No, Let’s Not “Uber” Our Bus System

Have you just read another article claiming that public transit would be better off if we unleashed private innovation?  Ask whether they're talking about privatized operations or privatized planning.  These are totally different things, but it's currently fashionable to confuse them.

Graduate student August Ruhnka, writing in the Denver Post, is the latest in a series.  After reviewing the real cost and quality control issues plaguing US bus systems, he goes on to propose a fatal confusion between privatization of operations and privatization of planning.

The remedy is simple. The city awards a route bus contract after a competitive bidding process, thus entering into a private/public partnership.

So far so good.  This is the standard model of privatized operation.  But then, OMG:

By privatizing our bus system's day-to-day operations while still providing public oversight, private operators will be able to change routes, schedules and fares as frequently as necessary without the need for lengthy public hearings and political approval.

"Change routes, schedules, and fares?"  This is the privatization of planning.  It features the abolition of "political approval," which is a polite term for the abolition of democratic controls over spending the public purse.   It's also produced some of the worst bus systems — in terms of both disutility and waste — that I've ever encountered in 23 years doing network planning.  Ruhnka goes on:

Today, successful privately operated transit projects like the Sydney Metropolitan Bus System, Hudson-Bergen Line in New Jersey and the JFK Air Train in New York are chugging away.

Only one of these examples is even a bus service, where route changes are an issue, and none of them are examples of the privatization of planning that Rohnka proposes.   They are all examples of privatized operations.  

The Sydney example is more apt than Rohnka knows.  Planning was controlled by private operating companies over much of Australia and New Zealand when I started working there in 2006.  Now, all over both countries, planning is being moved back into the public sector, while operations remain private. That's happening, in part, because transit planning by operating companies produced fantastically inefficient bus systems such as the one in Auckland, New Zealand, which I have been helping the new Auckland Transport to redesign.  

The problem was not just privatization but turf.  Private companies who control just certain bus routes may optimize their own bus routes, but that doesn't optimize the whole taxpayer funded network and can in fact make it worse.  (The same problem can afflict turf-bound governments, of course, but turning them over to the private sector does nothing to solve that problem, while it does remove our ability to hold elected officials accountable for it.)

In cities across the world, major bus corridors are becoming important redevelopment areas.  Bus service has a huge nexus with a range of important government activities, notably road design and land use planning.  To give up control over the design of bus services is to give up control that's needed to do those jobs well.

Public hearings are a drag, and the approval process for bus service changes in America is exhausting for both elected officials and the public.  Preparing for this process is central to every project I do.  My job is to help elected officials (or their appointees) make clear decisions about the real tradeoffs that transit planning requires.  These are hard choices that must reflect a city's ambitions and values, and that must be linked to a city's decisions about land use, urban form, and social policy.

All these thoughts are supposed to give way, of course, to the romantic idea that we could "Uber" our bus system.  

In light of our Uber-dominated downtown, it is time for us to make this switch. Private-route contracts establish a sustainable procedure to constantly test the market to achieve the lowest cost. Commuting in downtown Denver requires three things that currently RTD lacks: demand-response (paratransit) operation; experimental services; and remedying routes that have low ridership. All the above situations require a level of flexibility that the private sector can provide.

Uber is big and new and financed and sexy, so how could this not be better than our old bus services?   (A dismissive view of  "political approval," too, is part of the Uber mystique.)

Uber today is a taxi and (limited) shared ride service using small vehicles to carry small numbers of people at once.   Assuming you pay the driver decently (a big assumption in the private sector) the cost-effectiveness of transit is going to lie in passengers per driver, because pending driverless vehicles, the driver is most of the cost.  And the only way to get that number high is to run large vehicles in fixed-route services that are so well designed, and optimized over so many purposes, that lots of people ride them.   The Uber model does not scale to large-vehicle fixed-route transit, which is also known as cost-effective transit.  

Why, then, does downtown Denver require "demand-responsive operation"?  Downtowns are big, dense, and need to use street space efficiently, so large vehicles are the key.  Compared to big buses with decent ridership, demand-responsive service is a way of carrying very few people at a high cost.    There is no way that a demand-responsive solution, in a place where fixed routes could work just as well, makes any sense as a way to make transit affordable to low-income people, one of Ruhnka's alleged concerns.  Affordability is scalability.  If a solution doesn't scale efficiently — in terms of labor cost, energy, and urban space, it will naturally be expensive.  

