Read Eric Jaffe’s piece today on the effect of microtransit (UberPool, LyftLine, Bridj, Leap) on our cities.
The question about all these private operators, seeking to create something between large-scale transit and the private car, is this: Are they going to work with high-capacity transit or try to destroy it? There are signs both ways.
If microtransit co-ordinates with conventional big-vehicle transit, we get (a) lower overall Vehicle Miles Traveled, emissions, and congestion, and (b) stronger cases for transit-oriented land use and thus (c) better, more humane and inclusive cities. If they compete with it, drawing away customers from big vehicles into smaller ones, we get the opposite.
If it turns out to be a fight, the playing field would have to be leveled in terms of the overwhelming public sector cost drivers such as workforce compensation and Federal regulatory burden before we have a fair fight. (And I mean leveled upward, toward fair wages and policies that respect the civil rights agenda encoded in Federal transit regulations.)
Consider the latter: Do we need to clarify the Americans with Disabilities Act so that the cost of complementary paratransit (which takes 20-40% of most transit agency budgets) is shared by all private transit companies operating in the space? Will we require private transit to do Title VI equity plans to prove that they do not discriminate against people with a low ability to pay? (That would be interesting, because neglect of low income people is intrinsic to most profitable business models, which is why you’ve never seen an airline magazine ad that appeals to low-income concerns.) The enormous burdens of Federal regulation — most of it designed to implement a civil rights agenda that’s theoretically endorsed by all sides — would have to be shared before we’d know who’s really best for which market.
If it were a fair fight, high-volume urban transit (not just rapid transit but also high-volume frequent local bus lines) would continue to prevail where it’s the best use of both labor and scarce urban space. My fear is that it’s going to be an unfair fight, one that’s only made worse when the media frame it as ‘little enterprising’ upstarts vs ‘big, old’ agencies. In such an unfair fight, the upstarts can too easily win through means that are destructive to justice and the environment (low wage “contractors”, replacing space-efficient big vehicles with smaller ones) rather than through finding the most efficient equilibrium for all the transport needs of a city.
As Jaffe notes, the way forward is a difficult one for upstarts who are used to thinking of transit agencies as enemies. (It can also be difficult for transit agencies and especially their unions, who may have their own defensive and territorial feelings to work through.) The way forward is for less expensive service tools, including the upstarts, to focus on lower-density suburbia where the land use patterns make efficient big-vehicle transit geometrically impossible. The upstarts could even become contractors of the transit agency part of the time — paid to do things that they can do more efficiently than big buses can — as taxis often are today. And they can do this while also operating in the city at much higher price points than conventional transit, so that they aren’t undermining the space-efficiency of those existing systems.
But when I hear the upstarts appealing to elitism, and derogating conventional high-efficiency transit, I wonder where we’ll end up … One thing is for sure: This sector is going to need strong regulation to turn it into a force for good.
There’s room for hope. As I monitor how the upstart microtransit companies talk to their customers and investors, I notice that their early appeals to elitism and generalized transit-hatred seem to be giving way to more practical and inclusive messaging. Let’s hope the markets (and hey, that means you and your purchasing choices!) reward the companies that want to be part of a humane, sustainable, and efficient city.
Jarrett, what private sector experience do you have?
I have been in the private sector my whole career. Not as a transit provider, but as a consultant.
Your idea of “private sector experience” is consulting to the government? Can you name any private firms you have consulted for, or does all you experience have the government as the customer?
Zmapper. Please make a point rather than questioning my credentials.
I’ve worked in the private sector my entire career and find this an eminently reasonable post that raises critical concerns I myself have had for quite some time.
Zmapper, since when has the private sector been 100% independent of public assistance, infrastructure or regulation (to keep the competition on the same playing field)?
