Are users better-off with new transit lines?

This paper studies the entry of a new competitor in a public transport network. Competitors for existing rail can be long distance buses but also the vanpool services. These new lines decrease the ridership of the existing lines and increase waiting time for its passengers. A stylized network model is used to study this potential vicious cycle. We derive sufficient conditions for this negative effect to increase overall public transport costs. The new line is only beneficial when there are relatively many users that want to use the new direct line or when the unit cost reduction is sufficiently large. Our result raises concerns with respect to the decentralized management of transit systems.