Public Rapid Transit and Private Taxis

Cap’n Transit is writing about how, given that the political system in the New York area is hostile to public transportation expansion, private taxi companies are filling the gap, and this is fine (update: see the Cap’n’s comment below). This is not the first time I see people in the US claim that private shared-ride services are a substitute for public transportation; on Vox, Timothy Lee wrote that a ride-share service offered by Lyft is “the beginning of the end” for public transit. The tones are different – the Cap’n is hopeful that these services would get people out of cars, Timothy Lee is denigrating public transit and its supporters – but the message is the same: ride share is a substitute. I would like to explain why not only is this not happening, but also any hope of Uber, Lyft, and similar companies making the jump to conventional public transit is unlikely.

First, let us consider costs briefly. The biggest marginal cost of bus service is the driver, leading various futurists to fantasize about driverless taxis vastly reducing costs and competing with large buses. The only problem is, it costs too much to operate a car even without taking the driver’s wage into account. In the US, households spend 19% of their income on transportation; nearly all of this is private cars rather than plane travel or public transit. This works out to around $1.5 trillion a year, or about 30 cents per vehicle-km. Taxis have to pay this, and more, due to the cost of either the driver’s wage or the technology involved in automation. This is within the range of US urban public transportation‘s cost per passenger-km; the New York subway is 21 cents, and to be accessible to the masses it is subsidized. Of course, given automation, the subway would cost substantially less to operate.

This means that the only way taxi services can be affordable is if people share rides; Uber and Lyft are indeed moving in that direction. The problem is that sharing a car with a stranger ends the entire advantage of being in a car rather than on a train or bus. Slugging is not a popular mode of transportation; Wikipedia mentions a few thousand daily users in various US cities, whose subway systems get multiple hundreds of thousands of users. To offer even somewhat reasonable fares on their shared ride services, UberPool offers $5 promotional fares, and a maximum of two unrelated riders per car; sometimes, when the Uber system can’t find a second rider, there is just one rider, paying an express bus fare for private taxi service. It is not possible to make a profit in this manner.

Now, what the private sector can do, beyond taxis, is to scale up and offer vans and buses. It happens every day in the urban parts of New York beyond subway range: these are the dollar vans of various immigrant neighborhoods in Brooklyn and Queens, and the private services running in Hudson County. It’s possible that Uber and Lyft will eventually go that route. So far, tech startups involved in transportation have tried to reinvent the wheel, for example Leap’s failed attempt to provide premium buses within San Francisco, but it’s possible that a well-capitalized private company will instead try to offer more conventional bus service.

The problem is that the private sector has never in recent history scaled beyond that. This was not always the case: the London Underground, the New York els, and the Chicago L were built by private companies, often in competition with each other; in Japan, there are many private railroads, which built commuter lines by themselves in the prewar era. However, in recent years, rapid transit outside Japan has always been built publicly; when private companies exist, they either operate trains by contract, as in Singapore, or were initially public and only privatized after they were already running trains, as in Hong Kong. Japan belongs in the same category as Hong Kong, with one complication: the private railroads still build commuter lines in the suburbs, but, at least in Tokyo, they rely on the publicly-built subway for passenger distribution within the city core, as (due to prewar government regulations) the private lines do not enter Central Tokyo. Let us examine why it’s the case that the private sector no longer builds subway systems.

In the biggest cities of the world in 1900, the urban geography was simple: people worked in city center, or in their own neighborhood. This monocentric arrangement made it easy to build streetcars and rapid transit privately, since all a company needed was to build a line from the center to some suburb or outer-urban neighborhood. Network effects were weak, and transfers were not so important. The Manhattan els radiated north from South Ferry because there wasn’t much demand for east-west transportation; the Brooklyn els, the Chicago Ls, and the London Underground lines similarly radiated from the center in all directions.

Developing-world cities are in a similar situation. As they build their CBDs, they create situations in which people work in their home neighborhoods or in the CBD. For example, Nairobi’s matatu network is CBD-centric, with not much crosstown service, because the jobs that require commuting are concentrated in the CBD. Of course, there are many local jobs within neighborhoods, but usually people work in their own neighborhoods rather than commuting crosstown. However, construction costs in the third world are typically higher than they were in 1900 in what is now the developed world. When New York built the Dual Contracts – already at public expense – the cost was $366 million, which is (contrary the link to the cost figure) $8.6 billion today. This is around $50 million per km, about 42% underground. This cost is not unheard of today, but it is low; in China, $160 million per km is more typical of underground construction. See examples here, here, and here. Moreover, in the poorest countries considering transit expansion today, incomes are a fraction of the level of the US of 1913 ($6,500 in today’s dollars): Kenya’s GDP per capita is $3,000, Ethiopia’s is $1,500. Thus, rapid transit is less affordable. India, at $6,000, is more comparable to the US a hundred years ago, but it has high construction costs, and an urban geography that’s diverging from the monocentric layout I’m describing here.

In the developed world, construction costs, while higher than a hundred years ago, are more affordable, because the GDP per capita is not $6,000 but $30,000-$60,000. However, the cities are no longer monocentric; even relatively monocentric Stockholm has major secondary centers in the universities and in Kista, with high peak demand for subway service. In a polycentric city, a single line is no longer enough; the transit lines must work together as a network. The entire philosophy of Jarrett Walker‘s network restructures (i.e. the frequent grid) is based on this fact, taking bus networks that have not changed much from back when the cities were monocentric and updating them to reflect modern-day everywhere-to-everywhere travel reality.

With network effects so great, private startups can’t really step in and supplant the public sector. The barriers to entry are large, which is why the only companies doing so have a long history of corporate existence, either as private Japanese railroads or as recently-privatized companies, and are not startups. Of course, online social networks have large network effects as well, but they operate in a young industry, whereas transportation is a mature, conservative industry, without much opportunity to offer new service that does not yet exist. Advances come from engineering and network design and are slow and cumulative, unlike the situation in the tech sector.