I’m not sure I believe that para transit costs should be borne by private actors here. Probably its a bit too pie in the sky, but I hate dedicated revenue streams like this that tax something that is a “good thing” – TNC type services that result in fewer VMTs – for another “good thing” – paratransit services, thus making it a tradeoff. Instead, public goods should be provided by the public coffer, based from some combination of sin taxes and low, broadly applied taxes. Tax the single occupancy vehicle, not the company providing a more efficient, better service!
mbg0312, can you tell me how TNC’s reduce VMT? Nearly all of their trips involve driving around or driving to and sitting somewhere near good pick-up spots then driving the customer to. sometime you get a pick-up at the other end sometimes not. Also, para transit is now being managed by private brokers who have claimed big cost savings for Medicare by underpaying transit providers, a loss that the transit service is required by federal law to cover. That practice would be day lighted if the provider were a private service.
I was hoping you would respond to Jaffe’s article. My biggest concern with the addition of such private services is that they would erode the high-ridership corridors, leaving transit agencies scrambling to provide service on lower-performing, “coverage” (or “equity”) corridors without the benefits of revenues from the higher-performing routes. Overall, the cost per passenger of providing service could skyrocket. Additionally, adding more operators to the same geographic space could only result in a more confusing, disjointed, and less user-friendly network overall without serious coordination efforts.
On the other hand, to the extent that private transit service can relieve the transit agency’s peak spikes, this can be helpful. Successful operations like the Caltrain-Financial District jitney and the New Jersey dollar vans actually save the transit agency money by not having to accommodate even more people during the peak of the peak. Ideally the transit agency would provide a baseline level of service, with private transit providing relief for those who don’t want to have a 33% chance of standing (with most big bus agencies operating at a 1.5 load factor during peaks).
“One thing is for sure: This sector is going to need strong regulation to turn it into a force for good.”
The below thought seems like it might contradict the above thought:
“The enormous burdens of Federal regulation…”
Why/how would adding the “enormous burdens of Federal regulation” to microtransit be a wise decision? …or in what way would it benefit the general public?
I was interested in your point that “neglect of low income people is intrinsic to most profitable business models” in the fourth paragraph. While that may be true, it brought to my mind my trip to Rio de Janeiro, Brazil in 2005 where I noticed a proliferation of private van services that were specifically tailored to the low income populations. These services supplemented the already-deregulated traditional bus market, which was quite saturated being served by about 60 companies. Finding your way around never involved looking at a route map; you just stand on the street and wait for a bus with the name of the neighborhood you’re going to emblazoned on the front, which usually took less than two minutes to arrive. Despite the proliferation of services, the van services existed to provide service to the even more farflung low income neighborhoods that were neglected by the bus companies.
At the time I wondered if/when private transit would enter the mix in the USA. It seems that day has arrived, but some combination of the economics, geography and regulatory environment of our country make it so that these services cater to the upper classes rather than the lower classes. The Brazil examples shows that the opposite could also be the case, given different conditions.
If people are using the micro transit service, it is because they perceive a benefit to doing so over the alternatives. Just as people perceive a benefit to using their car, or bicycle.
Are you going to force everyone out of their car to make the public transport network’s financials look better?
The bottom line is there are many ‘old and mouldy’ PT systems that aren’t really serving their passengers very well and haven’t been reviewed properly in decades.
If you don’t want other startups to take away your passengers, then you need to offer a decent service at decent prices. There are a lot of exciting changes happening in transport – self driving cars, perhaps self driving buses also – that will cause huge social changes.
In the last 100 years there have been enormous social changes, we are well overdue for another one. Uber, AirBnb, AirTasker etc are just the beginning of something both scary and exciting.
The best thing transit agency can do is make sure that the services they are offering are relevant to the passengers and constituents they serve. If you look at how Bridj started, for example, there was clearly an unmet need.
I agree completely with most of these comments up to now.
To David Peterson: Given the context of heavy Federal regulation, I’m saying the regulation must apply to all players. I’m not saying I wouldn’t mind a less regulated environment for all players (your implied libertarian point) but that’s a different conversation.
TRTP: Yes, it is interesting that US innovation is all about higher-income. Many of these models have long existed in the developing world, as you note.