So to the extent that some people think they need a demand-responsive service downtown (apart from paratransit for the disabled) by all means let Uber and Lyft do that.  Demand-responsive is such an intrinsically inefficient form of transit that deploying it downtown can only be for the purpose of serving relatively fortunate people at fares much higher than transit fares.  That's a great role for the private sector.  There is also a role for demand responsive service in suburban areas where development patterns preclude efficient transit, through contracts between demand responsive providers and transit agencies.  But not downtown.

Another way of describing all of the "demand responsive" or "Uberization" fantasies is that they are predicated on moving large amounts of steel and rubber per customer trip, compared to big-vehicle fixed-route transit.  Even without considering the economics of labor, this can only be less efficient, in terms of energy and urban space, then what crowded big-vehicle transit achieves.  (And yes, you've probably read that a lot of big buses run around empty, as though this means that buses are a poor tool.  The refutation of that argument is here, and here.)

Transit is full of opportunities for private sector involvement, including in operations, infrastructure, and my own job, professional advice.  The private sector is always welcome to innovate, and there are markets — generally for higher-end services and higher fares — that the private sector will probably take over.  There are also fascinating opportunities to use Uber/Lyft models to improve the efficiency of services to low-demand areas — that will require partnership with suburban communities or transit agencies.

But privatize planning?  Let private companies re-arrange transit services without regard to the impact on the city and its values?  That's the opposite of democracy.

23 Responses to No, Let’s Not “Uber” Our Bus System

  1. Fraser May 28, 2015 at 10:38 am #

    Its worth pointing out that a lot of “coverage” and off-peak bus routes are arguably not cost-effective mass transit. The money spent subsidizing these services would *likely* be better spent on on a hybrid Lyft Line-like service that feeds the cost-effective mass transit routes. Bus stops become Lyft Hotspots (or whichever service provider has the operating contract). The end consumer gets better service in terms of average wait time & trip length. Kutsuplus in Helsinki is an experiment in this direction.

  2. P May 28, 2015 at 12:42 pm #

    This is an interesting discussion – I accept what Jarrett is saying but I’m curious to explore it further.
    1. Airlines don’t seem to fall victim to these problems. Why? There used to be quite heavy airline regulation similar to that used for buses, but that was removed. Cheaper fares followed. Why does private planning and operations work for Airlines but not for buses? What is the key difference here?
    2. Trucking. Carrying goods by trucks (i.e. parcels) also seems to raise the same issues – and goods are not always point to point, often they have to connect between modes (i.e. air mail, sea freight) or go to a central depot. These are also privately planned and operated – except for the post.
    3. Coach and Tour bus companies. Similar issues. Why does it work here and not in public transit?
    If a passenger chooses a private bus company (or a car) over public transit it is because the users perceive a benefit in doing so. If the public option is indeed “better” (i.e integrated fares, easier connections, wider service area etc) then it should send the private operator broke *anyway*. No need for a ban on the competition there. Surely to do so would also suggest banning private cars – the true major competitor of transit – would also logically follow?
    What am I missing here?
    Hopefully some interesting discussion will now flow.

  3. Fbfree May 28, 2015 at 2:35 pm #

    The economics are different. In most of the cases your stating, customers care most about the price of a trip, and can plan around a limited frequency service. For transit, both frequency and price are extremely important, and one can only optimize both variables when a network is planned to connect rather than compete.
    Looking at the case of airlines, deregulation did have some negative outcomes. The former cost of subsidizing unprofitable routes was transfered from airlines to the taxpayer through the Essential Air Service program. Carriers used smaller planes which increase congestion and fuel, labour, and capital cost per passenger-trip. Frequencies are also split between different carriers. However, the loss of efficiency compared to transit was much smaller, surge pricing reduced the base ticket costs and increased seat utilization, and government subsidization hid added infrastructure costs.

  4. P May 28, 2015 at 10:35 pm #

    ^ Does this apply to long distance train services, say European trains or UK trains that are intercity / international services?
    A lot of controversy over what model fits in the case of long distance national rail networks (i.e. UK Rail)

