The Bus Stops Here : Private Firms Are Making Inroads Against the RTD

The Southern California Rapid Transit District--second-biggest public transit bus system in the country--is losing business to private companies operating shiny new buses with logos like “Commuter Express” and “Foothill Transit.”

From the San Fernando Valley to the South Bay, these firms carry passengers on two dozen routes once served by the RTD, and officials say that number may double as private companies compete for a bigger chunk of the Southern California mass transit market.

The privately run buses carry 5,000 passengers a day--a tiny number compared to the 1.3 million passengers who daily ride the RTD’s 2,700 buses.

But, if the trend continues, transit experts say private companies operating under contract to public agencies will take over a quarter of the RTD’s 200 routes within the next few years.

The private companies primarily have targeted long-distance lines linking residential areas and downtown. Such lines carry fewer passengers than the RTD routes in the urban core areas, but private companies have found them profitable.

When these commuter lines have been turned over to private operators here, and in other cities, the cost to public agencies has been cut in half and ridership has improved, transit experts report. The savings, they say, can be used to improve public mass transit.

Los Angeles was the first to jump into bus transit, hiring three private companies to run 11 routes that the RTD was giving up because they were too costly to operate.

In the three years since, the private companies have cut operating costs by about 40% and increased ridership by 80%, city officials say. The basic fare on these privately run lines is 85 cents, compared to $1.10 for the RTD.

In the San Gabriel Valley, 20 cities that were unhappy with RTD fare increases and service cutbacks formed the Foothill Transit Zone two years ago. The zone now operates seven commuter lines and plans to take over a dozen more RTD routes.

At the bus stop, the switch to private buses has been popular both in Los Angeles and the San Gabriel Valley, according to interviews with a score of riders who praised the efficiency and cleanliness of the buses. “Foothill is the best,” said Marylou Maciel, a downtown officer worker who commutes daily by bus from West Covina. “Everything is better, the seating, the buses are cleaner, less crowded. . . . The RTD has lots of breakdowns, which make me late for work.”

The return of private carriers to Los Angeles has a certain irony, officials say. The RTD was created 30 years ago to take over a gaggle of failing private transit companies and establish a workable regional transit system.

No one is suggesting that the RTD give up the high-ridership local routes through low-income downtown neighborhoods.

But the Los Angeles County Transportation Commission and the federal government are pushing the switch to privately run buses on heavily subsidized suburban commuter lines.

Although RTD officials acknowledge that maintaining services to some suburban areas has been difficult, they have been an unwilling partner in the shift to privatization.

“Dollar for dollar, the RTD provides more transit service to more people than any other transit operation in Los Angeles County,” RTD General Manager Alan Pegg said.

He argued that the new private lines serve only affluent suburbs, leaving the RTD to serve high-density, low-income neighborhoods. This, he said, creates a “two-class bus system that is contrary to every public transportation policy adopted in the country.”

The district’s aging, hard-used buses operate along 4,236 route-miles that reach into five counties. Tight finances have plagued the district as costs have gone up and federal subsidies have shrunk. Breakdowns, cuts in service, low driver morale and high absenteeism all have eroded public confidence in the big public transit agency.

The story is similar in other cities. Chicago and New York have tried to cut costs by contracting out some transit service. San Diego and Denver each contract out one-fifth of their bus service.

In Los Angeles, the switch to private carriers has been pushed by conservative Supervisor Pete Schabarum and liberal Mayor Tom Bradley, with a strong shove from the federal government.

“Privatization is a concept we have pushed. . . . The private sector provides the service and the cost is less,” Transportation Secretary Samuel Skinner said in a recent interview.

Skinner wants to eliminate federal transit subsidies to local transit agencies. To encourage privatization, the federal government has threatened to withhold these subsidies unless agencies put some routes out to bid.

Supporters say privatization will cut costs by introducing competition into the transit marketplace controlled by public monopolies such as the RTD. Critics say the effort is only a thinly veiled plan to cut federal transit budgets.

“Obviously (Skinner’s comments) fit the ideological tenor in Washington,” said Columbia University economist Elliott Sclar, a Skinner critic. “Their big appeal is to hold out the promise of cost saving, but what it means is Washington spends less, the state and local economies spend more.”

Sclar contends that the promoters of privatization are manipulating the figures to hide the full public cost. The public agency buys the buses, schedules the routes and carries the overhead costs when it contracts with a private company to operate the vehicles, he said.

RTD officials disagree with those who contend that buses can be run at lower cost by private companies. They point out that when the Foothill Zone or Los Angeles contracts for bus service, the RTD still pays part of the cost for providing bus service.

