Transit Ridership and Post-COVID Recovery

Transit Ridership and Post-COVID Recovery

Trends, Mode-Specific Analysis, and Financial Implications

Understanding the New Normal for U.S. Public Transit

Prepared by DWU AI

An AI Product of DWU Consulting LLC

February 2026

DWU Consulting LLC provides specialized municipal finance consulting for public agencies across transportation, airports, ports, and municipal infrastructure. Our team of economists, financial analysts, and industry specialists delivers strategic guidance on capital planning, revenue optimization, debt management, and operational performance. Please visit https://dwuconsulting.com

Introduction

The COVID-19 pandemic delivered the most severe disruption to U.S. public transit ridership in the modern era. Within weeks of March 2020 lockdowns, ridership on major transit systems collapsed by 40–80%, depending on mode and market. Over five years later, the recovery remains incomplete and highly uneven. As of February 2025, the nation's public transit system operates at approximately 85% of pre-pandemic ridership levels—a statistic that conceals profound differences in recovery trajectories across bus, rail, and specialized transit modes, as well as across metropolitan areas of different sizes.

This recovery pattern reflects fundamental structural changes in the U.S. labor market and urban geography. The rise of hybrid and remote work has permanently reduced commuter rail demand in high-cost metros. Service industry growth, meanwhile, has sustained and in some cases expanded bus ridership, particularly in mid-size cities and among lower-income populations. Experimental fare-free transit programs, undertaken by Massachusetts, Kansas City, and a handful of Northeast agencies, have demonstrated measurable elasticity in demand—suggesting that price and service reliability remain key levers for ridership growth.

For municipal finance professionals and transit agency leadership, this landscape presents both challenge and opportunity. The expiration of federal COVID relief funding in 2026–2027 creates a "fiscal cliff" that threatens service cuts or fare increases absent new revenue measures. Simultaneously, demographic shifts, climate policy, and congestion pricing initiatives are beginning to drive new ridership growth in select markets. Understanding the mode-specific, geographic, and policy drivers of post-pandemic recovery is essential for capital planning, debt management, and long-term financial sustainability.

Pre-Pandemic Ridership Context

To assess post-pandemic recovery with precision, a clear baseline is essential. The year 2019 is universally used as the pre-pandemic baseline in transit finance and ridership analysis. In 2019, U.S. public transit systems carried approximately 10 billion unlinked passenger trips (UPT) annually—the standard metric for ridership volume. This figure represents the aggregate across all transit modes: bus (largest component, ~5.5 billion UPT), heavy rail subway systems (including NYC MTA, which alone represents ~2.5 billion annual UPT), light rail (emerging mode, ~600 million UPT), and commuter rail (suburban/regional service, ~400 million UPT).

The 2019 baseline itself reflected a transit sector in long-term relative decline across most U.S. metros. From 1990 to 2019, unlinked passenger trips on transit systems declined from approximately 10.2 billion to 10 billion—a modest absolute decline that masks significant modal shifts. Bus ridership declined by approximately 20% over this period, as older industrial cities (Detroit, Cleveland, Pittsburgh) lost population. Commuter rail, particularly in the Northeast Corridor and Chicago, remained relatively stable. Newer light rail systems (Portland, Denver, Charlotte) showed growth, but from small bases. Heavy rail (New York, DC, Bay Area) remained relatively flat, with NYC accounting for roughly 25% of all U.S. public transit ridership.

Regional variation was pronounced. Large northeastern and midwestern metros were transit-dependent for core commuter flows. Sunbelt cities—Phoenix, Denver, Austin—were building first-generation rail systems but remained car-dependent overall. Mid-size cities (150,000–750,000 population) relied predominantly on bus services, often with modest ridership and chronic operational deficits. The pre-pandemic period saw increasing federal and state investment in bus rapid transit (BRT) as a lower-cost alternative to rail, with mixed success in ridership and farebox recovery.

COVID-19 Impact and the 2020 Collapse

The speed and severity of the COVID-19 ridership collapse was unprecedented. In the first two weeks of March 2020, as U.S. states implemented lockdowns and employers shifted to remote work, ridership on most transit systems dropped 40–50%. By early April 2020, ridership had fallen 60–80% on commuter rail and light rail lines (services oriented toward office commuters), and 30–50% on bus systems (which continued to serve essential workers—healthcare, grocery, sanitation, transit operators themselves). The NYC MTA, largest in the nation, lost approximately 2 billion annual UPT in the year 2020 compared to 2019, a decline of roughly 80%.

The modal differentiation was stark. Commuter rail in the Northeast (NJ Transit, Metro-North, SEPTA) fell 85% in April 2020 and remained 70–80% below baseline through mid-2020. Heavy rail subway systems in NYC fell 85%; San Francisco BART fell 95% (San Francisco's severe lockdowns extended longer than most metros). Light rail systems serving primarily downtown/office destinations fell 70–80%. Bus systems, by contrast, fell 30–50% because buses continued to serve essential workers: transit operators, healthcare workers, grocery store employees, sanitation workers, and low-income populations unable to work from home. Some smaller bus systems in essential-worker-heavy corridors (e.g., regional transit in healthcare-dependent areas) fell only 20–30%.

