Mass-Transit Agencies Face Long Road to Regain Riders
(Bloomberg) -- U.S. mass-transit systems take millions of people every day to work, school and shopping. They are a lifeblood for areas like New York City where activity halts without subways and buses.
And now they’re in trouble as ridership has plunged because of the coronavirus pandemic, drying up vital farebox revenue. Other funding sources such as sales-tax receipts are expected to drop as economic activity slows.
Governors and mayors have urged citizens to limit outside activities to buying food and medicine. Business have required employees to work from home. Schools, cultural institutions and sporting venues have shuttered. The American Public Transportation Association is asking Congress and the White House to direct $16 billion in aid to public transportation systems across the country.
“This is the deepest hit, the most dramatic hit that the industry and many industries have experienced,” said Paul Skoutelas, president and chief executive officer of the APTA. “It’s not like turning on a light switch here. It’s going to take some time to get these systems back operating the way they have been and so they need to also provide for that extra period of time to get them up and running.”
Public transportation is a $71 billion industry employing 435,000 people, according to the APTA.
Now systems around the country are at risk of prolonged ridership declines, shrinking coffers and growing expenses as the virus requires constant sanitation and disinfecting of equipment, buses, train cars and stations.
New York’s Metropolitan Transportation Authority, the largest mass-transit provider in the U.S., faces a $4 billion shortfall and a potential credit rating downgrade from Moody’s Investors Service as the virus has decimated ridership.
It tapped $1 billion of commercial bank loans this week after ridership plunged 90% on the Metro-North Railroad and 67% on the Long Island Railroad. Subway usage dropped 60%.
“The ridership is down on the MTA and the revenue is down on the MTA, as is at every other public transit system in the United States of America,” New York Governor Andrew Cuomo said Thursday during a briefing with reporters. “So it’s going to have to be a national response.”
New Jersey Transit, the largest statewide provider of public transportation, is seeking $1.25 billion of federal aid to cover lost fare revenue. Ridership on its trains and buses is down 88% since March 9.
The Chicago Transit Authority’s system-wide usage fell 49% on March 16, with ridership on the rail lines down 61%. Metra, which connects Chicago to its suburbs, will run a reduced schedule on March 23 after ridership dropped to about 15% of normal. The Bay Area Rapid Transit, which serves the San Francisco area, began canceling trains after ridership fell 87%.
“What we’ll be looking at is how they are mitigating these impacts operationally and financially, whether it be use of reserves or adjusting the budget,” said Paul Dyson, an analyst at Standard & Poor’s
Public transit has withstood natural disasters, recessions and the Sept. 11 terrorist attacks. Since the systems provide an essential service to communities and businesses that tends to garner support from local and state governments.
“They generally have good to strong financial metrics,” Dyson said. “And the transit systems are generally located in very large metros that have very strong economic basis.”
And while the coronavirus has weakened ridership and reduced service in some areas, it shows the vitality of these systems. Subways, buses and commuter lines continue to transport health-care employees, police, fire and sanitation workers to their jobs to keep cities and towns safe and functioning.
“Public transit has a very special mission and it’s in the DNA of our public-transit organizations that they serve the public,” Skoutelas said. “And so they continue to operate around the country, in large cities and small, suburban rural.”
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