| Summary: | Many city bus systems have gone through crises--dropping ridership and unsustained finance--across countries over the past decades. Previous studies revealed that despite the soaring public subsidies on traditional bus services, the quality of bus services was unimproved and the responses to demand changes remained sluggish. A large number of bus users were, consequently, shifted to other transport modes, leading to a steady ridership decline which further worsens transit agencies’ financial condition. To deal with the dilemma, we integrate market-based customized bus services (MCBSs) into the traditional bus systems and propose a hybrid city bus model. Using data from Shanghai, China, we found that the MCBS had effectively responded to changing demand and achieved substantial ridership growth, maintained a healthy financial status, and provided social benefits to the transportation system. The success of MCBSs in Shanghai proves that the public transit system still has great potential and could be demand-responsive and financially sustainable at the same time. In the meantime, MCBSs have significantly helped improve transport equity in suburban areas. The hybrid city bus model can serve as a reference for different cities to reorganize their bus systems and regain the popularity, vitality, and social equity of bus services.
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