Of course, the government could structure its regulations in a way that lets the private sector tap into public-sector network effects. For example, it could compel operators to cross-honor one another’s transfer tickets. But this is the exact opposite of how tech startups work, which is without such regulations. You can’t send a Facebook message to a Twitter account. It’s also not how European private ventures that run on public tracks and compete with public operators work: the Italian private high-speed rail service, NTV, does not cross-honor tickets from the public operator, Trenitalia, and vice versa. Once the government mandates free transfers between companies, and joint planning for network optimization, and schedules that are more cooperative than competitive, we’re back in the world of public planning, and the private companies just run service by contract, as they already do in such cities as Singapore and Stockholm.

Improving public transit, then, requires improving the public side of transit. Taxis are a niche; so are buses that can be run privately, to the CBD or to the public subway network. The core of transit ridership, in the cities where public transit usage is high, consists of a mesh of buses and rapid transit that cannot be grown spontaneously by the private sector. If the government can’t provide this, the city will be auto-oriented. Good transit advocates have to then work to make sure the government is more competent and can build this network, rather than hope successful private ventures will save them; there is no alternative.

57 comments

  1. Ben Ross

    A nitpick: Not sure you’re right about job location in city of 1900. Garment industry was in Manhattan, but heavy industry was in Brooklyn (eg Navy Yard) and Jersey City. Warner in Streetcar Suburbs says that inner neighborhoods with working-class residents had crosstown streetcars, the outer neighborhoods whose residents worked downtown had only radial ones.

    I suspect that only the streetcars into the center got replaced with els/subways because streetcars to other destinations didn’t run into such heavy traffic (especially because industrial workers didn’t own cars).

    • Alon Levy

      Brooklyn and Manhattan only became one city in 1898, and still had separate CBDs. Thus the Manhattan els were north-south, and the Brooklyn els were initially radial east and south or Downtown Brooklyn. The BMT part of the Dual Contracts was indeed planned around this diacentric layout, which is really awkward today now that Downtown Brooklyn is a secondary CBD and Midtown is bigger than Lower Manhattan.

    • Alon Levy

      Fair, but you do seem optimistic about the ability of private companies (not e-hailing like Uber, but maybe UberPool Mk. 2 providing five-dollar vans) to do what the public sector can’t.

      EDIT: I put a note in the post.

      • Capn Transit

        Thanks! I am cautiously optimistic that they may be able to do some of what the public sector has so far failed to do. It’s worth exploring. I don’t think anyone has the answers at this point. I know I don’t.

  2. Bjorn Swenson

    In San Francisco, Chariot has supplanted Lyft as the main privately-owned public transportation company. Their route structure appears to be very similar to school bus routing; stop every few blocks in a residential neighborhood, then run closed-door to the destination.

    In Rochester, MN, Rochester City Lines operates over-the-road coaches from numerous surrounding villages into the city, with arrivals timed for work start times of 7:00, 7:30, and 8:00 am, and work end times of 3:30, 4:00, and 5:00 pm. My understanding is that routes are fully supported by their customers (and possibly with some financial support from Mayo and St Mary’s Hospitals, but I am not certain), they do not receive any direct subsidy from the government.

  3. michael.r.james

    Alon wrote:

    were initially public and only privatized after they were already running trains, as in Hong Kong.

    Yes, and the entity prior to privatisation was every bit as efficient as post-privatization. As important, to those economic-rationalists who use HK-MTR as their poster-boy is the fact that it has never had to deal with the heavy burden of capital costs associated with both its legacy structure (including the merger with KCR) and new developments. Nevertheless the arrangement (see further below) can take some burden off the government direct finances:

    According to the summary report of the new lines, the construction cost of the West Island Line would be HK$15.4 billion (as at Dec 2008). MTR asked for government funding of less than half of the total cost. The remaining cost and the operational cost would be covered by MTR.

    Thus, while one can technically label MTR as “private” it is really a heavily government-subsidized and regulated entity, and really closer to a management contractor (or a statutory authority that has shareholders). And lest anyone imagine otherwise, it would be unthinkable that control of MTR would be allowed to fall into non-HK hands. Which is as it should be.

    Also, it has always had the benefit of government purposely giving it rights to developments around its stations. An example is construction of the Airport Line (really two independent lines, Airport LIne & Tung Chung Line), in which a lot of the capital cost was put on the HKIA airport construction budget (including the entire lower level of the Tsing Mai bridge), and: “MTRC which was granted many large-scale developments in the construction plans for the new stations”. (This refers to the New Town of Tung Chung, and maybe Disneyland plus “Tsing Yi station is built next to the Maritime Square shopping centre and directly underneath the Tierra Verde housing estate”. ) Note this is the MTRC pre-privatisation a decade later (into MTRCL).

    Likewise for the new Tseung Kwan O Line in which “(c)onstruction costs were partly covered by the Hong Kong Government and private developers which linked construction of the Tseung Kwan O Line to new real estate and commercial developments.”

    This arrangement in which a Metro system has a long-term interest (and lease income) from the lucrative commercial and residential buildings that often form a part of the station or immediate vicinity, also occurs in Tokyo which has some of the biggest such developments in the world above its major stations. I belabour the point because it is an excellent model to help with both capital costs and running costs of public transit, yet it is shunned in the Anglosphere (AFAIK; but it is being adopted by mainland China) for the obvious reason that property developers consider that to be their domain and their profits. And of course every level of Anglosphere government is dominated by developers (as Trump never fails to shout at every opportunity; he doesn’t care if the administrations are Republican or Democrat, they are all in his pocket if he wants some project pushed thru). All of these things need to be kept in mind when considering the success of HK-MTR:

    The MTR system is operated by MTR Corporation Limited (MTRCL). It is one of the most profitable systems in the world, with a high farebox recovery ratio of 186%.

    To return to the article’s main topic, the evolution of HK’s MTR to include all the rail transport in HK (eg. merger with KCR) and the single-ticketing with the wildly successful Octopus card, reinforces what Alon has written. I would finish by noting that MTRCL has a total monopoly of rail in HK and so hits on the head the notion of neo-cons that things cannot possibly be run “efficiently” without competition (though it does compete with buses & trams). MTRCL has proven so successful that it now sells its services as management-contractor to other countries’ Metro’s.