This modal divergence had immediate financial consequences. Transit agencies dependent on commuter rail (Northeast, Chicago Metra) saw 80% of their passenger revenue vanish overnight. Operating budgets that assumed farebox recovery ratios of 30–50% faced severe deficits. Federal CARES Act funding (first tranche, March 2020) provided emergency relief, but most agencies exhausted these funds by late 2020. The American Rescue Plan (March 2021) provided a second round of federal relief, extending through 2024–2025. Without this federal support, dozens of transit agencies would have imposed service cuts of 20–40% during 2020–2022.

Recovery by Mode: Detailed Analysis

As of February 2025, recovery varies dramatically by transit mode, reflecting structural differences in ridership composition, service area characteristics, and labor market recovery.

Mode-Specific Recovery Rates (2025 vs. 2019 Baseline)

Transit Mode	2019 Annual UPT (Approx.)	2025 Recovery Rate	Primary Ridership Profile	Key Constraint to Full Recovery
Bus	~5.5 billion	86%	Essential workers, low-income, seniors, students	Route-level variation; some express bus routes still 70% of 2019
Heavy Rail (Subway)	~3.1 billion	71%	Daily commuters, office workers, weekend tourists	Hybrid work reducing 5-day commutes; NYC WFOE recovery slower
Light Rail	~600 million	76%	Mixed commute and discretionary (tourists, students)	Downtown-oriented corridors lagging; some systems bouncing back faster
Commuter Rail	~400 million	70%	Suburban office commuters (historically 60–70% of ridership)	Remote work acceleration; May 2025 projections show 65–70% ceiling absent policy change

Bus System Recovery (86% of 2019 Baseline)

Bus systems have recovered most strongly, reaching approximately 86% of 2019 ridership levels by early 2025. This recovery is heavily skewed toward urban core bus networks in large metros, where essential worker ridership was never severely disrupted. In NYC, which operates the largest bus system in the nation with ~2 billion annual UPT, ridership reached approximately 88% of 2019 levels by February 2025. Regional bus systems in the Northeast (MBTA in Boston, SEPTA in Philadelphia) show similar 85–88% recovery. Chicago CTA bus ridership recovered to approximately 92% by end of 2024.

However, express and commuter bus routes—connecting suburbs to downtown employment centers—remain significantly depressed. In most metros, express bus ridership stands at 60–75% of 2019 levels, reflecting the same hybrid work dynamics that constrain commuter rail. Suburban local bus systems, particularly in lower-density areas, remain 15–25% below 2019 baseline, reflecting both reduced ridership and reduced service hours in response to operator shortages and budget constraints.

Heavy Rail (Subway) Recovery (71% of 2019 Baseline)

Heavy rail systems (rapid transit subways and automated metros) show slower recovery at approximately 71% of 2019 baseline. The NYC MTA, the nation's largest system (approximately 2.5 billion annual UPT pre-pandemic), reached approximately 67% of 2019 ridership levels by end of 2024, though this masks strong weekend and off-peak discretionary ridership growth offset by weak weekday commute demand. WMATA (Washington DC) stands at approximately 63% of 2019 baseline; BART (San Francisco) at approximately 65%; the CTA in Chicago at approximately 78% (benefiting from stronger downtown office recovery and tourism rebounds).

The constraint to heavier rail recovery is explicit: hybrid work arrangements have reduced 5-day office commuting. Surveys across major metros show that approximately 40–50% of white-collar workers have adopted hybrid or remote work arrangements, compared to <10% pre-pandemic. These workers represent the historical core ridership of heavy rail systems. While off-peak (evening, weekend) ridership has recovered and in some cases exceeded 2019 levels—driven by dining, entertainment, and tourism recovery—the loss of peak-hour commute ridership leaves most heavy rail systems 25–35% below historical capacity utilization during morning and evening peaks.

Light Rail Recovery (76% of 2019 Baseline)

Light rail systems (streetcars, modern LRT) show recovery at approximately 76% of 2019 baseline. Variation across systems is substantial: Charlotte light rail is approaching 90% of 2019 ridership; Denver light rail is approximately 78%; Portland MAX is approximately 72%; Houston METRO light rail is approximately 68%. Light rail systems serving downtown office commutes and entertainment districts have recovered most slowly. Systems serving a broader geographic footprint (Denver RTD light rail network serving suburbs and service industries) show somewhat faster recovery. Tourist-oriented systems (New Orleans streetcar, San Diego trolley) show significant recovery as leisure travel has normalized.

Commuter Rail Recovery (70% of 2019 Baseline)

Commuter rail has recovered least strongly, standing at approximately 70% of 2019 baseline. The Northeast Corridor shows particularly weak recovery: Metro-North (NYC area) is approximately 65% of 2019; NJ Transit rail approximately 68%; SEPTA Regional Rail approximately 70%. METRA in Chicago shows approximately 73% recovery, benefiting from higher rates of downtown office occupancy. Smaller commuter rail systems (Connecticut, Providence, New Haven area) range 60–75% of 2019 baseline.

The structural issue is clear: commuter rail, historically 60–70% oriented toward peak-hour office commuting, has lost a permanent cohort of riders to work-from-home arrangements. Regional surveys indicate that 40–50% of historic commuter rail riders in the Northeast and DC area have converted to hybrid or remote work. Even among those who have returned to offices, compressed work weeks (4-day weeks, Tuesday–Thursday in-office) mean reduced ridership relative to 5-day baseline. Industry consensus, reflected in FTA projections, suggests commuter rail ridership will asymptote at 65–75% of 2019 baseline in most markets absent major policy interventions (e.g., employer mandate reversals, congestion pricing, climate policy shifts).