P: You betcha. But again, most transit agencies are doing what they can in the context of (a) no money and (b) massive negative feedback when the change anything. Read up on our experience in Houston, where we did prevail in creating a more useful system. It was brutal: https://www.humantransit.org/2015/02/houstons-reimagined-network-dont-let-us-make-it-look-easy.html
have a mass transit design that I am patenting at present. This design should be the most efficient electric train yet designed. It is designed for use in large metro areas and provides high speed travel and yet offers each passenger a nonstop trip. What country would be most interested in this type of system. I have at present one US patent for renewable energy, which I am developing myself. However mass transit can only be developed by governments due to high cost.
Firstly, the private sector takes financial risk. There is a very real risk that say, Bridj might go bust tomorrow leaving the entrepreneurs broke, investors with massive losses, and their house repossessed. And almost every government on Earth seems to be trying to sue Uber into bankruptcy. It is also hard for a private company to raise funds, start up and survive – most go bust in the first year or two.
The public sector takes risk at the ballot box, with constituent’s money and with politician’s reputations. So while I’m sure it’s hard for public transit agencies, it is also hard for entrepreneurs as well. Life isn’t easy on either side of the fence, private OR public.
The second point is the statement about regulation. I understand the point you want to convey, it’s just that Airline industry isn’t the best example to use:
“because neglect of low income people is intrinsic to most profitable business models, which is why you’ve never seen an airline magazine ad that appeals to low-income concerns”
The irony is that it was US airline deregulation that drove costs down to such low levels that there was an explosion of flights, massive cuts to fares and a huge surge in airline patronage growth. It transformed airline travel from being something exclusively for the very wealthy to something for everyone – low-income groups included – because it drove prices down. There are heaps of low-cost airlines like Jetstar, Virgin, Germanwings, Ryanair etc that are now around. More low income people can afford to fly now, and have more choices than PanAm.
If there are equity concerns, perhaps the public agency can subsidise or subcontract microtransit service in the areas that require it but cannot afford it?
US Airline Deregulation —> https://www.youtube.com/watch?v=91Pza6w2anE
Let me start off by saying, these microtransit companies as well as ridesharing are ALL for-profit. That is, at least for now, they receive NO government subsidies. You CANNOT criticize that. Their business model is profitable. They are serving an UNDERSERVED demand market, those between transit and taxis or private cars. Fact is, if these people are taking taxis or have private cars, they are doing so at an incredible financial burden probably keeping them in poverty and debt. IT IS A GOOD THING to unburden them. If they are using transit, while they may be able to pay a little more for more direct service, there is none. Hence, they are wasting their time and probably walking or biking a lot for the first/last mile. This is time they can’t spend with their kids or family or perhaps an additional part time job to get them out of poverty.
Transit should not feel threatened as most all government bureaucracies do. The Postal Service regularly spies on UPS and FedEx to make sure they are not delivering non-express packages and UPS and FedEx even slows down their deliveries to avoid being penalized as non-express. Will these microtransit buses slow down to avoid being accused of competing with transit? I hope not. Let transit not be the US Postal Service. Instead of trying to fight progress, transit should perhaps embrace progress. How many transit agencies are working on stop-to-stop Uber type flexible buses??? Why haven’t the regulations been changed? Instead I bet many transit agencies are having their lawyers think up new regulations to fight microtransit and ridesharing as Jarrett has mentioned. You know what regulations do? Ideally they protect the public, but as you can see today, regulators are so closely tied with big business, regulations are designed to favor big business and exclude competition which hurts the public. Most regulations are written so you can only be big to comply. You’re basically too small to succeed or too big to fail and hence must be protected and subsidized.
The New Jersey jitney services definitely serve lower income riders, and are able to make a profit running very frequent service on fixed routes. I think if anything the riders of the (subsidised, less frequent, more peak-commute-oriented) NJT bus service in the same areas are higher-income on average. You don’t need to go to the developing world to find models of successful privately-run transit that serves a diverse range of incomes.
