Bus Service RFI Routes Overview on Process

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1 Bus Service RFI Routes Overview on Process 8/14/2015 1

2 Goals of the exercise Expand service by leveraging third parties to provide service on low ridership routes and redeploying buses and operators to higher ridership routes Use contracting flexibility to test public / private partnership on selected routes Analyze marginal operating costs for each of the selected routes and net financial impact to the system when those routes are operated by third parties Generate savings by avoiding marginal costs on low ridership routes and reducing overall bus system-wide cost per trip 2

3 What are the characteristics of the selected routes? Total Ridership: The selected routes cover less than 2.5% of total MBTA bus weekly rides Moderate Ridership Routes: Express Bus Routes : Late Night Service: Total Routes Selected: 1.42% of total weekly rides 0.94% of total weekly rides 0.06% of total weekly rides Less than 2.5% of weekly rides Average Riders per Trip: Selected routes have ridership well below the system average Average Riders per Trip (weekday) MBTA Systemwide Express Routes Source: MBTA Internal Data Service Planning Team Moderate Use Routes Late Night Service 3

4 Costs included in the bus service marginal operating cost model Bus Operations Labor Bus operators Inspectors / Bus Supervisors Garage Superintendent Dispatchers Bus Instructors Maintenance Labor Car Cleaners / Automotive Forepersons Auto Maintenance Forepersons Fuelers / Machinists Maintenance Supervisors Other Vehicle Depreciation / Mid-Life Overhaul costs Materials/Services Uniforms /Vehicles Cleaning Diesel fuel Not included: Facility depreciation Administration/Management Source: MBTA Internal Data Service Planning Team Marginal Operating Cost Model (No Fixed Costs Included in the Model) 4

5 Annual revenue and marginal cost for selected bus routes Annual Revenue / Marginal Cost $5.0M $4.5M Total Cost: $16.7M Total Rev: $6.4M 0.0 $1.9M Annual Revenue $0.1M -5.0 Annual Marginal Cost -$1.7M -$6.0M $8.9M Moderate Ridership Routes Express Routes Late Night Bus Service Average Fare Fare Recovery % $0.93 $3.56 $ % 75% 4% Source: MBTA Internal Data Service Planning Team Marginal Operating Cost Model (No Fixed Costs Included in the Model) 5

6 Total annual net subsidy (marginal operating loss) for selected routes Annual Subsidy $0.0M $7.0M -$1.6M $1.7M -$10.3M Moderate Use Routes Express Routes Late Night Bus Service Total Source: MBTA Internal Data Service Planning Team Marginal Operating Cost Model (No Fixed Costs Included in the Model) 6

7 Net marginal cost per trip varies widely across the three categories Net Marginal Cost per Trip $ $ $3.51 Net Marginal Cost per Trip Moderate Ridership Routes $1.19 Express Routes Late Night Bus Service Source: MBTA Internal Data Service Planning Team Net Marginal Cost per Trip is the Calculated by Netting Marginal Cost against Revenue divided by total trips 7

8 Cost per trip for selected bus routes is 3x the system-wide average Net Marginal Cost per Trip $ $ Net Marginal Cost per Trip $ Selected Routes Average MBTA Systemwide Average Source: MBTA Internal Data Service Planning Team Net Marginal Cost per Trip is the Calculated by Netting Marginal Cost against Revenue divided by total trips 8

9 Partnership with third party operators should reduce system-wide cost per trip Illustrative to show full potential savings Marginal Cost per Trip $1.00 $0.98 -$ $0.93 Key chart assumption: Third party providers provision selected routes at no cost to the MBTA If third-party providers require a subsidy, this analysis will change RFI process is designed to test this assumption 0.00 Current systemwide average Savings from selected routes Future state average Any partnership with third party operators that reduces the annual subsidy below $10M will generate system-wide cost per trip cost savings Source: MBTA Internal Data Service Planning Team Marginal Operating Cost Model (No Fixed Costs Included in the Model) 9

10 Overview on the RFI process and strategy Structure of RFI RFI will gather information from potential partners on best-practice ideas for improving bus operations through provisioning of bus operations by third parties Respondents are encouraged to assume the current fare structure will be kept in place, but the MBTA welcomes submission of information on different approaches to fare-collection, pricing and/or gain share. If respondent proposes a different fare structure, it would need to undergo staff and FMCB review Timing / Process Goal will be publish the RFI within the next two weeks Management is planning a vendor conference here at MassDOT when respondents can ask questions and discuss ideas We also plan to interview one or more potential responders after RFI receipt and evaluation RFP process would occur after vendor conference, interviews and FMCB debrief Source: MBTA Internal Data 10

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