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2. Intercity Passenger Transportation
The major competing commercial modes of intercity passenger transportation are commercial air carriers. Amtrak, and the private intercity bus, including regularly scheduled and chartered services. In addition, public sector transit authorities provide regularly scheduled intercity transportation service in some rural areas that is competitive with private intercity bus service. The markets served by the major competitors varies considerably (Figure 1).
The private intercity bus covers far more of the United States than any of its competing modes. Some 5,000 points are served by the bus. In contrast, regularly scheduled commercial air carriers and Amtrak each serves approximately 500 cities, many of which are served by both.
Bus passengers are likely to live in rural or small communities. In contrast, most air and train
passengers are from metropolitan areas with 1 million or more people.
The majority of bus passengers are from lower income families. Although most air and train passengers are from families with relatively higher incomes, Amtrak passengers include a significant share of lower income families. In 1991, 37 percent of Amtrak passengers had annual household incomes less than $25.000.' These passengers are a key segment of the bus industry's market. The industry's ability to compete with Amtrak for their travel demand is critical to the survivability of the intercity bus.
Bus passengers are likely to be young (under 18) or elderly (over 64). In contrast, the vast majority of air passengers are between the ages of 25 and 64. The age distribution of train passengers shows little variation.
Of all modes of intercity passenger transportation, the bus is the most fuel efficient and environmentally sound. Buses consume only one-half of the Btus consumed by the train and onefourth of the Btus consumed by automobiles and air carriers per passenger mile. For the five major air pollutants-sulfur oxide, nitrogen oxide, volatile organic compounds, carbon monoxide, and particulate matter-the bus ranks first in fewest emissions per passenger trip, and second to commercial air carriers on a per passenger mile basis.
From Simmons Market Research Survey, 1991.
See "Federal Subsidies for Passenger Transportation. 1960-1988: Winners, Losers, and Implications for the Future." Robert R. Nathan Associates, Inc.. May 1989, Washington, D.C.. pp. 20. 23-24.
3. Federal Subsidies
Federal subsidies presented in this report are measured net of user fees. They indicate the extent to which outlays allocated according to the cost responsibility of each mode are not covered by collections from user fees.
We developed subsidy estimates in four steps. First, we aggregated outlays from federal funds and trust funds across federal agencies for each major transportation system—air, highway, intercity rail, and mass transit. Second, for air and highway systems, we allocated total outlays to specific modes according to the cost responsibility of each. The U.S. Department of Transportation (DOT) periodically determines cost responsibility based on amount of use as well as wear and tear generated by use. For example, heavy trucks exact more wear and tear on the interstate highway system and. hence, bear a greater cost responsibility than do automobiles. In the third step, we allocated Airport and Airway Trust Fund and Highway Trust Fund receipts, which are primarily generated by the air passenger ticket tax and motor fuel taxes, by mode according to contribution shares determined by DOT. In the final step, we measured subsidies by subtracting allocated trust fund receipts from allocated outlays.
Since 1960, all systems of passenger transportation have received federal subsidies. Disparities among modes, however, have been significant. And since 1988, the disparities have become more pronounced.
Measured in constant 1993 dollars, total federal subsidies net of user fees to the air transportation system, Amtrak, and mass transit have each exceeded the subsidy to the intercity bus industry by a factor of more than 39. The bus industry's most direct commercial competitors—Amtrak and the commercial airlines have received subsidies totaling $76.9 billion since 1960. In contrast, the bus received only $0.6 billion (Figure 2).
On a per passenger trip basis, the disparity is even greater (Figure 3). Since 1960, bus passengers received a subsidy of 5 cents per trip. Amtrak passengers received a subsidy of $54.88 per trip. The intercity bus transportation industry and those who rely on its service have been disadvantaged by this discriminatory allocation of federal funds. Industry performance has suffered and the ability of the industry to continue serving the thousands of communities that depend on the bus is continuing to weaken. Between 1982 and 1993. 7.130 locations lost all intercity bus service (Figure 4).
Figure 2. Total Federal Subsidies, Net of User Fees, to Passenger Transportation Systems and Modes, 1960-1993
(Billions of dollars)