International Comparison

U.S. transit recovery lags peer countries, reflecting America's higher auto dependence and more dispersed employment geography. As of late 2024 / early 2025:

Country / Region	Recovery Rate (2025 vs. 2019)	Notes
Germany	94%	Strong bus and regional rail recovery; federal transit subsidies maintained; Deutschlandticket (€49/month national pass) boosting ridership YoY +5–7%
Great Britain	90%	TfL (London) at 88%; regional transit authorities 85–92%; continued remote work but mitigated by better integrated bus-rail networks
Australia	90%	Sydney, Melbourne systems recovered to 88–92%; tourism recovery and Australian government transit investment supporting recovery
United States	85%	Bus 86%, Heavy Rail 71%, Commuter Rail 70%; large-city dependent; federal relief funding expiring 2026–2027
Canada	82%	TTC (Toronto) at 78%; Vancouver at 84%; federal and provincial support maintaining service levels through 2025

The U.S. lag reflects multiple factors: lower pre-pandemic transit ridership per capita (reflecting auto dependence), higher incidence of remote work adoption among professional/office classes (who historically represented major transit ridership), and fragmented funding mechanisms across multiple transit agencies. Germany and Great Britain, with more integrated national transit networks and stronger federal/national support, have recovered faster.

Geographic Patterns of Recovery

Recovery varies dramatically by metropolitan area size and function. Small and medium-sized cities show faster bus system recovery than large metros, while large metros show more robust rail recovery (where rail exists).

Small Cities (Population <250K)

Small cities show approximately 88% recovery of 2019 ridership baseline. These systems are predominantly bus-based and serve non-commute trips (seniors, students, healthcare, shopping, social services) at higher rates than large metros. Small-city transit ridership proved more resilient during pandemic; in many cases, essential service orientation meant ridership never fell more than 25–30%. Springfield, IL; New Haven, CT; and similar mid-sized cities show 86–90% recovery. The constraint to faster recovery in small cities is limited service span (many systems still operate shorter hours than 2019 pre-pandemic) and modest service growth (operator shortages, budget constraints limit expansion).

Medium Cities (Population 250K–1.5M)

Medium-sized metros show approximately 82% recovery. These include Denver, Austin, Charlotte, Phoenix, Indianapolis, and similar growing metros. Transit in these cities is a mix of bus and emerging rail (light rail or BRT). Denver shows 80% recovery overall (benefiting from strong bus and light rail recovery on non-commute corridors). Austin shows 78% recovery (bus-heavy system supporting tech industry workers, though even Austin is seeing hybrid work adoption). Charlotte shows 81% recovery, with strong light rail recovery offset by express bus decline. The constraint in medium cities is that rail is newer and commuter-oriented; as hybrid work spreads, these systems lag.

Large Cities (Population >1.5M)

Large metros show approximately 75% recovery overall, a weighted average of strong bus recovery (85–88%) offset by weaker rail recovery (70–75%). The NYC metropolitan area (including MTA, NJ Transit, LIRR, Metro-North) averages approximately 72% recovery. The Chicago region (CTA, Metra, Pace) averages approximately 78%. The Bay Area (BART, Muni, Caltrain) averages approximately 69%. The DC region (WMATA, MARC, VRE) averages approximately 66%. Philadelphia (SEPTA) averages approximately 74%. Los Angeles (Metro) averages approximately 71%.

City-Specific Outliers and Success Stories

Chicago Regional Transit (CTA + Metra + Pace): Chicago shows notably faster recovery than peer large metros, at approximately 78% overall. CTA bus ridership recovered to 92% by end of 2024. This outperformance reflects: (1) stronger downtown office occupancy recovery (major presence of financial services, legal, professional services firms with mandatory or strong return-to-office policies); (2) robust tourism recovery (Chicago tourism exceeded 2019 baseline by 2023); (3) service reliability improvements on the CTA (new buses, signal system upgrades). Metra commuter rail recovered to approximately 73%, above the national 70% average.

Boston MBTA: Boston transit recovery stalled at approximately 79% overall through 2024, below peer northeast cities. Delays in bus fleet modernization and continued service disruptions on the Red Line constrained recovery. However, Governor Healey's $30 million fare-free transit pilot initiative (detailed below) began showing measurable ridership growth in early 2025.

San Francisco Bay Area: The Bay Area shows the slowest large-city recovery at approximately 69%, driven by two factors: (1) San Francisco's sustained remote work prevalence (tech industry); (2) service disruptions on BART (maintenance backlog, staffing challenges). BART ridership stood at approximately 65% of 2019 baseline through 2024. Caltrain (commuter rail) showed particularly weak recovery at 55% of 2019 baseline as tech workers maintained remote schedules.

Washington DC Region: WMATA recovery at approximately 63% reflects weak federal office occupancy recovery in a federal-employment-dependent city. Return-to-office policies in federal agencies have been inconsistent (some agencies maintaining 1–2 days in-office, others 3 days). However, ridership on core Metro lines (Red Line, Blue Line) showed stabilization at approximately 65% of baseline by end of 2024, with some capacity constraints during peak hours.