Given our perpetually over-capacity transit system here in SF, it’s hard to see these startups as anything but a public good. And if they entice some new riders who have avoided the urban grittiness of Muni, well that’s good too.
A few specific comments about your post:
“better, more humane and inclusive cities”
No clear explanation above handwaving is made for why private transit firms would produce the alternative: worse, less humane (whatever that means in this context) and less inclusive cities. This is the same level of argument as NIMBYs claiming that a duplex in a single-family neighborhood will “destroy the character of their neighborhood.”
“the playing field would have to be leveled in terms of the overwhelming public sector cost”
Why is it the private sector’s problem that the public sector is inefficient? Note that the cost difference most probably is not all wage differences. As an example, the NTD-reported cost per hour for a bus service ranges from about $80 to $150, or a $70 difference for sake of simplicity. The straight-time hourly rate for a CDL-B operator is roughly about $15-$20 in smaller cities or private/contracted firms to $20-$30 for larger systems, or about a $10/hour difference at the top of the wage scale. Perhaps half of the wages included in the hourly cost of a bus is for the one operator; the rest for other employees or operators paid but not driving at that moment (in training, pre/post trips, etc), so the $10 difference in wages for a particular operator is really $20 when all wages of all operators are taken into account. Of the $70 /hour difference between a small or efficient firm and a large or inefficient firm, $50 is “unaccounted” for, as only roughly $20 or so can logically be explained by differences in straight-time wage payments.
“neglect of low income people is intrinsic to most profitable business models”
Somebody better go tell the billionaire Waltons that their discount chain’s business plan will leave them penniless and on the streets soon… everyone knows that the only successful businesses target the rich. As the Walton’s little collection of dime stores demonstrates, it is quite possible to build a business model squarely targeted towards lower-income customers.
“which is why you’ve never seen an airline magazine ad that appeals to low-income concerns.”
And while somebody’s off lecturing the Waltons they need to lecture Spirit Airlines to stop publicizing their sub-$100 fare sales.
“This sector is going to need strong regulation to turn it into a force for good.”
The risk of going out of business is a very strong regulation against inefficiency. In comparison, for various reasons subsidized transit agencies are generally not likely to go out of business, no matter how inefficient or unproductive their system is.
To be fair, the rampant violations of established disability law, especially by Leap in San Francisco where accessibility features in coaches were removed is cause for concern, and they absolutely deserve to be hit hard in the courts. Basically, laws need to be enforced equitably.
Jarrett – Unfortunately your thinking and analysis is micro thinking as well. You and others are looking at Uber’s, et. al. threat based on their current business model and activities…tryst me, they are ever evolving (freedom of the private sector), and will certainly lead to the near destruction of public transit.
Public transit faces a huge problem that right now the private sector micro companies are not: money. The federal government is on the verge of having to deal with huge deficits..spending cuts will hit public transit hard. At the same time, transit unions will continue to demand more pay and benefits, with the same level of low-productivity from employees.
The market for micro-transit operators is huge – it is a macro-market. The vast, vast majority of Americans do not want to be a slave to public transit, being told when they can travel and where they can travel. This model is outdated, expensive, and dying a slow death. Even in your favorite transit mecca city – Portland, where billions of dollars have been and continue to be spent on public transit, the transit mode split is still in the single digits. Showcase example of public tax dollars being wasted (mostly on 5-star generous, taxpayer funded health and retirement benefit plans).
Finally, an obvious case that these micro-transit companies are gunning for public transit is with the fast growing company VIA. Right on their website (http://ridewithvia.com/) it states in as their motto “Smarter than the subway. Better than the bus. Cheaper than a taxi.”
Jarret, you might want to remove Mr. Simpson’s obvious spam link…
“rather than through finding the most efficient equilibrium for all the transport needs of a city.” I’m curious what you mean by equilibrium. If it needs strong regulation to keep from unraveling, how is it an equilibrium?