  4. Eric

    My situation, which I think is relatively common, is that I use transit for the >90% of my trips where transit is a competitive option. For the remaining trips I use taxis. Many other people in the same situation buy a car for those remaining trips, and frequently, this leads them to use the car for all their trips. If the cost of taxis were significantly reduced – even if it were still uncompetitive with transit – I think many more people would suffice with transit plus taxis. That is where driverless taxis have the potential to make a big positive impact.

    • Adirondacker12800

      You can take an awful lot of taxi trips for what it costs to run a car.

      • Alan

        But a one-shot/monthly bill can be psychologically easier to pay than the big marginal cost every time you take a cab everywhere.

        • Adirondacker12800

          And you can lie to yourself that the only cost for using the car is fuel.

      • Eric

        That’s the main reason why I do it. I realized that commuting to work where I am would be equally expensive by taxi or car. So I use transit most of the time, and taxis when necessary. HOWEVER, it is a big psychological hurdle to pay for a taxi trip you feel you should be able to get for a tenth the price on transit. You feel like you’re getting horribly ripped off, which is a feeling nobody likes.

  5. Alan

    $.30 per vehicle-km is for the current fleet. It would be conceivable that robo-taxis would be far cheaper to operate— there will be much less insurance cost; the cars will be smaller and lighter as they will eventually have far lower requirements for crashworthiness, and the dick-waving element that drives many people to buy oversized, overpowered cars will be eliminated; and many will likely be electrically-powered.

    The sensor array required for a self-driving car will very likely rapidly decline in price. A smartphone camera module can cost $20 or less. MEMS have been dramatically plummeted: http://www.semi.org/en/IndustrySegments/EmergingMarkets/CTR_038029 Beyond that, LIDARs will probably plummet in price once they are in enormous demand, just as CD players did. There’s already a $90 unit:
    http://www.sparpointgroup.com/sean-higgins/vol13no27-lidar-unit-your-kids-can-afford

    Obviously many price improvement in self-driving cars will also apply to buses, but buses are already sized and priced for efficiency compared to the private auto fleet.

    • Alon Levy

      In the US, insurance is already a minor cost – the minimum required is laughably low. In Canada, you pay in a month what Americans pay in a year.

      The bulk of the cost is the car itself, maintenance, and fuel. Fuel costs aren’t getting lower – increasing fuel economy is hard, and electrifying saves less energy than you think. Cars are not getting any cheaper, either. Yes, you can make them lighter… but that costs more. There aren’t big savings to be made in manufacturing that haven’t been made already, since cars are already mass-produced at levels trains will never be. Going lighter helps, but not that much: cars on this side of the Atlantic are a lot lighter than in the US, and this has made them more fuel-efficient, but not by game-changing levels, while the purchase price is the same. Since fuel taxes here are not set at the fuck-the-environment levels they are in the US, the net effect on car costs is zero: in the UK, household transportation spending per capita is one half the US level, but the per capita vkm rate is also one half, so it works out to about 30 US cents per km as well.

      The other issue, which didn’t make my post because of length consideration, is that cars depreciate by the kilometer rather than by the year, especially at the intense utilization required for taxis. So you can’t just buy the same car and ferry people over and over, driving 40,000 km a year rather than 13,000 – it’d fall apart faster. This is why taxis and buses tend to be newer than private cars. In contrast, with trains, the London Underground’s fleet gets twice the annual train-km per train that the New York subway’s fleet gets, and its cars last approximately the same time.

      In general, it’s much easier for trains to go below 20/passenger-km than it is for cars to go below 30/vehicle-km. On intercity rail, the big European railroads (DB, SNCF, RENFE) charge around $0.15 per km and make a profit (RENFE loses money but barely), even with higher staffing levels than I’d like and some impressively peaky TGV runs. It’s possible to go lower if the peak factor is reduced, but that’s more specific to certain intercity lines such as the NEC. But peaky commuter rail can have pretty low costs, too, if the operators make serious attempts to be efficient. Auto manufacturing has had private-sector competition since the beginning; rail operations, not so much.

      • michael.r.james

        By any measure – including, judging from a random sample quizzed on the pavement last month, customer satisfaction – Paris’s Autolib’ electric car sharing scheme is looking like a success. Membership is up from 5,650 a month two-and-a-half years ago to 155,000 today. Between them, those members have clocked up the fairly remarkable total of 30.4 million miles. The service’s 2,500 Bluecars – hitting 3,000 by the end of this year – are now averaging a total of well over 10,000 rentals every day.

        There are 900 rental stations throughout central Paris. These are reserved parking spots with adjacent electronic control box on a column. (See pic in Guardian story, link below). It uses a phone App for booking, finding & payment etc. Fully electric small cars with good range (155 miles ≈280 km), recharged at the stations. The scheme has spread to Lyon, London (Boris is really into mimicking Paris ..) and, wait for it … Indianapolis.

        It can gain traction in Euro cities and maybe NYC, because parking (finding & cost & street vandalism) is such a big issue there that it is a strong disincentive to owning a car, or to bringing a car into the city. As some of the examples show, even if you own a car and a secure parking spot for it (Paris actually has a huge number of underground parking garages) it is still a bore to retrieve your car and go anywhere with it.

        http://www.theguardian.com/cities/2014/jul/09/electric-boris-car-source-london-how-work-paris-autolib
        Electric ‘Boris cars’ are coming to London – how do they work in Paris?
        When the electric car-sharing scheme Autolib’ launched in the French capital, staff were advised to expect a complete disaster. Three years and 30m miles later, the biggest concern is pigeons
        Jon Henley, Thursday 10 July 2014
        Jean-Philippe Wailliez, who runs a small wine business in Paris, finds he uses one “actually pretty regularly. Three, four times a week, maybe, instead of the metro or the commuter train. It really is a very useful service. Especially when I have to make deliveries.”
        Emanuelle Buet is on her way to an urgent, unscheduled meeting on the other side of town, further from a metro station than any self-respecting Parisian would ever want to walk. “I have a car, but it’s in the multi-storey 10 minutes away,” she says. “It’ll take forever to get out, and twice as long again to find somewhere to park at the other end.”
        Sarah Maurel and her colleague have just used one for the first time. “Brilliant,” she says. “We had a client briefing in Champigny-sur-Marne, and a train strike. Thirty minutes there, 40 back, way cheaper than a taxi. It took time to get used to – the brakes are a bit sensitive. But very happy.”
        By any measure – including, judging from a random sample quizzed on the pavement last month, customer satisfaction – Paris’s Autolib’ electric car sharing scheme is looking like a success. Membership is up from 5,650 a month two-and-a-half years ago to 155,000 today. Between them, those members have clocked up the fairly remarkable total of 30.4 million miles. The service’s 2,500 Bluecars – hitting 3,000 by the end of this year – are now averaging a total of well over 10,000 rentals every day.

