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There are two things that you should know about public transport in Málaga: It is plentiful and very cheap.
The EMT (Empresa Malagueña de Transportes) is the city's extensive network of public buses. A single journey, purchased in the bus, costs 1.30 € regardless of the duration and there are various bus cards available such as a 10 journey (8.30€) or a month unlimited pass (39.95€) which can be purchased at most "estancos" throughout the city. Buses are very frequent, air conditioned and the majority of bus routes pass through or nearby the city centre so it is very easy to connect with others. The Airport bus (linea A) leaves every 30 minutes both from city center and airport costs 3 € one way and takes about 20 minutes from/to airport/center. There is also a useful nightbus service across the city. You may want to avoid taking a bus during the early afternoon around 2pm and 5pm as they can get very crowded with people going to and from home for lunch and children going home from school. Try http://www.emtsam.es/ for more information about routes and timetables. This webpage is available in both Spanish and English.
For longer distance bus (coach) travel to other places within the Málaga province, wider Andalucia, throughout Spain and even to other countries, Málaga's main bus station which is located directly behind the main Renfe train station, is served by many companies to many destinations. They have a very useful website which can provide information on routes and prices. http://estabus.emtsam.es/
There is a tourist bus in Málaga (the big red type available in most cities the worldover) with commentaries in various languages, but the city is quite compact and the centre is managed easily on foot, but tickets for the bus are available form a kiosk outside the main post office in the city centre.
There are 2 "cercanias" (local) train lines in Málaga: The C1 which runs from the centre out to the west of Málaga, along the Costa del Sol to Fuengirola, and the C2 which runs inland to Alora. The C1 is probably the most useful as the airport train station is on this line and it continues on to the resorts of the Costa del Sol. These local trains are cheap and punctual but some trains do not stop at every station on the line so it is wise to double check before you board. The maximum price of a return ticket on a cercania train is 3,35€. Go to http://www.renfe.es/cercanias/malaga/... for more information about lines, timetables and ticket prices.
Málaga's main Renfe Station which connects lines C1 and C2 is also the station for longer inter-city and cross-country travel across Spain. Málaga is the end of the line station direct from Seville and there are many other direct destinations from Málaga including Madrid, Barcelona and Valencia. Consult the ticket office at the station for connections (often via Bobadilla) to other destinations. It is advisable to purchase tickets for longer distance train travel in advance as popular routes and times often become sold out especially at weekends and holiday times. For timetables and prices go to http://www.renfe.es/ which is also available in English.
Taxis in Málaga are everywhere. They are always white cars and can be flagged down anywhere as long as they have their green "libre" (available) light on. Taxi rates are very cheap (compared to UK prices) and the meter rarely reaches 5€ on short hops around the city. The standard airport tariff to the city centre is 12€ but with baggage etc is more likely to be around 15€.
There are plans to build a Metro network (both over and underground) with at least 2 lines to start with but work on it is not due to begin until 2013 at the earliest.