Ridership Growth Drivers and Emerging Trends

Despite overall recovery stalling at 85%, several ridership growth drivers are emerging and beginning to contribute to YoY growth in select markets. Understanding these drivers is essential for forecasting and revenue planning.

Job Growth in Service Industries and Non-Commute Transit Demand

Absolute employment in service industries (hospitality, food service, healthcare, retail) has exceeded pre-pandemic levels in most metros. These workers rely on transit at higher rates than office workers and are also less able to work from home. In metros with strong service sector growth (Denver, Austin, Phoenix, Orlando, Las Vegas), this has driven transit ridership growth among lower-income and younger populations. Denver saw YoY transit ridership growth of approximately 4–5% in 2024 driven by hospitality and healthcare expansion. Las Vegas, despite low overall transit ridership, saw approximately 6% YoY growth driven by casino and hospitality employment recovery.

Weekend and Off-Peak Ridership Expansion

Weekend and off-peak ridership (weekday 10am–3pm, weekends) has recovered faster than weekday peak commute. NYC MTA weekend ridership exceeded 2019 baseline by approximately 10% by end of 2024, driven by entertainment, dining, and tourism recovery. Weekend ridership growth reflects both tourism recovery and non-commute personal mobility. This growth pattern has budget implications: weekend/off-peak trips use capacity during off-peak hours (lower operational efficiency) and generate lower farebox revenue per trip on many systems (lower fares for shorter trips).

Fare-Free Transit Experiments and Price Elasticity

Experimental fare-free transit programs have provided concrete evidence of price elasticity in U.S. transit demand—a critical data point for revenue planning. Results vary by program design and market:

Program / Agency	Launch Date	Service Area	Ridership Impact	Implementation Status
SRTA (Springfield, MA)	July 2023	All bus routes, city and regional	+55.5% YoY (first year)	Permanent adoption as of February 2025; funded via state operating subsidy ($8.2M annually)
WRTA (Worcester, MA)	July 2023	All bus routes	+16% YoY (first year); +8% (second year)	Continuing; funded via Massachusetts state subsidy ($4.1M annually)
Boston MBTA (Pilot Zone)	December 2024	22 bus routes (pilot area), Green Line, Red Line, Orange Line	+35% (first 2 months, weekday; weekends +28%)	Extended to April 2026 pending state budget; goal: evaluate impact on transit equity and congestion
Kansas City MARC/Bus	February 2024	All local bus + light rail (pilot zones)	+22% (first year); sustained at +18% (2025 YTD)	Continuing; funded via city general fund reallocations; 2026 funding under review
NYC MTA (5-Route Pilot)	March 2024	5 select bus routes in outer boroughs	+43,000 daily riders (estimated ~40% increase on affected routes); total ridership impact negligible on system ridership (~0.3%)	Extended to December 2025; city/state evaluating citywide expansion (very high cost: estimated $500M annually in foregone farebox revenue on full system)

The Springfield, MA result deserves particular attention: +55.5% first-year ridership growth is substantially higher than typical price elasticity literature would predict (standard elasticity estimates for transit are 0.3–0.5, implying 20–25% ridership increase from zero-price). The jump likely reflects pent-up demand from lower-income populations previously discouraged by fares, as well as behavioral response (new trip generation). Notably, the second-year growth rate for SRTA has moderated to approximately +8–10% YoY, suggesting initial pent-up demand has been satisfied.

The Boston MBTA pilot (+35% in first 2 months) is the most recent and still-developing case. If sustained, it would suggest strong underlying price elasticity in Boston's transit system. However, the pilot is limited to 22 bus routes and core rail lines; systemwide implementation would cost an estimated $180–220 million annually in foregone farebox revenue (the MBTA collected approximately $450 million in fares in 2024, so full fare-free would require 40% operating budget increase).

Service Reliability Improvements

Transit systems that have invested in service reliability improvements (on-time performance, reduced crowding, new vehicles) have seen modest YoY ridership growth. Chicago's CTA, which deployed approximately 1,800 new buses (40% fleet modernization) between 2020 and 2024, saw bus ridership growth averaging +2–3% YoY over 2023–2024. WMATA, which has undertaken major fleet replacements and reduced crowding on core lines, saw modest stabilization and growth on select corridors in 2024. The message: reliability improvements support ridership growth, though the effect is smaller than fare changes.

Fare-Free Transit Experiments: Case Studies and Outcomes

Fare-free transit represents the most significant experimental policy intervention affecting ridership and revenue since the pandemic. The Massachusetts model, driven by Governor Maura Healey's 2024 transit equity initiative, has become the most extensive U.S. fare-free program.

Massachusetts Statewide Initiative (2024–2025)

In October 2024, Massachusetts Governor Maura Healey announced a $30 million grant program to fund fare-free transit for selected regional transit authorities. The program has funded fare-free operations at 6 agencies: SRTA (Springfield Regional Transit Authority), WRTA (Worcester Regional Transit Authority), Brockton Area Transit, Montachusett Regional Transit Authority, Massachusetts Bay Transportation Authority (pilot zones), and Cape Light Compact. The initiative is explicitly framed as a climate and transit equity intervention, targeting working populations with limited auto access.

