The politics being that contracting out was the rage back then and to some extent, Local 726 didn't want service being contracted out to Atlantic Express or Academy. Staten Islanders also didn't have a direct subway line to Manhattan and the closest they had and continue to have is the express bus system.
That X1 is as close to a subway as they may see...this route will eventually be 24/7.
Just to clarify:
The so-called pirates are only illegal in Brooklyn. On Staten Island, they may sail to the port of Manhattan via the New Jersey Turnpike. This is how the NYCDOT didn't need a franchise for the X23 and X24. These routes are supposed to go MTA in two years, but with no storage space, they will be rebid.
The pirates are practically gone. There are only two regular private operators left and these operators have been doing Richmond Avenue for at least seven years. In this market, there are a few carriers who are there REGARDLESS of the season, while there are seasonal carriers who do commuters because they aren't doing many charters. I don't consider the year-round operators pirates because they actually serve the commuters when they could be making more on that bus.
Private buses are generally street-hail buses: they make more stops than MTA buses, both in Manhattan and Staten Island. On Staten Island, smaller buses can be found, but most use large buses because the insurance on a smaller bus is not much cheaper and you can make more money with the bigger bus. Brooklyn "pirates" tend to use minibuses exclusively because they know they can't fill a bigger market without more publicity. Everyone knows that private buses float around Staten Island.
Speed over safety? I know the knuckleheads in which you refer to. Don't they say the same thing about Command drivers? In New Jersey, public and private bus drivers alike routinely operate at 70-75MPH. So can we safely state that ALL New Jersey buses are "pirates"? Not so sure, considering that Yukon is full of former Academy and Atlantic drivers, and the fact that their patches change doesn't make them more or less professional. Ever been on a non-governed MTA D4500? I have...Battery Place to the Staten Island Mall in 30 minutes on a Saturday afternoon...it was a sweet ride. Anyway, many can be reckless, but those are usually the emptier buses looking for passengers.
Remember that our current express bus routes are generally uni-drectional (I know, the X1, X10, and X17 tend to do ok on weekends). Anyone lead the charge for a bi-directional express bus? It's certainly possible between the Bronx and Queens (just look at how well the Q44 does), but who's trying it? The MTA nor NYCDOT is eager to try anything new: half the problem stems from money, the other half is institutional. By the way, the B110 (the unsubsidized Boro Park-Williamsburg route by Private Transportation) is a BI-DIRECTIONAL express bus that's profitable.
Just because it involves a little extra OOOMPH doesn't mean it isn't feasible.