Passenger transportation and transit industry

Industry Snapshot

GENERAL INDUSTRY: Transportation, Distribution, and Logistics

CAREER CLUSTER: Transportation, Distribution, and Logistics

SUBCATEGORY INDUSTRIES: Ambulance Service; Charter Bus Industry; Commuter Rail Transportation; Employee Bus Transportation; Handicapped Passenger Transportation; Interurban and Rural Bus Transportation; Rail Transportation; Scenic and Sightseeing Transportation; School Bus Transportation; Taxi and Limousine Services; Urban Transit Systems; Van Pool Services; Water/Ferry Transportation

RELATED INDUSTRIES:Airline Industry; Automobiles and Personal Vehicles Industry; Freight Transport Industry; Mass Transportation Vehicles Industry; Shipbuilding, Submarines, and Naval Transport Industry

ANNUAL DOMESTIC REVENUES:Public transportation: US$81.8 billion (IBISWorld, 2024); Public school buses: $13.2 billion (IBISWorld, 2024); Railroad industry: $107.8 billion USD (IBISWorld, 2024); Water transportation services: $8.5 billion (IBISWorld, 2024)

ANNUAL GLOBAL REVENUES:Transportation sector: US$4.9 trillion (Plunkett Research, 2022)

NAICS NUMBERS: 482–483, 485

Summary

The passenger transportation and transit industry comprises a diverse range of transport methods, all with the common goal of moving people to their desired locations. Modes of transportation are available to cover long or short distances, over land or water. The routes may be structured and scheduled, moving hundreds of people at a time, such as urban transit, rail, or ferry services, or under the direction of a single person or small group, as in taxi, limousine, or ambulance services. Companies in this industry can range from a single, independent owner-operator of a car service to a multibillion-dollar corporation covering great distances with thousands of vehicles and employees. Municipal transportation systems are often highly efficient and economical options for travelers. Improvements in traffic patterns and planning in this industry are the focus of dedicated research departments within academic institutions and government agencies around the world.

History of the Industry

Since ancient times, people have needed to travel from place to place. Most early travel was done on foot or with the help of animals. People covered long distances on land, but ferries were created to assist with water crossings and were noted in early Greek mythology. In addition to providing safe water crossing, it was believed that ferries transported the souls of the deceased to their final resting place; the dead often were buried with a ferry coin under the tongue or covering each eyelid.

Early passenger transport involved the use of a cart pulled by an animal or person. The first taxi meter was used in ancient Roman cities. A reservoir of small balls was attached to the axle of a passenger cart. As the cart moved, the balls were released one by one, and the passenger paid a fare based on the number of balls that had fallen. The first structured transit line was organized in Paris in 1662 by physicist and mathematician Blaise Pascal, better known for his contributions to understanding barometric pressure. This multiseat carriage service operated for fifteen years until influence from Parisian nobility raised the fares beyond the means of the general public. Similar stagecoach operations within cities did not reappear until the early 1800’s. In England, Walter Hancock revolutionized public transportation with the creation of the first steam-powered bus. These buses were more cost-efficient and alleviated many troubles of horse-drawn carriages, but strict legislation and high tolls discouraged the new buses from running. Abraham Brower, an American entrepreneur, pioneered bus use in New York City in 1829. News of its efficiency quickly spread, leading to bus services being instituted in Philadelphia, Baltimore, and Boston by 1844.

In Europe, Julius Griffiths first patented a passenger road locomotive in 1821, but it was not until 1825 that regularly scheduled passenger trains were developed by the Stockton & Darlington Railroad Company. The company’s locomotives were designed by George Stephenson, an English inventor, and pulled six coal cars and 450 passengers in twenty-one cars, nine miles per hour. In 1830, the first steam-powered passenger train in the United States, called the Best Friend of Charleston, carried 141 passengers six miles on its first trip. Within the decade 2,218 more miles of rail track had been laid, linking even more communities. Passenger rail travel continued to expand and flourish, carrying more than 1.2 billion passengers annually by 1920. The advances in diesel engines in the 1930’s made rail travel even faster, although passenger numbers did drop significantly during the Depression era.

Cable cars became a very popular mode of transport in the United States. They first were used in San Francisco in 1873, and within ten years, similar cars were operating in Chicago, New York, and Philadelphia. New York’s Brooklyn Bridge cable car carried more than 9 million passengers during its very first year. In 1882, Ernst Werner von Siemens began experimenting with the Elektromote, the first electric trolley car, in Berlin. Richmond, Virginia, began testing North America’s first electric street railway in 1888. At the Paris Exhibition in 1900, an experimental trolley line was used to move visitors. This innovation led to implementation of Europe’s first urban trolley car service in Bielathal, Germany, in 1901.

As a solution to the congestion of New York City streets, Scientific American editor Alfred Ely Beach suggested taking transportation underground. His “Pneumatic Transit” opened in 1870 and used a 100-horsepower fan to propel a passenger car through a 312-foot (one city block) underground wind tunnel. This odd invention paved the way for modern subterranean subway systems. The first subway system in the United States was the Interborough Rapid Transit system in New York, which was completed in 1904 and carried more than 150,000 passengers on its first day.

The Industry Today

The passenger transportation industry has evolved from the simple movement of people across distances to a highly competitive, increasingly efficient means of transportation incorporating a wide range of service options to passengers. In the United States in 2022, there were about 6,800 operational public transit systems in the United States, according to the American Public Transportation Association (APTA). Many large metropolitan public transportation corporations have diversified to include all modes of travel within their jurisdiction, including buses, commuter rail, ferry boats, light and heavy rail, paratransit, trolley buses, and vanpools.

