Uber/Lyft Find New Ways to Destroy Transit

Lyft has a growing service called Line that could make the long-unfulfilled dreams of carpool advocates come true. Users who request a ride through Line are paired with drivers going to the same general destination — a true example of ride sharing instead of the ride hailing that describes most Uber/Lyft rides. Rides might take a little longer if the driver picks up other carpoolers, but the cost is only 40 percent of a regular Lyft ride. The service is available in 19 cities to date and has proven particularly successful in New York, Los Angeles, San Francisco, Chicago, and Miami.

Uber has announced that it plans to expand its app to offer a comprehensive transportation service. Users say where they want to go and the Uber app will give them options of Uber rides, bike sharing, rental cars, or even mass transit. All rides would be paid for through the Uber app, so Uber would get a share of revenues from any public transit agencies that participated.

Even if public transit is one of Uber’s options, these kinds of innovations will continue to whittle away transit ridership. People who now ride transit will be tempted to use Uber to pay for their rides, thus saving the trouble of dealing with ticket machines or exact change. Once using the app, they will also be alerted to alternatives to transit, and some will select those alternatives in place of the transit they were using.

Uber, Lyft, and other private transportation services will grow because they are willing to innovate to earn customer revenues. Public transit agencies, by comparison, are more oriented to getting the taxpayer dollars that make up 75 percent of their budgets and are relatively unconcerned about ridership or fare revenues.

Los Angeles Metro, for example, has lost five bus riders for every light-rail rider it gained since 2010 (and even more if you go back to 2008). Undiscouraged, the agency intends to spend at least $6 billion on six new transit projects, most of them light rail. Light rail was made obsolete by buses 80 years ago and it certainly isn’t working to attract net new riders today, but that’s unimportant: what’s important is that Metro convinced voters to fund more rail construction on the false promise that it would relieve congestion.

While it may be true that Uber and other ride hailing companies are relying on venture capital now to keep them afloat, this doesn’t mean they are being subsidized any more than Amazon, Apple, or other companies that got their start through venture capital were subsidized. During the 1990s, Microsoft was one of the most valuable companies in the world, yet it paid no dividends until 2003. The venture capitalists who supported ride hailing companies will get their money back from the ones that are successful, and the companies will only be successful if they attract lots of users.

In contrast, because transit agencies are unresponsive to users, they fail to innovate and instead rely on obsolete technologies. Thus, they deserve to die when ride hailing services and other innovators take their customers away.

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7 thoughts on “Uber/Lyft Find New Ways to Destroy Transit

  1. LazyReader

    Carpooling and people with the same destination…………….this is called “Slugging” and we’ve been doing it for over 30 years in DC. A driver merely pulls up into a curb or stop, announces his destination and picks up the passenger with the same destination, the driver takes advantage of the HOV lanes they otherwise couldn’t use alone and the passenger get’s a free ride to the same destination. In nature this is called mutualism. Plus the environment betters, with one fewer car on the road. Why is Uber calling it “Line”…….maybe calling it slugging and the people Slugs is rather derogatory and finding a new name for a similar practice to try to make money off something that was a voluntary “free” exchange practice since Uber is hemorrhaging money like someone who got shot in the femoral artery. With carpooling on the decline, local governments can save money not going into debt by encouraging more carpooling. Instead of spending millions/tens of millions/hundreds of millions, they could instead offer tax incentives to people who use their car to shuttle passengers.

  2. btreynolds

    I’ve used the ride sharing feature on Uber a few times (UberPool). It works really well and saved me money on my trip. With the technology behind it, the detours did not add too much time to the trips and it wasn’t creepy as if you had just picked up a random stranger on the side of the road.

    If LazyReader thinks this is anything like what he describes, then he’s also being a LazyThinker! 🙂

  3. C. P. Zilliacus

    The Antiplanner wrote:

    In contrast, because transit agencies are unresponsive to users, they fail to innovate and instead rely on obsolete technologies. Thus, they deserve to die when ride hailing services and other innovators take their customers away.

    Of course, there was a time when transit did turn a profit for its (private-sector) owners in much of the United States. I can certainly remember profitable transit providers within my lifetime, before they were taken-over by large urban transit authorities. Would those transit providers be profitable today if they had remained under private ownership and operated under private management?