  5. Hibai Unzueta May 29, 2015 at 6:55 am #

    In my opinion the problem is the way the discussion is framed.
    The quality of the public transit network is perceived as bad or not as good as it could be. Meanwhile, there’s an explossion of agressive startups like Uber making fuzzy but optimistic prospect of futuristic transport systems.
    Many understand this message as: ‘It’s the private sector innovation at play here, and it’s obvious that transit should be demand-responsive’. In that context I would say: A private company, if commissioned to plan and operate transit may ALSO choose fixed-route transit. Why? Because it’s the optimal way of running a transport service at low cost in dense environments.
    Now, if the whole city needs to be optimally served, it’s difficult to think on different private companies operating in parallel because optimisation asks for coordination. Citizens need to go to places no matter who operates the lines. Therefore, the only possibility would be to have ONE single private company planning and operating for the whole city.
    In that case, provided we forget about subsidising the whole thing, that company would try to compete with other forms of transport (private cars, Uber, etc) to earn as much money as it could. What would it do? Well, it would run fixed-route lines (beause they are the most cost effective) along routes that would maximise ridership and earnings.
    That would certainly leave out some people, which is exactly why public transit planning is considered also a political issue.
    In this context of Uber innovation it’s easy to get confused, mix up taxis and buses, assume that success is because of the transport model and not because of other factors.
    Maybe Uber can afford leaving out a number of citizens with the costly ineficiencies of few people per vehicle, surge pricing or choosing their coverage based on economic prospects. But mass transit has different goals and is essential for the well-being and the economy of cities in a degree much higher than Uber could be.
    When we see non-agile planning processes, a great difficulty in trying out new routes, etc, the critique is adequate. But the solution is not in the private/public axis nor the fixed/demand axis. It has a lot more to do with politics, planning expertise, participation and understanding and control of NIMBYsm.

  6. Jim May 29, 2015 at 9:19 am #

    I fail to see the argument against privatization of planning? A contract could stipulate that a certain percentage of service hours be dedicated to a certain area, that seniors are charged half fare, that a peak fare is no greater than three times regular fare, etc. I don’t have as much faith in public planners as Mr. Walker. I have witnessed remarkable incompetence in the public sector including public planning, and in today’s universe, many kowtow to influential special interest groups at the behest of their elected boards. Yes, private planners would tend to maximize productivity, but is this really a bad thing? Why are we even having a debate about productivity vs coverage when we already know as far as roads and cars, coverage is bad, it’s unsustainable, it creates sprawl, pollution, foreign wars, and creates alienated, inhumane suburban communities with no soul??? What does maximization of profit mean? It’s not as evil as you might think. Let’s say you’re selling crutches. Bill is willing to pay $40 because he broke his leg and must get to work. Bob is willing to pay $10 because he sprained an ankle and doesn’t need to get to work. Why not let Bill get the crutch, because he’s willing to pay more, because he needs it more? Why create a $10 crutch price ceiling which allows Bob to get the crutch if he’s in line first? Likewise, you provide sprawl/coverage service to nowhereville for Bob who doesn’t have a car and really should have chosen to live closer to where he works and recreates while you provide less frequent service to Bill who has made the right, sustainable, wise choice to live closer to the center of town.
    You only assume public planners are smart and really do care about the long-term interests of their communities, but I assure you, that is fanciful imagination. Most I’ve met are reactive, short-sighted, risk-averse, micro-managed, controlling, and have the imagination of a gnat and I guarantee you as proof, most all are either ignoring or fighting Uber-style adaptive intelligent flexible routing arguing that front-door service is impossible when they should really be looking into existing bus stop to bus stop service. Only AC Transit that I know of is interested in this new technology by fault of proximity to Silicon Valley.

  7. Jarrett May 29, 2015 at 5:07 pm #

    Jim. In 23 years as a planning consultant, I have witnessed great quantities of brilliance, stupidity, innovation and laziness all across both public and private sectors. Both sectors suffer from lowering of expectations due to lack of competitive pressure. (Look at any successful mega-company and note all the ways it works to suppress actual customer choice, from mergers to vertical integration to designing competing products/services to not work together.)
    My comments are therefore not making any generalizations about anyone’s competence. My comments are about the intrinsic math and geometry of mass transit, and why these make it extremely unsuitable for privatized planning in a democracy.

  8. Jarrett May 29, 2015 at 5:09 pm #

    P. I think mass transit differs from intercity because of its deep interdependence with urban form and land use planning, and the fact that it’s inevitably subsidized (like other civic infrastructure) and therefore involves a taxpayer interesting requiring elected oversight.. J

  9. Jarrett May 29, 2015 at 5:17 pm #

    Thanks to Fbfree and Hibai Unzueta for explaining things better than I could.

  10. Steven Judd May 30, 2015 at 1:35 pm #

    So what about San Francisco privately owned public transit such as Chariot and Leap Transit? While they are clearly designed for people who do not want to take the local transit (MUNI), and probably would not take MUNI (although I have not seen any survey results), it does speak to some of the issues of market driven transit planning.
    It also brings up questions of leadership when MUNI service is not likely to provide such targeted services as these private companies, nor are they likely to have the capacity to do so.

