The goal of the Forward Funding Financial Plan designed to fix the MBTA in 2000 was “to transform the MBTA from an agency that bills the State for its operating deficits to a system that sustains itself from an identified revenue stream.” It was a mandate for “greater cost efficiency and revenue enhancement.”
What was vastly underestimated is the level of management effort required to achieve an organizational transformation of this scale. So far there is little evidence of efficiency or cost reduction at the MBTA. The T is forecasting deficits as far as budgets look out. And the T is not considered a worthy steward of additional revenues from any source.
But look around. The goals of transformation as contemplated by Forward Funding have been achieved in transportation systems elsewhere.
London Underground is nearly self-sufficient. It anticipates being fully financially self-sufficient within two years. This goal has been accomplished principally by a visible management effort of organizational change.
What day-to-day management looks like at LU is that at 8:30 every day their general manager and the entire senior staff, including the managers of each line, have a conference call in which every service fault of the previous day is reviewed, minute-by-minute, and corrective actions put in place. Meanwhile, there are plans in place for virtually every eventuality. When there is a service interruption, there is plan in place to redeploy staff, including senior executives, to address it. This is the reason that the Underground was able to fully restore full service within 30 days after the terrorist bombings of July 7, 2005. There was already a plan in place for that, too.
As to cost efficiency, London Underground is continuously changing the way it does business. It has long since outsourced operation of its bus service to private vendors, along the model of MBTA Commuter Rail and improved customer service in those operations. It has embraced technology and reduced its cost of fare collection from 14 percent to 9 percent of total revenue by use of its pay-as-you go “Oyster” smart card which is interchangeable for both bus and rapid transit service. It will further reduce its cost of fare collection by an additional $90 million when it finalizes its plan to close all ticket windows this year. London Underground has announced its future plan to introduce driverless trains to the system.
As to revenue enhancement, London Underground collects approximately 60 percent of the total cost of its services from fares and fares are raised as required to meet unavoidable increased expenses. This compares to approximately one third of the total cost of MBTA service being covered by fares. London Underground also maximizes its secondary revenue sources, principally advertising and real estate. Transport for London is the largest advertising estate in the United Kingdom.
At the same time, London Underground has been engaged in an aggressive capital program to build new assets and to upgrade its existing one. It will take such a capital program in Boston to improve the system to an overall “state of good repair” and keep it there.
Because of visible day-to-day management, effective intervention when there are service interruptions, and successful management strategies to decrease cost and improve service, London Underground is trusted to manage its revenues. As fares have increased, London Underground has continued to increase ridership, because it provides good service and its prices continue to compare favorably to other modes of transportation.
As the snow subsides here in Boston, we are left with the unfinished task of transforming the T.
Rather than trying to solve that problem solely by funding deficits, we should demand transformation of the MBTA with management committed to the goal of self-sufficiency by decreasing costs and enhancing and managing revenue. It is worthy of note that a principal architect of success in London was Robert Kiley, a former general manager of the MBTA.
Just as Boston was first North American city to build a subway in 1897, we can be the first to achieve a 21st-century transformation of our transit system into a sustainable and financially self-sufficient organization.
We should strive for nothing less. Our economic future depends on it.
Peter Zuk was director of the Central Artery/Tunnel project from 1991 to 1999 and was a senior executive and member of the Board of Directors of the London Underground from 2004 to 2008.