“We’re not on a level playing field here,” RTD Comptroller Tom Rubin said. “We’re stuck with a lot of costs. . . . We maintain the bus stops, print all of the transfers, then have to turn the service over to the private sector. . . . They ride piggyback on us.”

RTD critics, however, say the district has become too big and top-heavy and that it has allowed bus operation costs to soar out of control. Introducing private competition is a way of forcing costs down, county Transportation Commission officials say.

“The idea is to let the RTD operate the heavily used lines that it does well, along Wilshire (Boulevard) and in the downtown area,” said Sharon Neeley, commission transit expert. “Then, out in the suburbs, where the RTD doesn’t have the ridership . . . we should let private companies come in and bid for those routes.”

However, privatization has not come to Los Angeles without complications.

The RTD contract with unionized drivers and mechanics prevents private takeovers that eliminate union jobs. This puts the district in a bind because federal regulations require the RTD to put some lines up for bid or face possible loss of $55 million a year in federal subsidies, officials said.

The county commission suggested that the district could step around the conflict by dropping service along some high-cost commuter routes. Such routes then would be picked up by the city or the newly created Foothill Transit Zone.

Outraged union officials call the tactic “union busting,” pointing out that private companies pay their employees far less than the RTD.

RTD drivers earn up to $15.60 an hour, plus $7 an hour in fringe benefits, records show. The average RTD driver earns $31,000 annually; a few make up to $67,000 with overtime. Drivers for private lines earn a maximum of $9 an hour, with some qualifying for fringe benefits worth another $3 an hour. However, many of these drivers are $7-an-hour part-timers without benefits, company officials report.

“It’s not a question of RTD paying drivers too much,” said Earl Clark, head of the United Transportation Union locals that represent 5,000 RTD drivers. “The real issue is that the private drivers are paid too little.”

Clark alleged that the commission pressured the RTD into giving up these routes by threatening to withhold federal funds.

For several months in 1986 the commission did hold up $9 million a month in the RTD’s federal funds. It also encouraged the San Gabriel cities to form the transit zone and helped Los Angeles get a $9.5-million federal grant to buy buses and take over 11 of the San Fernando Valley and South Bay routes that the RTD was giving up.

The city contract went to Laidlaw Inc., a Canadian firm that operates the routes under the name Commuter Express. City officials report that the RTD’s average operational cost per bus on these 11 lines was nearly twice as high as Laidlaw’s $94 an hour.

“We can operate more efficiently because we don’t pay our drivers as much as RTD . . . and because we run leaner,” said Len Engle, manager of Laidlaw’s Commuter Express operations. “We don’t have planners or a marketing staff, there’s no telephone information service,” he said, listing some expenses borne by RTD.

When the RTD agreed to give up lines in the San Gabriel Valley, the RTD unions went to court, contending that the Foothill Transit Zone was formed illegally. The union lost the first round in court, then appealed. An appellate court blocked the start-up of any more lines pending outcome of the case.

Officials from cities in two other areas--the San Fernando Valley and Southeast Los Angeles--are discussing formation of new transit zones that would use privately operated buses. If formed, the zones would take over another 20 or 30 RTD lines, Transportation Commission officials estimate.

In addition, Los Angeles is now calling for bids on four former RTD commuter lines.

Private Bus Lines Throughout Los Angeles County, cities large and small are forming competing transit zones and hiring private bus companies to take over some RTD lines. Maps shows a general outline of the boundaries of one current transit zone and two proposed transit zones that may change over to private lines feeding the downtown area as well as local areas.

1.) A San Fernando Valley Transit Zone has been proposed but no general boundaries have yet been developed.

2.) The Foothill Transit Zone serves residents of San Gabriel Valley areas.

3.) The proposed Mid-Cities Transit Zone would serve cities in Southeast Los Angeles.

BUS SERVICE: PUBLIC VS. PRIVATE LINES Labor is the key ingredient in the cost of transit bus services. Private firms operating under contract to public districts are providing service for less, in large part because of reduced labor costs, experts say. This chart shows labor costs per hour and total operating costs per hour of privately and publicly operated buses.

LABOR COSTS: OPERATIONAL AGENCY WAGES AND FRINGES COSTS PER HR. Starting pay Top pay RTD (public/unionized) Long Beach $12.16 $18.71 $45 (public/unionized) Foothill Zone $10.72 $13.37 $47 (private) L.A. City & $10.15 $12.60 $32 County (private)