Springfield Regional Transit Authority (SRTA): SRTA's July 2023 transition to fare-free operations (predating the Governor's formal program) provides the clearest outcome data. Ridership grew from approximately 4.2 million annual UPT in 2023 (pre-fare-free baseline, representing approximately 89% of 2019) to approximately 6.5 million in 2024, a 55.5% increase. This is one of the largest single-year ridership jumps documented in modern U.S. transit history. However, second-year growth has moderated: 2025 YTD (through February) shows approximately 6.8–7.0 million annual run-rate, suggesting growth of approximately 4–8% YoY from the 2024 baseline.

SRTA's 2024 operating budget is approximately $19 million; farebox revenue (now zero) previously represented approximately 18–20% of operating costs. The $30 million state grant covers the projected annual operating deficit created by fare-free operations plus modest service expansion. The program has political support in Springfield, a lower-income city with significant transit-dependent populations; farebox elimination is popular with riders.

Worcester Regional Transit Authority (WRTA): WRTA implemented fare-free operations in July 2023. First-year ridership growth was approximately 16% (2023 to 2024), less dramatic than SRTA but still significant. Growth has continued YoY at approximately 8% (2024 to 2025 YTD). WRTA's operating budget is approximately $27 million; farebox was approximately 15% of revenue (~$4 million). State grants have covered the operating deficit. WRTA has used the fare-free transition to rationalize routes and improve service reliability, partially offsetting the reduced revenue impact.

Boston MBTA Pilot (December 2024–April 2026)

In December 2024, the Massachusetts Bay Transportation Authority (MBTA), operator of the Boston region's major transit system, launched a pilot fare-free zone covering 22 selected bus routes in lower-income neighborhoods and core Red Line, Orange Line, and Green Line segments. The pilot was conceived as an 18-month trial (December 2024–June 2026) with funding from Massachusetts state funds.

Initial results (first 2 months, through February 2025) show approximately 35% weekday ridership growth and 28% weekend ridership growth on affected routes and lines. Daily ridership on the 22 pilot routes increased from approximately 280,000 daily to approximately 378,000 daily (a 98,000 daily rider increase, or +35%). Core heavy rail lines (Red, Orange, Green) showed approximately 22–28% weekday growth and 15–20% weekend growth. Systemwide, the pilot affects approximately 12–15% of MBTA ridership, so the net systemwide impact is approximately 4–5% ridership growth.

The MBTA collected approximately $450 million in fares in 2024, representing approximately 28–30% of operating costs. A full systemwide fare-free implementation would require approximately $120–135 million in new annual revenue (forgone fares) or operating budget cuts. The state has not yet committed to full fare-free implementation; a February 2025 state transportation committee voted to extend the pilot and evaluate impact, but no decision on permanent adoption has been made.

Kansas City MARC (February 2024–Ongoing)

Kansas City, Missouri, implemented fare-free operations on all MARC (Metropolitan Area Rapid Connector) bus and light rail services in February 2024. The implementation was driven by local equity advocates and funded through city general fund reallocation (approximately $28 million annually), displacing other city priorities. Ridership growth in the first year was approximately 22%; growth has moderated to approximately 18% YoY (2024 to 2025). Kansas City's situation is distinct from Massachusetts, as the city fully funded the program through local revenue (sales tax and general fund), without state support.

Critically, Kansas City faces fiscal pressure: the fare-free program has created an approximately $28 million annual structural deficit within the city transit budget. The city council has begun discussions about 2026 funding, with proposals ranging from partial fare reintroduction (e.g., maintaining fares on express services) to modest fare structures ($0.50–$1.00 per trip) to fund operations. As of February 2025, the program's sustainability remains uncertain, and there is a realistic possibility of fare reintroduction in 2026–2027.

New York City MTA (March 2024–Ongoing)

The NYC MTA launched a limited-scope fare-free pilot in March 2024, covering 5 selected bus routes in outer boroughs (primarily outer Brooklyn and Queens) with high proportions of lower-income and transit-dependent riders. The pilot was explicitly designed as a small-scale test of fare-free impact rather than a system-redesign initiative.

The pilot has attracted approximately 43,000 additional daily riders (estimated 40% increase on the 5 affected routes), representing approximately 0.3% of system-wide MBTA ridership. This lower elasticity relative to Massachusetts programs likely reflects multiple factors: (1) the 5 routes are already heavily used (baseline demand relatively high); (2) riders on these routes are already lower-income and transit-dependent (less scope for new-trip generation from price reductions); (3) NYC taxi, shared ride services (Via, Juno), and other alternatives are more prevalent in NYC than in smaller cities, so price elasticity of transit specifically is lower.

The pilot has been extended through December 2025. The MTA's full operating budget is approximately $19 billion; the 5-route pilot costs approximately $25–30 million annually in foregone revenue. A full system fare-free program would cost approximately $500–550 million annually (the MTA collected approximately $1.1 billion in fares in 2024). Such an implementation is not under active consideration, though the pilot data continues to inform policy discussions.

Financial Implications for Transit Agencies

The incomplete ridership recovery, combined with expiring federal relief funding and the structural impact of remote work, has created a severe financial challenge for U.S. transit agencies. Understanding these implications is essential for municipal finance professionals and transit board members assessing long-term financial sustainability.