  11. cph May 31, 2015 at 9:04 am #

    I think Leap, etc. are chasing a different market–affluent commuters that probably wouldn’t use Muni much, if at all.
    It would be a big leap, pun not intended, to see any private company run a full-time city transit service, as a for-profit venture in the United States. If it primarily stuck to the busiest routes, and didn’t serve lower-ridership residential routes, and did not offer goodies such as free transfers between routes, discount passes, etc, if might be possible to make a go of it.
    Remember the old Las Vegas (NV) Transit? It made beaucoup bucks running buses up and down the “Strip.” But the service to the adjoining residential areas was pitiful (huge one-way loops with hourly service). Around 1993, it was replaced with a public operator (CAT/RTC) covering the entire area with a grid system.

  12. Eric May 31, 2015 at 9:32 am #

    In my country, I know of an intercity bus route (runs hourly) with a parallel jitney service of similar frequency. The best setup for riders would be for jitney trips to come 30 minutes after bus trips, so that passengers would never have to wait more than 30 minutes for a trip. Of course, the jitneys are privately run, and that’s not in their interest. Every hour, the jitney comes 0-5 minutes before the bus does. This way it fills up from the crowd of people waiting for the bus. But riders still have to wait up to an hour for a trip; the extra jitney trip has not decreased their wait at all. This is one example of a Nash equilibrium where private choices are less efficient than public planning. I’m sure there are other examples.

  13. Hibai Unzueta May 31, 2015 at 10:27 am #

    Eric is pointing out the problem of competition over one line. Of course, it gets worse than the inter-city case when it happens _inside_ a city where transport has to cover an area with a variety of origin-destination pairs.
    The issue here is that freedom of movement of citizens, which is related to quality of life and the economy of the city can only be optimally provided with a network of lines. If two or more competing companies don’t collaborate, their added efforts will be less than the sum of collaborating companies. It does happen often even without privatisation, in the context of different public operators that don’t successfully collaborate.
    The whole issue of a market with competing transport providers does not work here because of the scarcity of offer. Most cities struggle to provide a network of frequent services under 15 minutes or so.
    Provided you had a very crowded area, where service is very frequent you might introduce competition to let passengers choose over the experience or the speed. But I haven’t found many examples of places where those conditions are met, where citizens would want to trade a fast arriving bus or train for choice in the travelling experience. I don’t include here services like Leap, because they are playing a different game that is not for everyone (because of prices, because of the route, because of the specificity of their service, because of the schedule).
    Why insist in bringing the market to every single system and compromise other markets? Is the “disruption” we saw with some big names improving our freedom of movement? Does a start-up automatically become an expert in urbanism and mobility? Is innovation a phenomenon that only happens within the private frame?

  14. Chris Marsland May 31, 2015 at 1:03 pm #

    As someone who lives in a city (Manchester, UK) where private companies plan the network I’d caution any other city/country from adopting the approach. What happened here is that two companies split the city between them and concentrated all their resources serving the profitable routes, leading to an almost entirely radial network (the transport authority subsidises some orbital services), no ticket integration and slow journeys that provide a poor service to potential choice riders. Since the law was changed in 1986 (banning publicly managed buses outside London) the reputation of the bus services, their quality and their popularity has declined. It’s easy to say that private companies will innovate, but if it’s more profitable for them to form a monopoly -and where urban transport is concerned it is – then they’ll do that.
    The government (economically the most right wing in post-war British history) has just announced that it will legislate to allow Manchester (and eventually other cities) to regulate bus routes and fares. If our government isn’t going to give the market another chance to fail then no one should.

  15. John May 31, 2015 at 3:59 pm #

    re Eric’s example of the jitney:
    Another example: there are two ice cream sellers on the beach. From the point of view of the customers, to minimise their walk to get an ice cream it would be best if the sellers stood at the one quarter and three quarter points, so that each serves half the beach.
    In fact the sellers, if they are genuinely competing, will end up standing beside each other in the middle of the beach as each moves inward trying to steal territory from the other.
    The Braess paradox is a similar example. See the example on Wikipedia. Focus on the new link road, with travel time approximately zero, which *increases* total travel time. It is obviously beneficial to close this road and revert to the original network. That is an act of central planning which private enterprise would have no incentive to do even if it could.