          • michael.r.james

            That was in 2014. Give it some time.
            I don’t know if it will take off as a major thing or remain niche. At least I believe Paris will give it a good try. I am much more likely to use a service like that than a taxi or uber, especially as I only use a car (usually hire or a friend) when I really need it (ie. for moving things or people).

          • Alon Levy

            I remember the discussions about it on the transit blogosphere years ago, well before 2014. I mean, Autolib’ was launched in 2011. As with Uber, UberPool, and any other technology that’s in the news, there were commenters who were sure it was game over for public transit, and others who were sure it was game over for the need for private car ownership. And yet, the number of users is small by the standards of both the number of Franciliens who take public transit to work and the number of Franciliens who drive to work.

            Velib’, by the way, has about 100,000 users a day.

          • michael.r.james

            Autolib can’t replace mass transit. That would be physically impossible and undesirable. Its competition is with taxis and owner’s cars, maybe Velib in bad weather. 10k a day, 155,000 members and 30m km driven, after 3 years is not bad. Especially when you consider there are only 18,000 taxis in Paris. It might be only a slow uptake as more people choose not to own cars or use the ones they might have. (Quite a few Parisians have a car in a parking garage that is not especially close to where they live.)

        • Stephen Stofka

          Autolib’ sounds like pretty straight carsharing with its main gimmick being that it uses electric cars. Carsharing’s been around for a while now, and it hasn’t replaced public transit or eaten into biking–it simply serves a useful niche.

          Incidentally, the rental car companies are acquiring the carsharing startups now.

          • michael.r.james

            Just like bike-sharing had been tried (and failed) dozens of times over the past century, when Velib showed how it could be made to work in Paris–followed by London, NYC and dozens of other cities around the world? Well, we are yet to see Autolib’s potential.
            I keep seeing this meme repeated about “replacing public transit” but I doubt you could find a primary source of anyone dumb enough to predict such a silly thing. But then maybe there are those predicting that driverless cars will do that too?
            I agree, that 3-4 years after its introduction it is “niche”. But as it begins to approach the 18,000 taxis Paris has, then how much longer is it just niche?

      • Adirondacker12800

        Cars are not getting any cheaper

        They don’t sell new Model Ts anymore. Or 1965 Belairs, Volkwagen Beetles, 2CVs or even what was a base model in 1995.

        depreciate by the kilometer rather than by the year, especially at the intense utilization required for taxis.

        Using an internal combustion car intensively makes it last longer. It gets hot and stays hot.
        New York City’s Taxi and Limousine commission has regulations about how old the vehicle can be. It’s not unusual for them to get too old, then get sold off with 300,000 miles on them. The last car we sold had 314,000 miles on it. The people who bought it are thrilled. It gets from point a to point b. Without air conditioning or a radio because those died at 250k. The upholstery was in rough shape too.

        http://nypost.com/2014/12/29/the-record-breaking-roadster-with-3-million-miles/

      • simval84

        I’m late, but I’ve got to point a few things out. The cost of private vehicles tend to much under-estimated because all the labor or regular maintenance, cleaning and administration falls on the owner who does it himself, out of his own time. People who take the cost of running a private vehicle as a baseline for an automated taxi fleet demonstrate complete ignorance of the actual business of running an actual taxi fleet.

        For instance, the driver of a taxi does more than just drive the vehicle, he has to do some basic maintenance and cleaning, and spot verification of the vehicle to know when to seek repairs. Adding self-driving technology would replace driving, but couldn’t replace all the tasks a taxi driver does, you will need to hire people to do these frequent tasks taxi drivers do. All this also means that you will have higher overhead costs as taxi companies would have to set up complex administrative operations to manage their fleets and make sure vehicles remain clean and functional (especially once you had self-driving technology, which will increase the amount of verification that needs to be done).

        That’s why on my blog I eschewed the usual method of approximating costs of self-driving vehicles through comparisons to private vehicles by looking at actual taxi cost structures. These show that the driver’s wages and regulatory costs make up 50-60% of total costs. Considering that taxis usually cost (once you include all the fees, not just the per-mile charge) about 3 to 3,50$ per mile, that means that, even excluding driver wages and regulatory costs, the cost of providing taxi services is probably around 1,20$ to 1,50$ per mile, taking into account the cost of the vehicle, of maintenance, of fuel and of all the overhead costs tied to running a taxi fleet, so 70 to 100 cents per km.

        Uber is another example where the drivers do a lot more work than just driving, they buy the car, they clean it, they manage the maintenance schedule, take care of all paperwork tied to the car, etc…Add self-driving tech, and all this management work doesn’t disappear, it needs to be done by someone. Considering how little most Uber drivers are paid for all the work they do (I’m not sure Uber drivers who buy a car exclusively to work Uber would earn minimum wage once all is accounted for), I’m guessing self-driving vehicles would not be significantly cheaper than Uber is currently.

        • Bjorn Swenson

          Private car drivers also don’t always take care of everything that needs to be fixed.