The term “micro-transit” is new to me, but it seems like the frame of the conversation is way off. These companies are not really targeting transit agencies. These companies are going after the taxi industry. Transit will always provide a longer trip for less money versus UberPool, Lyft Line, etc. A $2.50 bus fare for a mile jaunt is easily $5-8 using Lyft Line. The extra money basically buys reliability – Lyft will come and get you within 10-20 minutes from the time you click on “Request Lyft”.
But the conversation again, isn’t about transit. It’s about the taxi industry and, to be honest, that is nothing but a fat monopoly. The industry everywhere sucks, which is why they are getting eaten alive by Lyft and Uber. Uber, as depraved and dude-bro as their corporate culture is, is still more customer-service friendly and provides a better service than your taxi guy. They have nothing but themselves to blame for what is happening because they sat on their butts with the medallions in hand and tried to live the high-life by using the power of their monopoly. The system that they built is fundamentally a bad one: Drivers start the day in debt. If you are new, then you get the bad shifts and work when they tell you. The cars are generally crappy because their only interest in them is for the profits they generate. The experience is pretty sketchy. The only thing they get right is that they have at least a handful of vehicles that are ADA compliant (…but Lyft does too now). For the driver, things are pretty shitty and it’s not great for the passenger either. The laws in effect guarantee the medallion holder (who generally does NOT drive) a stable wage. Everyone else? Screw ’em.
Again, I’m making the argument that Uber and Lyft (more so) is just better than the taxi industry they are actually going after, both for passengers and drivers. For the passengers, it is a ride for less in a newer car without the hassle of money and with additional accountability (You can get a refund from Uber or Lyft if you get taken for a ride. You are screwed if a taxi takes you for a ride.). For drivers, they have to be doing SOMETHING right because the barriers for entrance and exit are minuscule. Overall, I’ve probably taken about 60 rides with Lyft and Uber and I always try to ask the driver two questions: How long have you been driving? How has it been for you? Afterward, I usually get an insight in on why they started. Overall, the people driving seem to be content with the choice, alright with the pay, and thrilled with the flexibility to simply go offline when they want to. I’ve met an ex adjunct professor who wanted to write a book, a mid-wife, an ex paratransit driver, an ex taxi driver, a guy who just got laid off and is using the flexibility to look for jobs while keeping his apartment, students, a stay-at-home mom who Lyfts while the kids are at school, Retired people looking to make an extra buck, etc., etc.
Another concern often cited in this debate is about equity in service. The argument being that taxis have to go everywhere and serve anyone by law, while Uber drivers aren’t bound by that (They can pick and choose, which will naturally lead to disenfranchised areas getting the snub). My first gut response to that is that we are pretending if we try to claim this isn’t happening today with taxis. If you open up Hailo or Flywheel (apps for hailing traditional cabs like Uber), if you are in a disenfranchised community your odds of having a regular taxi near you and on the app are low. In my experience, you Lyft and Uber are more likely to have a car nearby for you. We also know that taxis skip over people of color and that in some cities will illegally refuse to drive to some neighborhoods anyways. So, the taxi industry is failing to address the problem already today. My second response is that my bet is that taxi drivers often avoid those areas because of a distrust of the people there (whether right or wrong). That’s exactly what these apps try to address by allowing drivers to rate passengers and vice versa. A person who might get skipped over purely because of the color of their skin might not get skipped over when the driver sees that they have a five star rating. There is no reason not to pick them up because you know what you are going to get. There’s also less risk of robbery because these apps don’t deal with cash. There’s nothing to steal, except the car and these companies know who you are (and who your driver is, if they try something funny). These two things are actually progress.