As metropolitan areas experience increased development and sprawl, demand grows for public transportation options. Although North Americans enjoy the convenience of driving their own vehicles, mounting fuel, parking, and insurance costs have led many to look into alternate transportation options. Public transit systems are inexpensive alternatives, but predetermined routes and strict schedules do not work for everyone. Alternatives such as taxis, limousines, sedans, and shuttles offer more flexibility and convenience, but at higher costs.

Costs and concerns surrounding air travel have risen in the past decade, leading more people to explore bus and rail travel for both business and recreation. Distances may take longer to cover, but the scenic route options, scheduled stops, vast network of destinations, and low fares make land travel an attractive alternative.

Ambulance services are sometimes included in the passenger transportation industry. In many countries, ambulance service is operated as part of the health care system; in the United States, ambulance service generates billions of dollars in revenue. American Medical Response is one of the largest services, operating more than four thousand vehicles, and carrying millions of patients each year.

Many companies in the passenger transportation industry are investigating multimodal transportation options, partnerships, and expansion of core services. Metropolitan transit services may include several modes of transportation in order to cover a great geographic area and meet the needs of their ridership by linking them to additional services. For example, New York City offers the public a linked system of rail, bus, subway, and ferry options. Many cities provide bike racks on buses and trolleys to accommodate people who wish to travel a portion of their commute on bicycle and link to public transit for another portion. Passenger transportation companies are expanding their services to provide scenic tour options and destination bus trips for holidays or sightseeing; rail companies such as Amtrak are partnering with hotels and attractions to provide package and themed vacations. Passenger transportation companies want to use all of their potential space and energy output to generate revenue, so many have combined passenger transport with freight transport. An example is Greyhound Lines, the bus company that carries passengers as well as packages.

All passenger transportation relies heavily on the infrastructure of the served area. Roads, rails, and ports must be maintained to ensure passenger safety, and a great deal of the responsibility and cost lies with municipal or other governments.

Passenger transportation modes are the focus of a great deal of research. Research highlights include improved efficiency, lower costs, and cleaner fuels to reduce environmental impact. Many metropolitan transit systems have made the switch to buses that run on natural gas. In 1999, commercial bus service in Christchurch, New Zealand, began using hybrid electric vehicles, and Seattle became the first city to put General Motors hybrid transit buses into service in 2004.

Industry Outlook

Overview

The outlook for the passenger transportation and transit industry was the rise prior to the 2020 COVID-19 pandemic. IBISWorld reported that the US public transportation industry saw annual growth of 2.5 percent from 2013 to 2018. However, since 2020, the industry’s revenue growth has faltered, contracting by 5.8 percent in 2022 alone. The losses in this industry can be attributed to a number of factors, including higher fuel costs, vehicle maintenance costs, urban sprawl, and restrictions imposed by national and regional lockdowns.

In larger cities, people are finding it increasingly expensive to operate, insure, and park their vehicles and are looking to transportation options to reduce their costs but maintain convenience. According to the American Automobile Association, the estimated annual cost of driving a motor vehicle in 2022 was $10,728, depending on vehicle type, fuel type, and mileage; the annual average savings that year from taking public transportation was $9,985, according to the APTA. The APTA estimated that taking public transportation reduced gasoline consumption by more than six billion gallons.

Many transportation and transit companies have expanded hours and routes and upgraded fleet vehicles in order to increase ridership. Environmental concerns also provide incentive to riders to use mass transit. Without mass transit, there would be more than 2.6 million more cars on New York City streets. For each mile traveled, fewer pollutants are emitted by transit vehicles than by single-passenger automobiles. Emissions and fuel efficiency will continue to improve as passenger transportation vehicles transition to cleaner fuels.

As improvements in service and convenience continue to be made in the passenger transportation industry, more customers will consider it a viable option. Governments around the world have been providing cash and incentives to transit systems to make these improvements in order to reduce traffic congestion and environmental impact. Teams of researchers are working on ways to improve fuel efficiency, alternative fuel options, and transportation planning.

Globally, private-sector influence over the transportation industry is growing. In many cases, inability of governments to efficiently administer public transportation has led to privatization. These collaborations have improved the performance of transportation modes and infrastructure. Examples of successful privatization include railroads in several European countries and privatized subways in Tokyo and Hong Kong.

Employment Advantages

The transportation industry was identified by the High Growth Job Training Initiative, which recognizes the need to prepare workers for new and increasing job opportunities in high-growth/high-demand and economically vital industries. Many of the positions in this industry do not require advanced education, and some companies will provide training, licensing assistance, and certification. Careers in transportation often are a popular choice for new immigrants. Some larger companies may provide above-average wages and benefits, while employees of smaller and independent transportation companies usually are able to determine their own benefits and working conditions. Many of the large transportation companies and urban transit systems have labor unions and provide opportunities for advancement, career development, and job security. Transportation employees are needed to work a range of shifts to accommodate around-the-clock service.

Annual Earnings

The passenger transportation and transit industry is strongly influenced by fuel costs and convenience. According to IBISWorld, in 2024 revenue in the US public transportation industry reached $76.9 billion, though government subsidies skew that figure. Other passenger transportation and transit sectors also saw growth and strong revenues tied to the US economy's recovery from recession.

Occupations within the industry vary significantly in terms of earnings, though the majority of jobs are production and nonsupervisory roles. According to the US Bureau of Labor Statistics (BLS), in 2021 the mean annual wage for bus and truck mechanics and diesel engine specialists was $48,690; for professional drivers (including ambulance drivers, bus drivers, truckers, taxi drivers and chauffeurs), about $30,000; rail transportation workers, $64,170; water transportation workers, $62,760; and other transportation workers, $29,940.

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