Once, visitors to Paris would return to London feeling the Métro was more elegant and better run than the Tube. Not any more. In New York the subway is currently so bad that Governor Andrew Cuomo has declared a state of emergency. Meanwhile, the Underground and London’s buses have bounced back from decades of under-investment: we now have both an extensive night-bus system and the Night Tube, as well as the Overground and Crossrail to come. It makes life in the capital easier: but it might now all be under threat.

Transport for London’s finances are in a dire condition. Until recently, the body that oversees the city’s network seemed to be thriving. Its annual fare yield was rising sharply. Demand was going up too. The Tube was busier than ever and growing fast. But in the financial year that is about to end, the cash total collected in Tube and bus fares is expected to drop by £56 million. That’s a shock. Figures for London’s commuter railways show a slightly worse picture, with sharp falls in season ticket sales during the past year. This is a remarkable turnaround, and it bodes ill for the capital.

What’s going on? The answer is no one is yet sure but transport bosses are worried. Is the fall in ridership and fare income a temporary blip? Or is it the beginning of a trend caused by a series of changes to the way we live and work? Either way, there has been a sudden drop in passenger numbers. That’s a surprise as London’s population is still growing, and so is employment in the city. There must be other explanations for the retreat from public transport.

Perhaps demand for travel is falling. Every computer is now an office. More people are now able to work from home, at least for some days of the week. Persistent strikes on commuter railways will doubtless have convinced more people to work fewer days in the office. Start-ups are often run from rapidly growing shared workspace locations. Offices have been converted to flats in central London. With home ownership now more difficult for the young, more of them may be choosing to rent in Zones 1 to 3, close to new-tech companies and nightlife. Online shopping, increased bike use, increased numbers of on-demand car services, the threat of terrorism, falling real incomes and Brexit may also be explanatory factors.

The Mayor’s fares freeze, which applies to many journeys, may have kept passenger numbers higher than they would have been but it also reduced income by a possible £160 million in its first year. The freeze is a commitment that is meant to last until at least the next mayoral election, so its impact will continue to reduce any potential growth in the cash available to TfL for at least two more years.

Maybe it’s not just a London thing. Passenger numbers on New York’s public transport are also declining: subway journeys fell by two per cent last year, while bus use in Manhattan has fallen by a sixth since 2011. Paris’s Métro and RER use is flatlining at best. Whatever the reason, growth in fare income is vital to TfL. Government grants to London’s transport have fallen and will not rise soon — the north of England is now seen as the Government’s investment priority. TfL receives far less subsidy than comparable world systems, which is the main reason for London’s relatively high fares.

The next big challenge facing the Mayor and TfL is to ensure that Crossrail — now called the Elizabeth line — opens on time and generates the number of passengers and fare income expected. Official figures project more than a quarter of a billion passengers paying more than £800 million in fares within a couple of years. This money is needed not only to run the new line but also to service a slab of debt incurred to pay for construction.

If changes in travel patterns mean the Elizabeth line does not generate its planned fare yield, TfL’s financial woes would get worse. The organisation’s recent business plan also assumes that not only will the Elizabeth line rapidly increase overall fare revenue but also that it will only marginally hit growth in other Tube and bus revenues. The latter are shown bouncing back to robust growth by 2020-21.

The Mayor’s fares freeze may have kept passenger numbers higher but it also reduced income by a possible £160 million in its first year Tony Travers

The real risk to London’s transport system is that weaker fare revenues continue, whatever their cause. If TfL cannot bank on buoyant revenues from its passengers, and the Government does not stump up, there will be pressure to cut maintenance and investment in existing services. New trains to replace old ones on the Piccadilly, Central and Bakerloo lines could be delayed. There would be no new lines or extensions. The death-spiral of lower passenger numbers leading to less income, leading to even-higher fares, leading to even fewer passengers is familiar in Britain. This is what public transport was like as recently as the early Eighties. Major road improvements and maintenance in London would also be threatened, which would mean even more potholes.

So what should the Mayor do, faced with this potential financial Armageddon? He has the power to extend and increase congestion charging. The Government is itself examining road-pricing options for the country as a whole. If the Mayor does not use the powers he already has to generate extra revenue from road-pricing, I’m sure that, in time, Whitehall will do so instead.

This is the moment for a radical change to the way we pay for roads, providing City Hall with options to improve them and reduce pollution as well. With millions from road-pricing would come a new way to extend and maintain Tubes and the bus network, so escaping the risk of Seventies-style decline. Let New York’s problems be a warning.

Professor Tony Travers is director of LSE London