  4. Maddog

    Putting the share in share-ride!

    https://www.maddogslair.com/blog/putting-the-share-in-share-ride

    “Lyft has a growing service called Line that could make the long-unfulfilled dreams of carpool advocates come true. Users who request a ride through line are paired with drivers going to the same general destination — a true example of ride sharing instead of the ride hailing that describes most Uber/Lyft rides. Rides might take a little longer if the driver picks up other carpoolers, but the cost is only 40 percent of a regular Lyft ride. The service is available in 19 cities to date and has proven particularly successful in New York, Los Angeles, San Francisco, Chicago, and Miami.

    Uber has announced that it plans to expand its app to offer a comprehensive transportation service. Users say where they want to go and the Uber app will give them options of Uber rides, bike sharing, rental cars, or even mass transit. All rides would be paid for through the Uber app, so Uber would get a share of revenues from any public transit agencies that participated.”

    I have been writing about this as one of the primary cost-saving devices for commuters and school children. Right now with the Lyft Line program an individual paying The Portland Trimet HOP pass fare of $2.50 to commute to work could take a Lyft ride costing up to about $6.30 (Lyft Line is 40% of the usual costs so $6.30 X .4 = $2.52). However, because the service is door to door and does not require the individual walking to a distant bus stop and waiting in the rain, people will value this service. I expect they will be willing to pay more due to the time savings, convenience, and comfort.

    Wait till these we find out that these services can eliminate the need for expensive local school bus service. Districts could offer to pay for the shared ride service for low-income families of school children. Why in the world are taxpayers paying for the transportation costs of the kids of wealthy families? School bus service is expensive, requiring huge storage yards, maintenance facilities and skilled employees to maintain the buses, not to mention an army of drivers.

    How much better that the students should be picked up at home and dropped off at school then picked up at school and dropped at home? Yeah, door to door service would be infinitely better than the current service which picks up and drops off on major roads! The evidence is that with the large self-drive capacity share ride vehicle, it would be much cheaper, and safer.

    Currently, these services roll out slowly because we are not used to them. Just as Amazon had to recalibrate the American mind with Prime to buy things 2-3 days before they were needed so too will these services need to recalibrate the American mind to think differently about transit. However, once the mind is reset, all bets are off, and like Amazon, the change will be swift, sweeping away the outdated transit modes.

    As the self-drive shared ride vehicle makes its way onto the scene, the configuration of vehicles will change to accommodate the various needs.

    And the progressives will stand athwart every change screaming STOP!!!

    Mark Sherman

  5. JOHN1000

    “Would those transit providers be profitable today if they had remained under private ownership and operated under private management?”

    One thing is for certain – they would use mini-buses costing less than $100,000.00 (some under $50,000.00) with flexible routes and save huge $ rather than large buses costing $300,000.00+ and running mostly empty.

  6. The Antiplanner Post author

    LazyReader,

    You are right about slugging but it is rare and only happens where there are HOV lanes and not always then. In fact, I only know of it happening in San Francisco and DC. Line (which is different from Uber Pool — Lyft already has its own version of Uber Pool but Line is much less expensive) can potentially work in a lot more cities.

  7. Henry Porter

    Door-to-door vs. parking lot-to-door is a big difference between slugging and Line. Another is anonymity. You know something about the person(s) you’re riding with with Line but not with slugging.

    Another difference is repetition. Once Line has hooked you up with others who go the same place as you at the same time as you, 5 days a week, you no longer need Lyft to match you up every day. You exchange phone numbers and then you have a traditional carpool.

    This is not unlike carpool matching services that were offered by Departments of Transportation in larger cities during the OPEC “crisis” in the 1970s, except that they didn’t have cell phones.

    As encouraging as all this is, it remains to be seen whether ANYTHING—be it ride sharing, slugging, carpooling, ride hailing, telecommuting, or all of them together—is capable of “destroying” transit. There is an equal, maybe better, probability that publicly financed transit will continue to exist, unscathed. As an industry, transit has already proven it is capable of existing…even thriving…at great public cost without having to deliver public benefits.

    If Trump can’t kill Amtrak, what chance is there that Lyft can “destroy” transit? Publicly funded fransit is immune to competition.

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