          For instance, the family car I used to drive about 80% of the time had a few large dents in the door, a broken turn signal auto-cancellation device, as well as broken power mirrors. Nothing major that kept the car from being driven or was substantially unsafe – all I had to do was cancel my signal after turning, and adjust my mirrors before driving if I wasn’t the last person to use the car – but the car was still broken nonetheless. At the hundred-plus it would cost to replace each broken part for what little benefit I would recieve, it made no sense to maintain the car to its absolute best condition. Judging by the number of cars I see with hasty paint or even tape repairs, I assume that many others don’t always repair their car to the fullest either, even with components that are actually safety-critical such as brake lights.

          Additionally, 1 in 7 US drivers lack car insurance. For these people, if you drive the cheapest car you could find on craigslist, don’t buy insurance, and never bother to repair anything that you don’t have to absolutely repair, driving could easily be cheaper than bus fares, to say nothing about a cab or Uber.

          In contrast, professional transportation operators have to maintain their vehicles correctly, as well as carry the correct insurance, and are likely subject to regulatory checks, or they will get fined or shut down. A fleet owner of self-driving cars couldn’t skimp on replacing small broken parts analogous to a device that automatically cancels your turn signal.

  6. threestationsquare

    “The problem is that sharing a car with a stranger ends the entire advantage of being in a car rather than on a train or bus.” Most of the advantage of UberPool/LyftLine over buses is speed. In a city like San Francisco they’re regularly 2-3 times faster than Muni for typical journeys, thanks to making at most two stops instead of many, shorter typical waiting times/headways, taking advantage of freeways when it makes sense to do so, and door-to-door service.

    As for why “slugging” is unpopular, the huge variety of journeys makes it difficult to find people going even roughly the same way. (My experience hitchhiking has been that one always underestimates just how varied the destinations of people on the same road are.) Networked software can create real value by solving this pairing problem. Other issues include the difficult coordination problem of setting up slugging points without a central authority, and the lack of a reputation system; Uber and Lyft to some extent address these problems as well. Also, shared taxis are of course a popular and important mode of transit (typically somewhat faster and more expensive than buses) in much of the developing world, though I grant that those situations mostly aren’t very comparable to Uber and Lyft’s markets.

    • Alon Levy

      If slugging is a poor example, then look at carpooling. This, unlike slugging, does get nontrivial usage in the US (it’s more popular than transit overall, though not in the areas where transit exists), but it’s in steady decline. And this is not usually with strangers, but with family, friends, and community members; there’s no need to trust the Uber algorithm. Carpooling may cut the cost of transportation by a factor of 3 or 4, but you’re still riding with other people, in an uncomfortably cramped car.

      As for speed, this is also supposed to be the advantage of express buses: they make a couple stops in a neighborhood or suburb, and then they express to the CBD on freeways. They make more than 2 stops, so they’re slower than rideshare, but they’re still a lot faster than regular buses. They still get very little usage, and despite charging the same fares as UberPool and spreading the cost of a driver among many more riders, they lose money.

      • leviramsey

        As for speed, this is also supposed to be the advantage of express buses: they make a couple stops in a neighborhood or suburb, and then they express to the CBD on freeways. They make more than 2 stops, so they’re slower than rideshare, but they’re still a lot faster than regular buses. They still get very little usage, and despite charging the same fares as UberPool and spreading the cost of a driver among many more riders, they lose money.

        Express buses being terrible doesn’t necessarily reflect on UberPool.

        Do express buses actually deliver a meaningful speed advantage for many riders? They’re fast from pickup-point to destination (typically a park-and-ride and a CBD depot), but with the time to get to either, are they much faster than local buses? Sure, if the transit authority schedules appropriately, it’s viable to transfer from local to express buses (e.g. by pulsed timed transfers), but given the institutional inertia in at least nearly every US transit authority, does it make sense to wait for that? Further, if the frequency isn’t great (say fewer than 2 an hour), some fraction of the headway should be added as well (of course, if a given o/d pair with enough skipped inner destinations to make expressing reasonable is filling multiple express buses per hour, then that pair seems to be calling out for something rail-based (which would serve some of the skipped destinations without losing much if any speed to express bus). It seems reasonable to suspect that UberPool would be substantially faster than express buses and local buses for this reason, which might make a higher fare than local buses more palatable.

        An UberPool driver is almost surely cheaper than an express bus driver, thanks to fewer qualifications (no passenger endorsement CDL to restrict the pool), and being classed as an independent contractor. Maybe a factor of 4 difference (remember that what UberPool is paying the driver effectively includes maintenance, depreciation, and fuel)? Staff utilization is also somewhat better by definition so it’s maybe a factor of 5 difference. Each passenger in a 5 passenger UberPool van is paying the same for the driver as each of 25 passengers in an express bus.

        Organization before electronics before concrete. UberPool could be viewed as an organizational change (it’s not really electronics, despite the tech angle, and it’s certainly not concrete). The ceiling for UberPool is far below the ceiling for well-organized public transit, but it’s probably not worse now than poorly-organized public transit: whether it’s a net good is then a function of the chances of converting poorly-organized public transit into well-organized public transit. Considering that the barriers to such organizational change are largely political, and that there’s no politically significant tribe in the US that’s invested in well-organized public transit…

        • Alon Levy

          In New York, bus drivers make $63,000 a year. You can’t go a factor of 4 below that. In Singapore, where the government aims to increase rather than restrict the supply of taxis in order to reduce fares, taxi drivers make a bit more than S$2,000 per month net of rent, fuel and congestion charge. This involves a lot of dead time, since, again, there’s an oversupply of taxis, so staff utilization is not terribly high. Higher staff utilization means higher pay, so you’re not saving that much money at the end of the day. Singapore is also a significantly lower-wage and lower-tax economy than the richer parts of the US. The staff utilization rate on buses is not low, unlike on trains: 1,200 revenue-hours per driver-year on NYCT buses, but I don’t know how it breaks down as local vs. express buses.

          UberPool so far guarantees a maximum of two unrelated people per car. You can go higher and turn it into vanshare… but then the question is why existing vanshare isn’t successful beyond a very small number of thick corridors, where they act like smaller buses.