More than serving commuters or rich techies, these companies seem to be creating an ideal job for people who need both an income and flexibility for their situation. For me, this is the real interesting thing about the service. An expense that is necessary for just about everyone (a car, 2010 or newer) can be used as capital by just about anyone to earn an income on a schedule that exactly matches their needs. Many of the drivers are in situations where a traditional full or part time job would be impossible to hold. The job is also open to anyone who has a suitable vehicle and driving record, so no cliques excluding people from driving or discrimination in employment on the part of the companies. That’s actually pretty amazing and for the life of me, I can’t think of something that offers the same type of opportunity for all comers. And if they don’t like it? They leave. They turn off the app and that’s that. If they can make more money another way or if they get a new job, Lyft and Uber doesn’t care. If they want to come back on, whatevs.
These guys can and should be better, but the real villain in this story is the taxi cab monopolies. Who wants to ride around in a crappy ex-police cruiser crown vic anyways? Even if it is a newer vehicle, a taxi cab company is not going to maintain it like a someone does for their own car…
Uber and their ilk are nothing but 21st century jitneys. The 20th century jitneys had a deleterious effect on the street railway industry (at a time they *really* didn’t need it) because, like their modern day counterparts, they were cream skimmers.
I’m waiting for the insurance industry to wake up to what some of their policy-holders are doing; it shouldn’t take too many claims for them to see what’s going on. Likewise, since these are nothing more than taxis, they need to be regulated as such. Municipalities need to get on the stick.
If we’re lucky, these will grow rapidly, peak, then largely disappear as the regulations, insurance industry, and taxi industry catch up to reality. Much like in the 1920s.
Disclaimer: I am NOT an investor in Uber! 😀
This whole thing is like the health insurance market – think ‘adverse selection’. If the only market left for the public transit providers are the least profitable to serve, then they will be even worse off than they are today.
The only reason these ‘upstarts’ are doing so well is because public transit is terrible in this county.
Government needs to get out of the way and let people live and do what they want
I notice a pattern in these comments, in that many assume that their city is typical of the whole country. There are transit systems where service is routinely adjusted to meet load standards, call-n-rides are computerized and there are friendly taxi drivers who keep their cabs clean, volunteer to take low-income women to a charity Mothers Day breakfast, etc.
After 50 years of private, public and non-profit transportation work, I’m not a fan of the steadily increasing burden of regulations — both major parties add to them in each administration. HOWEVER, there’s nothing magic about setting up a parallel system that operates on a pirate basis.
In the 1930’s a British libertarian thinker correctly guessed that deregulation would result in demands to directly subsidize safety-net service. In the 1975 Oregon Intercity Bus Study, we found that the old system of cross-subsidizing rural routes from main line revenue was breaking down, and concluded that it would be more honest to subsidize some service than to continue asking the low-income big city-to-big city passengers to bear the costs. This process was given a jump by airline deregulation, which nearly killed long-haul bus traffic. As a result, today we have 5311f programs and state funding in some cases.
Looking at the micro-transit interaction with regulated transit and taxis, we need to ask who will bear the costs if the regulated carriers wither away.
1. At the (regulated) Gray Line of Portland, as dispatcher I was prepared to get a bus and driver — a “big” bus — for forest fire crews ASAP. If we didn’t, say because they always trash the bus, we’d be in trouble. At Uber, on the other hand, the fire crews would have a low score, so who would come round to take them to the fire lines?
2. When my dad’s hotel burned to the ground on 23 Apr 78, in the middle of the night an Edmonton Transit bus driven from the garage by a serviceman pulled up to provide a warm respite for the survivors. In a few minutes he was relieved by an operator who came from home in a cab. Uber’s premium pricing would have kicked in for these peopled huddled on the street in their pajamas.
3. In the nicer Denver suburbs, police dealing with drunks don’t have a pick-up wagon like the big city. They call a regulated taxi and send the drunk home. How does Uber deal with that?
And so forth. Yes, someone will pay for a solution. For example, instead of an expensive transit driver, we’ll pay a fireman or a policeman and buy special purpose vehicles to do these jobs.
It’s nice to see private enterprise doing what it does best, but there is no net free lunch unless we’re willing to go the whole Third World route and give up our expectations. Perhaps it would be more cost-effective overall to back off of some regulations than to pretend we can benefit by a transport system half-slave and half-free.