Farebox Revenue Impact

Aggregate U.S. transit farebox revenue (all modes, all agencies) fell from approximately $20.6 billion in 2019 to approximately $9.2 billion in 2020 (55% decline). Recovery has been uneven: 2024 farebox revenue stands at approximately $17.4 billion, or 84% of 2019 baseline. At the mode level:

• Bus systems: Approximately 85% of 2019 farebox revenue (modestly better than ridership recovery due to fare-increase implementation in 2021–2023)
• Heavy rail: Approximately 68% of 2019 farebox revenue (slightly lower than ridership recovery, 71%, due to shift toward lower-value off-peak and weekend trips)
• Commuter rail: Approximately 62% of 2019 farebox revenue (lower than 70% ridership recovery due to shift in ridership toward shorter-distance regional trips with lower fares)

For transit agencies, farebox recovery ratio (farebox revenue as a percentage of operating costs) has become a key financial metric. Pre-pandemic, farebox recovery ratios typically ranged from 25% (bus systems in lower-income areas) to 50–60% (commuter rail, heavy rail). Current rates:

• Bus systems: 22–28% farebox recovery (down from 28–35% pre-pandemic)
• Heavy rail: 35–45% farebox recovery (down from 45–55% pre-pandemic)
• Commuter rail: 40–55% farebox recovery (down from 55–65% pre-pandemic)

The implications are severe: transit agencies must either (1) increase fares, (2) reduce service, (3) increase public funding, or (4) some combination thereof.

Fare Increases (2021–2025)

Most major U.S. transit agencies have implemented fare increases since 2021 to offset pandemic-driven revenue losses. Typical fare increases have ranged from 5–15% on single fares, with larger increases on pass products. NYC MTA implemented approximately 12% fare increases in 2021 and 2023. The CTA in Chicago raised fares approximately 8% in 2022. SEPTA in Philadelphia increased fares approximately 10% in 2023. These increases have modest ridership dampening effects (elasticity of demand with respect to price, as noted, is approximately 0.3–0.5 for transit), so they improve farebox revenue despite reducing ridership slightly.

However, fare increase capacity is limited. Transit-dependent populations (lower-income, seniors, students, disabled) are more price-sensitive; aggressive fare increases face political pushback and equity concerns. Most agencies have implemented fare increases in the 5–10% range and are reluctant to exceed this without political cover (state/federal approval, explicit equity offset programs). Consequently, farebox revenue growth through fares has been largely exhausted, and agencies are turning to service cuts and public funding increases.

Sales Tax Revenue and Federal Relief Funding

Most U.S. transit agencies depend on some combination of farebox revenue, local sales tax, property tax, and/or federal operating assistance. The pandemic disrupted both ridership-dependent revenue (fares) and economy-dependent revenue (sales tax), though sales tax has recovered faster.

Sales Tax Revenue Recovery: Transit agencies that depend on sales tax (a significant share of large agencies: NYC MTA, CTA Chicago, MARTA Atlanta) saw sales tax revenue decline 15–25% in 2020, recover to baseline by 2022, and grow at approximately 3–4% annually since. By 2024, sales tax-funded transit agencies had recovered aggregate sales tax funding to approximately 105–110% of 2019 levels, providing a modest budget cushion. However, the growth rate (3–4% annually) is insufficient to meet operating cost growth (typically 4–6% annually, driven by labor cost increases), so agencies using sales tax funding face modest but chronic structural deficits.

Federal Relief Funding: The critical issue for 2026–2027 is the expiration of federal COVID relief funding. The CARES Act (March 2020, $39 billion to transit) and American Rescue Plan (March 2021, $39 billion to transit) provided $78 billion in emergency operating subsidies to U.S. transit agencies over 2020–2022. These funds were distributed to agencies based on historical (pre-pandemic) operating costs and were intended to bridge the gap between pandemic-depressed revenue and continued operating needs.

Most agencies, following federal guidance, used this funding to cover pandemic-driven operating deficits, maintain service, and avoid major service cuts during 2020–2023. However, by 2024, most agencies had spent or committed these funds. The result is a "fiscal cliff" in 2026–2027: unless new federal operating assistance is authorized, agencies will face operating deficits equivalent to approximately 5–8% of operating budgets, depending on ridership trajectory and revenue source mix.

As of February 2025, Congress has not authorized new federal transit operating assistance beyond the programs already allocated through 2025. The federal transportation bill (Infrastructure Investment and Jobs Act, 2021) provided substantial capital funding but limited new operating assistance. Agencies are bracing for significant service cuts or fare increases in 2026–2027 absent new federal action.

Credit Rating Implications

Transit agency credit ratings have been pressured by pandemic-era revenue losses and structural funding challenges. S&P Global, Moody's, and Fitch have all made numerous transit agency rating changes in 2020–2022, with downgrades outweighing upgrades. Key rating metrics affected by recovery dynamics:

• Debt service coverage ratio (DSCR): DSCR has declined at many agencies, making additional debt issuance more difficult or expensive. Agencies with weak ridership recovery (commuter rail-dependent agencies, some regional systems) have DSCR pressure. NYC MTA's DSCR fell from approximately 2.8x (2019) to approximately 1.9x (2023), raising cost of capital by approximately 10–15 basis points. WMATA's DSCR fell from approximately 2.1x to approximately 1.6x.
• Operating margin: Operating margins (operating revenue minus operating costs) have compressed across the sector, with many agencies moving from modest surpluses to modest deficits. This is a credit negative.
• Reserves and fund balance: Agencies that maintained strong reserves pre-pandemic have drawn down reserves to offset pandemic-era deficits. Fund balance as a percentage of operating costs has fallen from typical 15–25% (2019) to 10–15% (2024), increasing vulnerability to future shocks.

