How Much Does a Bus Cost to Purchase and Operate?

Hybrid bus near Chicago Water Tower, USA
(Mark Williamson/Oxford Scientific/Getty Images)

​One of the sensible questions anyone should ask about their local public transit agency is how much does it cost to purchase and operate the buses? The short answer: a lot. (Note: rail transit is a different story.)   This article was originally published in October 2011; as a general guide for how much costs referenced here would be today multiply the numbers listed by the rate of inflation since October 2011.

Capital Costs

Bus purchases make up the vast majority of all capital costs for the average transit agency (recall the difference between capital and operating costs).

The cost to buy a bus depends on a variety of features, including size, manufacturer, and number of vehicles purchased, but the most important factor is what kind of propulsion system the bus uses.

Diesel buses are the most common type of bus in the United States, and they cost around $300,000 per vehicle, although a recent purchase by the Chicago Transit Authority found them paying almost $600,000 per diesel bus. Buses powered by natural gas are becoming more popular, and they cost about $30,000 more per bus than diesels do. Los Angeles Metro recently spent $400,000 per standard size bus and $670,000 per 45-foot bus that run on natural gas.

Hybrid buses, which combine a gasoline or diesel engine with an electric motor much like a Toyota Prius, are much more expensive than either natural gas or diesel buses.

Typically, they cost around $500,000 per bus with Greensboro, NC's transit system spending $714,000 per vehicle.  All of these prices will, of course, increase with each passing year.

Electric buses are on the horizon but problems still persist with batteries being unable to provide a satisfactory range.

Currently, although electric buses are in operation in some niche environments such as airports; they are very rare in classic public transit settings.

Typically, transit agencies pay for the full cost of each bus up front—unlike what many people do when they buy a car, they do not usually borrow money for the purchase. The federal government pays much of the costs of bus purchases, with the rest coming from states, local government agencies, and the transit system itself. Therefore, since there is rarely any debt service, the purchase cost of a bus per year is equal to the purchase price divided by the useful life of the bus, which is usually 12 years.

Operating Costs

In addition to paying for the bus, transit agencies have to pay to operate the bus. Usually we talk about the operating cost per revenue hour—how much does it cost to drive a bus in service for one hour? Some examples of operating costs include New York City ($172.48 for bus and $171.48 for subway); Los Angeles ($124.45 for bus, $330.62 for the Red Line subway, and $389.99 for the light rail lines); Honolulu ($118.01); Phoenix ($92.21); and Houston ($115.01 for bus and $211.29 for light rail).

Of the above costs, a majority is the cost of employee wages and benefits—about 70%.

In addition to drivers, transit agencies employ mechanics, supervisors, schedulers, human resource staff, and other administrative employees. Some transit systems attempt to save money by contracting out to private operators. Of the above examples, New York City, Los Angeles, and Houston operate service directly while Honolulu and Phoenix contract out all of their service to a private company.

Lest you think that transit costs less to operate in smaller cities, it still costs $108.11 in Lansing, MI but only $69.27 in Bakersfield, CA and around $44 for Beach Cities Transit, which operates three routes in an around the Los Angeles suburb of Redondo Beach.  Again, all of these costs can be expected to keep rising at a rate at least equal to inflation every year.

When you consider how expensive it is to operate both buses and rail systems, the cost to carry each passenger when the vehicles are empty can be quite high.

For example, if in the course of one hour a bus only carries 6 people, it could easily cost the transit agency $20 to carry each passenger. On the other hand, a full bus that carries 60 people per hour only costs the transit agency $2 per passenger, which is likely not much more than the fare the passenger is paying.


Purchasing and operating city buses is very expensive, and while we should be concerned about keeping fares low and service coverage wide in order to provide a basic safety net for the transit dependent, we should also set standards to ensure a reasonable amount of the total cost of providing the service is paid for by the passengers and that each route carries a reasonable amount of passengers per hour. Transit agencies with higher farebox recovery ratios and more productive routes tend to have more stable funding streams (because they are less vulnerable to changes in tax revenue) and are more likely to gain voter support for tax measures that increase their funding (because they are viewed as more efficient).