  16. threestationsquare May 31, 2015 at 11:22 pm #

    In the New York City area there are a number of privately-planned, privately-operated, profitable fixed-route buses/vans that augment the government-run/subsidised transit system. They provide useful and important services, especially in the closest part of New Jersey, where a number of routes have very frequent all-day service (much more frequent than the subsidised competing service provided by NJT). Private planning does not seem to have led to poor route choices or uneven headways, and has not interfered with democratically-supported subsidised coverage services. As transit ridership in other US cities grows, it seems likely they may find such privately-planned services augmenting their existing transit networks useful (though the Chariot/Leap examples in SF seem very disappointing so far).
    Also Tokyo Metro and most of the other urban railways in Japan are examples of both private planning and private operation, right?

  17. Hibai Unzueta June 1, 2015 at 3:08 am #

    The Tokyo metro is apparently a private company whose capital is owned by the Tokyo metropolitan government and the Japanese government. It’s hard to see private planning operating there.
    I don’t know about the NYC case. It looks as if it had a long tradition? Which are its origins?

  18. Jarrett June 1, 2015 at 4:23 am #

    Stephen Judd. Leap (which recently was put out of business by state regulators) wasn’t much of a threat to Muni, the regular San Francisco transit system. It was peak only, and it always advertised how uncrowded the bus is, which is the same as advertising it as elite and unscalable. Some elites need elite treatment, and their only alternative to Leap was Uber or taxis, which use urban space less efficiently.
    Still, elites, too, need spontaneity, and Leap was never going to scale to that given its lack of network effects and focus on peak markets.
    If Leap took riders from Muni, it did so by taking them on the peak, where increments of capacity are very expensive to a transit agency. So it many have been doing Muni a favor.

  19. Jarrett June 1, 2015 at 4:26 am #

    John. The two ice cream sellers on the beach is a great explanation of why privatized planning (or simply the lack of competent planning) leads to too many buses packed into the CBD, with lousy service to secondary destinations.

  20. Steve Lax June 1, 2015 at 5:45 pm #

    Your comments on the vans in North Jersey ignore the history.
    Prior to the vans competing with conventional bus routes, there were both private and public bus carriers operating conventional bus service on those routes (generally not in competition with each other). And almost all of those routes were profitable, cross-subsidizing other routes that did not cover their costs.
    Then the vans began to “jump” the conventional bus service as Eric described above. Except that the conventional bus service on these routes was rarely hourly. Many of the routes offered peak frequencies of every two minutes and the worst off-peak frequencies I can recall (except late night and Sunday) were every 20 minutes.
    The van competition started to erode the profitability of these routes. Eventually, the private companies ceded their routes to the public agency, NJ Transit, and, as the vans increased, NJ Transit had to decrease the frequency of the services it offered.
    At no time do I recall any of these van operators starting new routes that would increase the network (such as to job opportunities in “The Meadowlands” which were in need of additional transit services and which were proximate to the areas where the vans did operate.

  21. Erick June 3, 2015 at 5:27 am #

    It’s one thing to make an argument about private sector innovation, but when you base your argument on Uber I say that’s it!
    The only innovation with Uber is the app doing the dispatching and that comes only years after the taxi industry developped their own automated dispatching system, so is it really innovation? The fare system? Nope that’s how most jurisdictions started regulating taxis and adopting regulations demanding a meter so for me Uber is a huge step backwards, it brings us back to when taking a taxi was dangerous (car or driver) and you did not know how much it would cost you.
    As for the automated vehicles it screams gadgetbahn to me. Don’t need to rehash the reasons why in CBD it will not work, we don’t have the space even if the computer was better at driving which is far from being the case right now.
    Railways have been trying for decades to automate complicated junctions with partial success (see Zoo interlocking on the Northeast Corridor of Amtrak) but we are suppose to believe that we have automated vehicles ready?
    I live in eastern Canada and the moment that there’s too many solar flares, telecommunications and electricity systems are affected, it does not inspire confidence that such vehicles will be able to talk to one another.

  22. Luis Gutierrez June 4, 2015 at 4:28 pm #

    A case study on market-based route planning:

  23. Patrick S June 24, 2015 at 6:13 am #

    Yes, Jarrett’s well-argued post here is in line with the long-term research of public transport scholar and activist Paul Mees. If you want an in-depth treatment of the problems of privatizing the strategic planning aspect of public transport, see his book ‘Transport for Suburbia, Beyond the Automobile Age’ – . Includes a discussion of different models of how high-performance public agencies such as Zurich’s do network planning.

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