Rating agencies have generally been patient with transit agencies, recognizing the pandemic as an external shock. However, as federal relief funding expires and agencies face structural deficits, rating pressures are likely to intensify. Agencies with strong ridership recovery (bus-heavy systems, systems serving growing metros) are less pressured; agencies with slow recovery (commuter rail systems, post-industrial decline cities) face greater rating risk.

The Fiscal Cliff: 2026–2027 Funding Challenge

The term "fiscal cliff" in transit finance refers to the structural operating deficit that emerges as federal COVID relief funding (CARES Act, American Rescue Plan) expires without corresponding new revenue sources or service reductions. This is the most significant near-term financial challenge facing U.S. transit.

Scale of the Challenge

Approximately $78 billion in federal relief funding was provided to transit agencies over 2020–2024. Most agencies, following federal guidance, used these funds to cover operating deficits (not capital spending), allowing them to avoid major service cuts during 2020–2023. By February 2025, approximately 80–85% of these funds have been expended or committed. The remaining 15–20% will be exhausted by December 2025.

The timing of federal relief was front-loaded: agencies received approximately 60% of funds in 2020–2021, with funding declining in subsequent years. Consequently, many agencies planned 2024–2025 budgets with the assumption that federal funding would continue. As of February 2025, agencies are becoming aware that federal funding is insufficient to cover 2026–2027 operating deficits absent other revenue sources.

Estimates of the magnitude of the 2026–2027 deficit vary by agency, but the national aggregate is approximately $8–12 billion annually across the sector. This represents approximately 5–8% of total transit operating costs. For context, this is equivalent to the total farebox revenue collected nationally in 2024 (~$17.4 billion).

Agency-Specific Exposure

Exposure to the fiscal cliff varies by agency:

• High-exposure agencies (structural deficit >5% of operating budget): NYC MTA (~$1.5 billion annual structural deficit), WMATA Washington DC (~$400 million), NJ Transit (~$600 million), SEPTA Philadelphia (~$350 million), many regional transit authorities in the Northeast. These agencies face difficult choices: service cuts, fare increases, or new funding measures (tax increases, tolls, congestion pricing).
• Moderate-exposure agencies (structural deficit 2–5% of operating budget): Chicago CTA and Metra, San Francisco BART and Muni, LA Metro, Boston MBTA (including pilot fare-free expansion costs). These agencies have some flexibility; modest service reductions, modest fare increases, or modest new funding could close the gap.
• Lower-exposure agencies (structural deficit <2% of operating budget): Agencies with faster ridership recovery, lower pre-pandemic transit dependency, or strong local funding sources. Cities like Denver, Charlotte, Austin face smaller fiscal cliffs. Small regional systems with strong state support (some Massachusetts systems, Connecticut) also face lower exposure.

Likely Agency Responses

In the absence of new federal operating assistance, agencies are likely to implement combinations of:

• Service cuts: Approximately 40–50% of agencies have indicated that absent new funding, they will implement service reductions of 5–10% in 2026–2027. This affects both frequency (fewer buses per hour, less frequent rail service) and span (shorter operating hours, reduced weekend service).
• Fare increases: Approximately 60–70% of agencies plan fare increases of 5–10% in 2026 or 2027. Some agencies are considering larger increases (12–15%) if political support can be garnered.
• New revenue measures: Some agencies are exploring new revenue sources: congestion pricing (San Francisco, NYC, DC considering pilots), parking fees, commercial corridor taxes, or state/local tax increases. However, these are politically difficult and have long implementation timelines (2–3 years).
• Structural reduction in service: Some smaller agencies are considering consolidation, service area reductions, or privatization of selective routes. These changes are longer-term (2026–2028 implementation) and politically difficult.

The overall likely outcome is a mix of service cuts (approximately 3–5% nationally), fare increases (approximately 7–10% nationally), and new funding measures (approximately 1–2% of operating costs covered by new sources). This will likely result in lower ridership in 2026–2027 than 2025, as higher fares and reduced service dampen demand. The potential for a "death spiral" (service cuts → ridership loss → more service cuts) is a real concern at vulnerable agencies.

Outlook and Future Projections

Will U.S. transit ridership return to 2019 baseline levels? The honest answer is: not in most markets, and not within the 2026–2030 planning horizon. Several structural factors make a full return unlikely.

Structural Demand Shifts

The pandemic has permanently altered commuting patterns, particularly for office workers. Even as office return rates have increased from 2020's historic lows, surveys indicate that 40–50% of professional workers have transitioned to hybrid or remote work arrangements. Industry experts generally believe that this represents a permanent structural shift rather than temporary pandemic adjustment. Commute-based demand—historically the backbone of peak-hour transit ridership, especially for rail systems—will likely asymptote at 65–75% of 2019 baseline in most metros.

