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Charter Bus Service Regulations

FTA’s Charter Service Regulations (49 CFR Part 604), which implement 49 U.S.C. 5323(d), protect private charter operators from unauthorized competition from FTA grant recipients. In essence, the charter regulations were implemented to ensure that transit agencies, subsidized with federal money, do not unfairly compete with privately owned bus companies. Under the charter rules, with limited exceptions, local transit agencies are restricted from operating chartered services.

Charter service means, but does not include demand response service to individuals:

  • Transportation provided by a recipient at the request of a third party for the exclusive use of a bus or van for a negotiated price. The following features may be characteristic of charter service:
    • A third party pays the transit provider a negotiated price for the group;
    • Any fares charged to individual members of the group are collected by a third party;
    • The service is not part of the transit provider’s regularly scheduled service, or is offered for a limited period of time; or
    • A third party determines the origin and destination of the trip as well as scheduling; or   
  • Transportation provided by a recipient to the public for events or functions that occur on an irregular basis or for a limited duration and:
    • A premium fare is charged that is greater than the usual or customary fixed route fare; or
    • The service is paid for in whole or in part by a third party.

There are limited exceptions when a grantee may provide charter service, including: 

  • Official government business;
  • Qualified Human Service Organizations (elderly, persons with disabilities, and low income individuals);
  • When no registered charter provider responds to a notice sent by a recipient;
  • Leasing (must exhaust all available vehicles first);
  • By agreement with all registered charter providers;
  • Petitions to the Administrator: Events of regional or national significance, or hardship.


FTA grantees are encouraged to familiarize themselves with the controlling regulations at 49 CFR part 604, as well as the comprehensive Questions and Answers appendix.

For additional questions about FTA’s Charter Bus Service Regulations, the FTA Charter Service Ombudsman is available to assist you. When submitting a question, please provide the pertinent facts and highlight which area of the regulations, or Q&A, is impacted by your question.