Cliff Slaterís Second Opinion

The Honolulu Advertiser

Wednesday, September 2, 1999



Itís time to rethink TheBus

A $100 million subsidy argues for privatization


Having just returned from London, I can reassure everyone that the bright red double-decker buses are still running and, in fact, both service and ridership have increased significantly. (1) Even better, in 1998 for the first time in decades, both operating and capital costs were covered by fares. (2)

Alert readers of this column will already have guessedóLondon Transport has been privatized. Before privatization, opponents had rationalized why only government could run an efficient public service, why safety would decline and how the private sector would rip off the consumer. But they were wrong.

These people ignored the fact that if we can trust the private sector for open-heart surgery, why not for a bus ride? We can trust the private sector to run our airlines, why not our buses?

In Atlantic City, privately operated 14-passenger buses ply the streets 24 hours a day with a $1.50 fare and a 40-second wait between buses during busy times. And they are profitable. (3)

Buenos Aires, Argentina has 15,000 buses providing excellent citywide service and it is privately operated and profitable. (4)

Meanwhile, we in Honolulu are spending $100 million annually to subsidize the operating and capital costs of our bus system. (5)

Have our City Council members been to Buenos Aires to see how we could have better public transportation at no cost to taxpayers? Or to Atlantic City? Or to London? Or have they even reviewed the events leading up to the socialization of public transportation in Honolulu to find out how we got in this $100 million mess? Of course not.

So, let me review it for you.

Before the City takeover of public transportation in 1971, Honolulu Rapid Transit Ltd., or HRT, had always made a profit, albeit a small one. (6) They had also fought off the jitney buses in the 1930ís.

The jitney buses of the Rosecrans Company were real buses, GM Metros, with neatly uniformed drivers.(7) Carrying only seven passengers, they were able to offer faster service and thus made serious inroads into HRTís streetcar and bus business.

In 1940 HRT was able to get the courts to order the jitney buses off the streetódespite public protest. The court ruled that HRT was entitled to a monopoly on public transportation; safety was not an issue. (8)

After World War II bus ridership steadily declined as a result of growing automobile ownership. By 1971, unable to get City permission to raise fares, HRT was "caught in the vise of restricted [income] and spiraling costs." Wage and benefit increases had been more than double that of fares, and so, unable to afford new equipment, HRTís service declined.(9) To the end, as a private entity, it was still making a small profit.

In 1971, the City took over service and from that moment on began generating huge losses. It was understandable; let any ten voters get together with a demand for better service and the City Council would approve empty buses up Pacific Heights, buses across the mountains and buses around Oahu. Fiscal discipline disappeared. City policy has continued in the same vein by expanding service regardless of cost.

At a time when the City is scratching for the last dollar, you would think that Council members would start taking a hard look at the $100 million that TheBus costs each year.

Cliff Slater is a Honolulu businessman who represents the Reason Foundation in Hawaii. His footnoted columns are at


(1) Cox, Wendell. Urban Transit Fact Book. London: Transport Bus & Underground Costs per Passenger from 1985. Available at:$pass.htm

(2) Cox, Wendell. Urban Transit Fact Book. London Transport Buses 1998 Results: Cost Reductions Continue; No Operating or Capital Subsidies. Available at:

(3) Jitneys of Atlantic City. Motor Coach Today. April-June 1997. Vol. 4, No. 2. pp. 3-10.

Revisions. Motor Coach Today. January-March 1999. Vol. 6, No. 1. p. 18.

The Atlantic City Jitney Association website is at

(4) Hibbs, John. Urban Bus Transport in Buenos Aires: The Colectivos. Transportation Research Record 914. Transportation Research Board. 1983. pp. 57-60.

5th International Conference on Competition and Ownership in Public Transportation. Workshop 3 Report on Franchising and Tendering held 1 August 1997. Wendell Cox (Chairman), Wendell Cox Consultancy, St. Louis. Didier van de Velde (Rapporteur) Erasmus University, Rotterdam.

"Frederick Salvucci (former Massachusetts Secretary of Transportation) made some observations on the Buenos Aires experience with increased private sector roles in the production of commuter rail, transit and bus services. After describing the extensive changes that took place in the organisation of public transport services in the Buenos Aires area (concessioning of commuter railways, replacement of public monopoly in bus services by hundreds of regulated non-subsidised private companies), the author gave results showing dramatically improved performance and increase patronage."

(5) Federal Transit Administration National Transit Database for Agencies Exceeding 200,000 Population in 1997. p. 86. City & County of Honolulu Department of Transportation Services.

(6) Honolulu Rapid Transit Limited. Annual Reports 1901-1971.

(7) Honolulu Star-Bulletin. New Rosecrans Busses Go Into Service Friday. July 11, 1935. p.6. & accompanying advertisement. p. 7.

(8) Honolulu Star Bulletin. "Jitneys ruled off streets." May 7, 1940.

Honolulu Star Bulletin. "Rosecrans Patrons Defend Bus Service." May 7, 1940.

"Last night's public hearing packed the court room to the doors...dominated by (jitney) bus patrons who rushed to the defense of the (jitney) company praising that service, the courtesy of the drivers and insisting upon (its) right to do business as a rival to the long established (streetcars).

Those who spoke included Charles Maeschke, a civilian employee at Pearl Harbor, Ernest L. Graves of the Mutual Telephone Company; Joseph Capsan, an electrician; Peter Church, Dr. James Kondo, Mrs Elizabeth N. Mann, A.H. Wong, Charles Borad, Salvador Vidal and Merlin McGrew, a teacher at McKinley high school. The foregoing stated that Rosecrans service was needed not only for competition, but because of late running and better service on routes the HRT did not parallel."

(9) 1969 Annual Report. Honolulu Rapid Transit, Ltd.