Obviously yes, you have to since the vast majority of expenses (>70%) are fixed costs. If you only exclude them and only look at marginal costs, they're profitable.
But you cannot run a transit system on marginal costs, so using that comparison is also misleading.
Thought experiment: What would happen with total profitability, given positive marginal unit economics, if readership were to greatly increase?
I’d imagine it would get really congested unless massive fixed costs were expended to make the system higher capacity.
The usual rule of thumb is that fixed costs of public transit are covered by increased property values. It could mean a private transit company developing the areas around stations (as it often works in Japan), or it could mean the government getting more money from property taxes. Or it could even mean more money from income taxes, if the transit project stimulates economic activity.
If a transit project doesn't increase property values enough to justify the investment, or if the entity funding the project cannot extract that value, the project rarely makes sense.
Now you’ve created a property tax regime where nobody is going to want to own residential property near a transit station.
typically people want to live nearby transit stations because it means you can get places cheaply.
the property value goes up because of increased demand for it
Do you mean that nobody wants property values go up? The government gets more property taxes, because properties near transit stations are more valuable than in other places.
Yes, if you don't intend to sell, and actually want to live somewhere, higher property values just mean higher taxes (or if constrained like with Prop 13, declining services).
This doesn't have to be true. Washington State, for example defines the amount of property tax revenue to be charged and then divides that in proportion to everyone's taxable value.
So if everyone's value goes up 40% your property tax bill stays the same. If your area climbed faster than others, it goes up but not by 40%.
If property prices increase 40%, then cost of living increases, government needs to collect additional revenue to pay employees a living wage, and that feeds into taxes. Even without higher order effects, the above chain was literally about net increases in property taxes to fund more services and saying it's fine because property values increase (in specific locations, too). But property values are not a tangible thing for anyone who doesn't want to sell.
declining services here would mean that transit station stops gwtting service though, decreasing your property value