This also occurs with semi-public services (at least in the US). For example, the MBTA ("T") in Boston serves largely those without cars: college students, tourists, people with low income. Unfortunately, due to extreme mismanagement, the T regularly decides to cut services and increase fares... and things just get worse from there.

If you're a private business, you have to find a way to escape the spiral. If you're a government service, you need a government that isn't incompetent, corrupt, and myopic.