The institutional design of route regulation for city motor carriers is not so good as that for highway motor carriers because there is no reviewing committees. This paper therefore explores the current issues of route operations regulation, the implications of off-the-road competition and development trends of route operations deregulation. By the contracting out of the passenger transport service and the tendering or auctioning system, the expenses of subsidy was reduced and the quality of service was import. It can be the references of future improvements of institutional design for the deregulation of city motor carriers.