How Much Does a Bus Cost to Purchase and Operate?

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

​Public transit can be a huge cost-saver for commuters, but that doesn't mean it is cheap. Bus systems have significant capital and operating costs that must be taken into consideration when designing public transit systems.

Capital Costs

For the average local transit agency, bus purchases make up the bulk of all capital costs—the fixed expenses required to get a project off the ground. The cost of each vehicle depends on a variety of features, including size and manufacturer, but the most important factor is typically 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 $550,000 per vehicle (according to a 2016 study). Buses powered by natural gas are becoming more popular, and they cost slightly more than diesel-powered vehicles. 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. In 2011, the transit system of Greensboro, North Carolina, spent $714,000 on each of its hybrid vehicles. Electric buses are the most expensive on the market, costing around $800,000 per vehicle. Because of their low maintenance and fuel costs, however, they are becoming more common in cities around the country.

Transit agencies usually pay for the full cost of each bus up front, rather than borrowing money as people often do when they buy a car. The federal government pays much of the costs for bus purchases, with the rest of the funds coming from states, local government agencies, and local transit systems. 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 typically 12 years.

Operating Costs

In addition to paying for the bus, transit agencies also 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? Operating costs vary by city; some are relatively high ($215 per hour in New York City and $195 per hour in San Francisco), while others are fairly low ($110 per hour in Dallas and $90 per hour in San Diego).

Of these costs, a majority is made up of employee wages and benefits—about 70 percent. In addition to drivers, transit agencies employ mechanics, supervisors, schedulers, human resource staff, and other administrative employees. Some transit systems—including Honolulu and Phoenix—attempt to save money by contracting out to private operators. Meanwhile, New York City, Los Angeles, Houston, and many other cities operate service directly.

When you consider how expensive it is to operate buses, the cost to carry each passenger can be quite high when the vehicles are fairly empty. For example, if in the course of one hour a bus only carries six people, it could easily cost the transit agency up to $20 to carry each passenger. On the other hand, a full bus that carries 60 people per hour could cost the agency as little as two dollars per passenger, an amount that is comparable to a typical bus fare.

Fuel costs are also an important part of a transit system's operating costs. The price of diesel and electricity fluctuate over time; using historical averages, however, scientists have determined that electric vehicles are cheaper to operate over their lifetimes compared to diesel vehicles. Electric buses also require less maintenance, since they never need oil changes or filter replacements. Taking all of this into consideration, a 2016 Columbia University study placed the lifetime cost of an electric bus at $1.18 million and the lifetime cost of a dielsel bus at $1.35 million.