Capital expenditure

Many urban transport systems (especially in developed cities) are only required to recover their direct operating costs from fare-box revenues, with capital and infrastructure expenditure being met from public funds. Clearly this lowers the level of fares that need to be charged, but places the development of the system at the mercy of government budgets. Unfortunately sector allocations are both unpredictable and frequently inadequate for the purpose, and public transport may not hold the highest political priority for investment.

An effective compromise may be to limit public expenditure to the infrastructure required for the transport services, and recover the capital costs of replacing rolling stock from fares. In times of system expansion, though, additional rolling stock would still require financing that might require some form of public support such as guarantees or extended operating contracts.