      • threestationsquare

        Express buses manage the “uses freeways” and “fewer stops” (though still far more than UberPool/LyftLine) parts, but lack the “door-to-door service” part and have much, much worse headways/average waiting times (sometimes running only at peak), so the overall trip time is still substantially longer. (And in spite of this, the privately-operated express buses in New Jersey are quite profitable, though I’m aware that farebox recovery on NYC express buses is poor.)

        I think that carpooling is in decline in the US partly because of increased dispersion of origins and destinations, with people becoming less likely to have the same origin and destination neighbourhoods as their friends and family. Thus software automatically matching people with strangers (and marketing reassuring them that this is safe) has the potential to reverse this decline. (That said, Lyft’s total nationwide ridership in December 2014 was only about 70k per day; extrapolating from this and other public data suggests that even in SF where they are very established total UberPool+LyftLine ridership is only a few percent of Muni ridership.)

  7. Greg Acton

    Alon, is comparing Uber to subway operating costs the right comparison?

    Uber’s per-mile vehicle fee in NYC is less than 2x the bus system’s cost per revenue seat mile; in Pittsburgh Uber is already below our bus costs. Plus, those are aggregates of a number of routes some of which are more inexpensive and/or revenue generating which could get picked off sequentially… slowly raising the subsidy required to the keep the buses running.

    By the time Uber (or someone else) gets to autonomous electric civic-sized vehicles, operating costs seem likely to end up well below even subways… with interesting consequences/implications for congestion pricing and other needed externalities. http://gregacton.blogspot.com/2015/10/uber-part-6-transit-network-cross.html

    • Alon Levy

      Yes, there is an issue of private transit skimming off the profitable core bus routes. Sometimes, they end up coexisting, as with the Sherut vans in Israel, which run along the busiest bus routes. Sometimes, the public agency gives up and lets the private vans replace it, as in parts of Hudson County. In fact, one of the motivating examples for my post is that those private van service have never graduated to any fixed infrastructure, such a private subway, despite the fact that, for public agencies, subways tend to subsidize buses rather than the other way around.

      None of Uber’s supposed benefits is about thick routes, though. Uber is supposed to be a bigger deal on thinner routes, because there, the frequency of private vanshare is much lower.

      Yes, Uber’s cost per unit of distance driven isn’t far above bus costs… but buses don’t work alone, not in first-world cities that are serious about their public transit systems. The buses in New York feed an expansive subway system, with much lower operating costs. The subway’s capital costs are enormous, but only because New York’s construction costs are unusual. If you try working out costs based on best industry practices, you get to variable costs in the single digits in cents per passenger-km (see e.g. this calculation), including variable maintenance costs.

      In general, if you try to work out variable costs only for cars, you should do this for trains and buses as well, and then the costs look substantially lower. As one example, the trains in London and New York last approximately the same amount of time – 40 years – even though New York runs them about 90,000 km a year and London 170,000. Trains depreciate per year rather than per km, and therefore this is a fixed rather than variable cost, whereas cars depreciate mostly per km, which means that running them more hours per day is not much of an efficiency boost, as you note in your posts about the breakeven points associated with being part of a fleet. Improving taxis’ cruising efficiency would be big… but how much can you improve cruising efficiency in a crowded city center, anyway? In a less crowded area cars could park and wait for a hail, but then the distance from where they wait to where they’re being hailed can be a large fraction of the distance they’ll be traveling while loaded.

      • Eric

        When I use the NYC subway, I continually hear loud banging noises which I have not heard in any other city’s rail transit system. I don’t know if this is due to bad track maintenance or what, but it’s very noticeable. I can totally imagine that NYC subway cars get more physical stress per km than other city’s cars, and for that reason deteriorate faster.

  8. Tal F

    I think a great deal of the private sector’s reluctance to develop fixed infrastructure such as subways can be explained by the huge implicit subsidies available to private cars and vans in the development and maintenance of the road network. If every car or van were forced to pay the FULL cost of building and maintaining the roads on which they drive (including all hidden costs such as traffic police, ambulances for all the casualties of road carnage, etc.), many private companies would quickly find it cheaper to build fixed-line rail rather than pay the exorbitant user fees to use public roads.

    • Alon Levy

      But it’s not happening even in cities with low private vehicle mode share. In plenty of areas, the market for travel to the CBD is already dominated by public transit (even in LA, transit has a 50% share for downtown workers). The everywhere-to-everywhere markets have lower transit share… but these markets are precisely where network effects are the most important.

      • Tal F

        Problem is the government subsidizes both public transit and private road transit but not private fixed line transit. Eliminate subsidies in private road-based transit and you will see development of private fixed line transit.

        • Alon Levy

          What about cities where the government does not subsidize public transit? Toei and Tokyo Metro are both profitable. JR East is fully private, and is building new lines; so are the private railroads. So why do we not see any new entrants building new subway lines?

          • Tal F

            I’m not familiar with Japan’s transit. Perhaps I am missing something.Or perhaps (just a thought based on 0 knowledge) the value of the road system subsidy exceeds the cost savings from running fixed-line transit, so that vans are still more profitable than trains. Alternatively, there may be capital constraints (such as high borrowing costs) preventing most private firms from building out large fixed-line systems.

          • Nathanael

            It gets incrementally more expensive to build subway lines the more underground infrastructure has already been built. So you’d expect there to be a higher and higher hurdle to building new lines through *already served* areas. Can you think of any parts of Tokyo which are essentially subway-free, where a subway line might be built at “base” cost?

          • michael.r.james

            To describe entities like JR East as “fully private” is a considerably simplification. I can’t pretend to understand the complex history of “privatisation” of Japanese National Railways (ie. the original government entitity). But it surely tells you why true private passenger railways don’t really exist; these newish entities are only possible because of decades or a century of previous public investment building the networks.

            JR East was incorporated on 1 April 1987 after being spun off from the government-run Japanese National Railways (JNR). The spin-off was nominally “privatization”, as the company was actually a wholly owned subsidiary of the government-owned JNR Settlement Corporation for several years, and was not completely sold to the public until 2002.

            The Settlement Corporation was set up to handle the assets and debts of JNR prior to attempts to sell off the 5 operating rail companies.