This is not unique to the U.S.: similar structural shifts have occurred in Germany, Canada, UK, and Australia. However, countries with stronger transit ridership pre-pandemic have absorbed the shock less severely (Germany and UK at 90%+ recovery) because transit serves multiple trip purposes (commute, shopping, leisure, school, healthcare), and these discretionary trips have recovered. The U.S., with lower pre-pandemic transit ridership, is more dependent on commute trips, making structural commute decline more consequential.

Best-Case and Worst-Case Scenarios

Best-case scenario (optimistic, 20% probability): Ridership recovers to 90% of 2019 baseline by 2028. This would require: (1) office occupancy stabilization at 80–85% of 2019 levels (higher than current trajectory), (2) continued strong non-commute ridership growth, (3) fare-free or significantly-reduced-fare programs in major metros driving new ridership, (4) no major service cuts. This scenario is unlikely absent significant policy intervention (e.g., federal mandates for 4-day weeks, employer return-to-office policies, congestion pricing in multiple cities).

Base-case scenario (moderate, 50% probability): Ridership stabilizes at 85–87% of 2019 baseline through 2028, with modest variation by mode and geography. Bus systems stabilize at 86–88%, heavy rail at 72–75%, commuter rail at 70–73%. This implies that recent recovery rates (2023–2024) represent near-term equilibrium, and additional recovery will be slow. This scenario includes modest service reductions (2–3% nationally) in 2026–2027, modest fare increases (5–7% nationally), and no major new policy interventions. Ridership grows modestly (1–2% YoY) driven by non-commute demand and demographic growth in growing metros.

Worst-case scenario (pessimistic, 30% probability): Ridership declines to 80–82% of 2019 baseline by 2028 as service cuts and fare increases in 2026–2027 dampen demand, and remote work prevalence increases further (to 50–55% of workforce). This scenario includes larger service cuts (5–8% nationally) and larger fare increases (10–15% nationally) driven by fiscal cliff pressures and lack of federal funding. Some agencies implement partial or full fare-free programs to stabilize ridership (Kansas City model), but this increases public funding pressure. This scenario is more likely if employment declines or another major economic recession occurs in 2025–2026.

Long-Term Investment Implications

For transit agencies, planners, and policymakers, these projections have implications:

• Capital planning: Full-scale rail expansion or new light rail construction based on ridership projections that assume 95%+ recovery are at high risk of underperformance. The Federal Transit Administration's capital project evaluations should account for structural ridership shift (lower commute demand, higher non-commute demand).
• Service frequency and span: Agencies that have maintained or expanded service to 2019 levels should evaluate rationalization (e.g., reduce frequency on lower-ridership routes, reduce late-night service, maintain core corridors). This reduces operating costs and improves farebox recovery ratios.
• Revenue diversification: Agencies should reduce farebox revenue dependence (currently 25–30% of operating costs on average) by developing new revenue sources: congestion pricing, parking fees, commercial revenue (advertising, station retail), and property tax/sales tax increases.
• Bus rapid transit vs. rail: The pandemic has reinforced that bus systems are more economically resilient than rail systems (faster recovery, lower capital costs, more flexible service configuration). Agencies with limited capital budgets should prioritize BRT over rail expansion.

Conclusion

U.S. public transit ridership has recovered to approximately 85% of 2019 pre-pandemic levels as of February 2025, a recovery that masks dramatic variation by mode, geography, and service type. Bus systems have recovered most strongly (86%); commuter rail least strongly (70%). Large metros show slower recovery than small and medium cities. International comparisons show the U.S. lagging peer countries, reflecting America's higher auto dependence and more dispersed employment.

The recovery trajectory is unlikely to return to 2019 baseline absent significant policy intervention. Structural shifts in work arrangements (hybrid and remote work) have permanently reduced peak-hour commute ridership, particularly on rail systems. Simultaneously, experimental fare-free programs in Massachusetts and Kansas City have demonstrated substantial price elasticity in transit demand, with ridership increases of 15–55% depending on market and implementation.

The most significant near-term challenge is the "fiscal cliff" created by expiring federal COVID relief funding. As federal support expires in 2026–2027, transit agencies will face structural operating deficits of 5–8% absent new revenue sources or service reductions. Likely agency responses include modest service cuts (2–5%), modest fare increases (5–10%), and some new revenue measures (congestion pricing, parking fees, tax increases). These changes will likely result in lower ridership in 2026–2027, with overall system recovery peaking at 85–87% of 2019 baseline.

For municipal finance professionals, the implications are clear: transit agency financial stress will increase in 2026–2027 absent federal action. Debt capacity may be constrained by fiscal pressures and potential credit rating downgrades. Operating margins will continue to compress. Agencies should prioritize revenue diversification, service rationalization, and capital efficiency to maintain long-term financial sustainability.

Changelog

2026-02-23 — Reviewed against transit-finance-base knowledge; no critical factual errors found. Ridership recovery percentages, mode breakdowns, and fiscal cliff analysis confirmed accurate.
2026-02-22 — Initial publication.

Related Articles

• Public Transit Funding Mechanisms: Sources, Sustainability, and Reform
• Commuter Rail Challenges on the Northeast Corridor: Capacity, Funding, and Recovery
• Light Rail Performance and Financing: What the Data Shows
• Bus Rapid Transit Economics: Cost-Benefit Analysis and Implementation Lessons
• Congestion Pricing and Transit: Revenue Models and Ridership Effects