
The service-intensity statistic was included for consistency between modes, but provides relatively little information, for directional route mileage has little influence on bus operating costs ("infrastructure" costs, e.g. roadway operation, maintenance and repair expenses, are seldom charged to transit operators). Tri-Met bus network service intensity (annual vehicle-miles per directional route-mile) was increased slightly (by 2 percent). Directional route miles were increased by 5 percent during this period.
The statistic giving annual operating expense per directional route-mile was also included for consistency between modes. As explained above, it provides relatively little information. The increase in annual operating expense per directional route mile reflects the increased cost of vehicle operation.
Despite network expansion, a large increase in LRT service levels per unit of route length resulted in a large reduction in LRT unit operating cost. A modest increase in bus service produced no reduction in unit operating cost.
 
Appendix 1)  Data and Statistics, Metric Units:
 
1997
(2001$s)
2001
Change
Annual Passenger-km
Bus
369,933,100
  
348,475,305
-5.8%
LRT
88,270,500
  
232,296137
139.4%
Total
458,203,500
  
580,771,442
26.7%
Annual Operating Expense
per Passenger-km
Bus
$0.32
$0.35
$0.44
26.8%
LRT
$0.23
$0.25
$0.17
-30.0%
Total
$0.30
$0.33
$0.33
1.9%
Annual Revenue Vehicle-km
Bus
34,258,053
  
37,028,398
8.1%
Adjusted - 40’ (12.19m) Equivalents
  
32,545,053
  
38,396,169
18.0%
 
LRT
2,545,455
  
8,147,429
220.1%
Adjusted - 40’ (12.19m) Equivalents
  
5,531,061
  
17,703,684
“
Adjusted - 40’ (12.19m) Equivalents
Total
38,076,211
  
56,099,853
47.3%
Directional Route km
(annual average)
Bus
2,232
  
2,345
  
LRT
48.7
  
104.7
  
Annual Operating Expense
per Revenue Vehicle-km
Bus
$3.46
$3.77
$6.70
10.2%
LRT
$7.86
$8.57
$7.93
-42.6%
Notes: Totals may vary from sum of data entries because of rounding. Adjustment to 40-foot (12.19-meter) equivalents based on weighted average of gross vehicle length.