            In 1987, when the privatization of Japanese National Railways took place, JNR debt totaled over ¥37 trillion. Upon passage of the 1987 Railway Reform Law, the debt of JNR was split, with 60% of the responsibility falling directly on the JNR Settlement Corporation, and 40% falling on three of the JR Group railway companies, JR East, JR Central, and JR West. While the smaller portion was expected to be repaid, the three JR Group railway companies were not held liable for failed earnings, and only made significant profit through sale of stock. JNR dignitaries staggered interest payments on the large existing debt to keep the JNRSC from paying back the debts that it was expected to. During its tenure, the debt increased, leaving taxpayers to pay off nearly ¥24 trillion as of 2009.

            As I say, I don’t know details of JR East but I suspect it will be similar to Hong Kong MTRCL, also privatized but whenever line extensions or major capital expenditure is necessary the HK government pays for at least 50% of that cost. So even in incredibly high-ridership networks (JR East carries 6 billion pax pa) these so-called private rail operators aren’t really … and I don’t think we should refer to these companies as if they the same as, say, WalMart. (I almost wrote GM but of course it was nationalized after the GFC with $50bn of public money, then after 5 years or whatever, reprivatized with the loss of $10bn to the taxpayer–without even counting the opportunity cost of all that money over those years.) And one thing these rail companies are not models for, is privatization in western countries. They may function quite well in particular societies like Japan and Hong Kong but would be disasters in the Anglosphere. Where there is not enough public or political support for passenger rail transit, as in the USA, then you’ll get what you pay for: crap (by international standards). Even where the private companies inherit a century’s worth of infrastructure and working routes, like the UK, the service deteriorates and fares become even more expensive and the actual infrastructure company (Railtrack plc) went bust and had to be rescued (re-nationalized) by government (where it remains today). They say that the TGV side of SNCF is “profitable” but of course that is in an operational sense and certainly does not include any liabilities of the capital cost in building all those HSR. Just as HK’s MTRCL is praised as the best run (and profitable) “private” city Metro in the world but it, like JR East, neither built its system nor pays for its expansion.

          • Alon Levy

            I say JR East is fully private because it’s fully investor-owned, and its recent non-Shinkansen capital projects (Tokyo-Ueno Line) are to my understanding privately funded. The Chuo Line track elevation is 90% publicly funded, but that’s because in Japan, if the railroad was there first, the road users, i.e. the general public, have to pay for grade separation, unlike in the US, where the railroad has to pay even if it was there before the roads.

            The JRs still have to pay for Shinkansen construction debt. The 60% of the debt that was wiped was not construction debt, but debt for past operating losses: from 1971 to privatization, JNR lost money even before depreciation, and because it didn’t get much in government subsidies, it borrowed to cover the losses. The same is true for at least some of the RFF/SNCF debt, but so far it’s not being wiped. In the US, the MTA engages in similar practice – it has recently funded a lot of its capital plan via borrowing, but these capital plans include routine maintenance.

          • michael.r.james

            Yes, yes Alon but none of that changes my main point. These “private” entities were only possible by being given huge assets paid for by the public over decades, with very large operational incomes, and being freed from the US$300bn debt.
            That is my answer to Nathanael (or whoever) about why “private” transit companies cannot build new lines.

            I’d also be interested who “invested” their real money in the IPOs of the JRs? For example did the Canadian Pension Funds buy into them? Or is it mostly just recycled public debt (part of the 240% of GDP that is Japanese state debt)? Are the shareholders of JR Central happy for it to fund the US$90 billion for the MagLev?

          • Andrew in Ezo

            @michael r. james
            You are overlooking the numerous private interurban railways serving the Tokyo and Osaka metropolitan areas. These have *always* been privately owned and financed, and the especially in Osaka, developed as competitors to the old government-run railway, and indeed still compete with the privitized JR railway(s). The largest of the private railways in terms of passenger volume is Tokyu Railway, which daily carries more passengers than the DC Metro, Chicago L, MBTA subway, and BART *combined*. It is of course, profitable.

          • michael.r.james

            @ Andrew in Ezo

            Sure. Those are commuter lines. Their two main lines in Tokyo total about 50km and their entire network (all cities) is about 100km. So, even the total is less than a single RER line (A, 120km) in Paris and which carries about 300m pax pa (and which might also exceed the ridership of those US systems you list, though not of course of NYC which you don’t list) in a city about one third the population of Tokyo. I can’t find figures for Tokyo but the total commuter lines must be at least the same as Paris and so must be at least 1,000 km (the RER system alone is 580km). So the Tokyu lines would be no more than 5% of the system. The two Tokyo Metro lines, both government-built if now quasi-privatized, have over 300 km of lines.
            I would guess that the Tokyu lines are profitable because 1. they were built beginning in 1926/27 so own a legacy ROW, well before the explosion in Tokyo property prices; 2. they serve the biggest urban population in the world; 3. they both intersect, ie. get fed commuters from, the Metro system, esp. the Yamanote line (as it should; just saying that these two lines could not operate without the rest of the publicly-built network); 4. Tokyu is a very diversified company and owns shopping centres (some above their stations, which I have noted elsewhere is a very good model to recoup the “externalized benefits” of city transit).

            All of that is not to either deny or criticise your post, but to point out that Tokyu operate a quite small part of the biggest city transit systems in the world. What lessons do you think the rest of the world’s big cities can learn from Tokyu? Should we discuss it (as in my original point about JR East–now the “private” owner of the Yamanote line amongst a lot of other publicly built Metro lines) as a model for “private” commuter transit? How did Tokyu survive while the various private owners of London and NYC lines disappeared, to be taken over by the public operators?

          • Alon Levy

            Well, there’s more than just Tokyu… the ridership in Greater Tokyo splits as around 40% JR East, 40% all private railways combined, and 20% Tokyo Metro + Toei.

          • michael.r.james

            In that last post I wrote:

            The two Tokyo Metro lines, both government-built if now quasi-privatized, have over 300 km of lines.

            That is a bit ambiguous. I meant the separate “two Tokyo Metro **companies**” as in “Tokyo Metro Co., Ltd” and “Tokyo Metropolitan Bureau of Transportation (Toei)”.

