According to the wikipedia article for the MTA here in LA, the $1.75 ride fare only covers about 10% of the operating expenses of the system. This means that the actual cost of the system is actually $17.50 per ride and this is what the residents of LA are actually paying.

I’m convinced that a private system could do a lot better then $17.50 per ride. For instance, at perhaps a little over $17.50 I could call an airport shuttle and it would pick me up in front of my house at a time of my choosing, load my bags, drop me off exactly where I’m going and they take credit cards, and I wouldn’t have to pay exact change. I’ve shared a cab to the airport and it cost around $17.50.

Also, I have done a lot of traveling in Japan, and I have to say their public transport system (privatized in the 80′s) it’s a great experience. The wikipedia article on JR east, the largest carrier shows that they are a profitable company, and a bus ride costs roughly 1-5 USD depending on how far you are traveling. oh, and no exact change needed.

The japanese trains are unbelievable, and I’d guess that a majority of Tokyoites don’t own a car. Not to mention that you can get to almost every major city in japan on a train, usually a bullet train and it’s much more convenient and less expensive than air travel.

In Santiago, private buses refused to service poor areas effectively and demanded subsidies for routes that did not meet a certain profit margins. This was crippling the entire metro-area. In the end, it was cheaper and more effective for the city to step in and take control.

To understand why, you have to realize that intra-city public transit is a “Public Good”. That is to say, it works best if it strives to remain as non-rivalrous and non-excludable as possible.

The city’s take over of public transit was a popular move. However, the system is still struggling with the switch-over.