          • michael.r.james

            Alon Levy at 2015/10/18 – 11:00

            Well, there’s more than just Tokyu… the ridership in Greater Tokyo splits as around 40% JR East, 40% all private railways combined, and 20% Tokyo Metro + Toei.

            I’ll have to accept (or not) your figures on that. But that still puts >60% in public (or quasi-) hands, or at least that was funded and built by the public. Just a few posts back you would have not included JR East’s 40% share (possibly still don’t) but that’s the thing: I don’t know, without a lot more work on each of those claimed “private” companies, just what is the true “private” input into Tokyo transport. Actually, it’s worse. You haven’t answered as to who the shareholders of JR East (or any of these others) are, probably because, like me, you don’t know and can’t easily find out.

            I still claim that the essential core (and almost certainly the most expensive to build) of the city’s system is was publicly funded and built (if now in nominally “private” hands). Without it, the commuter rail would not be able to function. (In fact construction of London and Paris Metro systems was largely to take commuters from the big train stations to everywhere around the city.) I am also not clear on what these pax numbers mean. It seems difficult to think there can be no double-counting unless it is claimed that most of those arriving in Tokyo are at their destination and don’t need to use Metro for the final stretch inside the city?

            I also note that the second biggest non-public company (not including the two Metros) Tobu “interoperate” with four of the Metro lines (and at least one of those is also “inter-run” with Tokyu). I am sure that makes excellent operational and efficiency sense but it points out how complex the relationships and operational dependence Japanese transport is. Admirable but I’m not sure there are any examples anywhere else in the world, or at least in cities we would consider have successful mass transit. In Hong Kong they eventually merged the separate KCR into MTR(CL) to create a single entity responsible for all rail transport in HK. I suppose London is an example of a bunch of private lines (not commuter but Mainline) however that was forced ideological privatization of public assets which lots of riders hate; but London has a single over-arching entity TfL under direct control of the mayor.

      • Adirondacker12800

        The nowhere to nowhere markets. Outside of the CBD, unless the residential density is like Brooklyn, the traffic is much less congested if at all, there’s lots of parking and where ever you are starting out or destined isn’t near where the bus line could be.

  9. Landofrye

    “First, let us consider costs briefly…” Uber, Lyft and other rideshare technology companies don’t have any operating costs to speak of because they merely operate a software platform. The drivers are the ones who end up footing the bill: unlike traditional taxi drivers, however, Uber and Lyft drivers usually use their own cars and often work on an ad hoc basis so that they may not pay that much more than they pay for driving on a personal basis. (the guys who put all their time and effort into this, though, often end up getting screwed over).

    “The problem is that sharing a car with a stranger ends the entire advantage of being in a car rather than on a train or bus.” No way, at least not in a city like Los Angeles. If you live at a distance from a transit-running arterial or if the nearby transit line has limited non-peak frequency (the latter is, sadly, the case on much of Los Angeles’ Westside), then a shared ride still boasts the advantage of convenience and flexibility.

    What amazes me most about Uber and Lyft is how popular they have become in Los Angeles (which was among Lyft’s top two or three markets I believe), where public transit has traditionally had a marginally mode share. These services are not only extensively used for transport to nightlife (supplanting the role of taxis) but have a substantial market in the morning and evening rush hour periods. (I don’t have the exact statistics but I used to be a Lyft driver myself) The “Heat Maps” I used to get as a Lyft driver showed that daytime use of Lyft predominates on the Westside and along Wilshire Corridor (as well as in Downtown and parts of the Valley), well-heeled areas whose denizens seldom if ever use transit.

  10. walkableprinceton

    I’m really not sure what the point of this article is. Are you seriously arguing that the private sector cannot provide transit? That would be demonstrably wrong, because the private sector is already providing a significant amount of transit in the USA, and in other developed countries. If the argument is that the private sector cannot supplant the public sector, well, that is a statement of the obvious. If you have an existing subsidized system, it’s going to be hard to replace that system with one that charges market rate.

    • Alon Levy

      No, I’m arguing private startups (not the same as the private sector) cannot provide either bus networks or rapid transit of any kind. It can provide service on individual lines, as on many dollar van routes and some system that feed Port Authority, but it cannot provide the everywhere-to-everywhere bus grids that various North American cities are moving toward, and it cannot build rail lines.

      The subsidies to existing public transit are neither here nor there. Usually the argument that the private sector could replace transit isn’t “the private sector can make a profit if it charges twice as much for identical service.” The public sector can, after all, decide to double its fares as well. Instead, there’s an argument that involves appeals to public-sector inefficiencies and to private-sector innovation: Bridj, supposedly, uses cutting-edge algorithms to match service to demand, and offers faster service than the bus. In reality, it’s a niche, and is probably going to either go the way of Leap or turn into an ordinary vanshare service.

      • chris

        I like this short and summarized version. I think the private taxi operators of Trinidad and Tobago might provide a counter-example to the strong form of this claim. They provide everywhere-to-everywhere service by running mostly fixed routes, with some flexbility. There is significant passenger-facing infrastructure in the form of taxi stands and terminals. Many trips involve transfers, usually with a brief walk in between. There’s no American-style transit network to compete with the taxis — the only buses are intercity.

        I only visited, and I never got good at using the system, but I watched the locals use it, and I have no doubt that they could get wherever they wanted to go.

      • Ben Kurtz

        Alon writes: “No, I’m arguing private startups (not the same as the private sector) cannot provide either bus networks or rapid transit of any kind. It can provide service on individual lines, as on many dollar van routes and some system that feed Port Authority, but it cannot provide the everywhere-to-everywhere bus grids that various North American cities are moving toward, and it cannot build rail lines.”

        Putting it that narrowly, I’d concede that the argument is both true and largely irrelevant in the U.S. context. The vast majority of Americans will probably live their entire lives without spending much time dependent on “everywhere-to-everywhere bus grids,” and I would guess nearly as many without depending on rail-line mass transit. Recent U.S. Census data puts transit mode share, nationally, at about 5%. So is it really a problem that the private sector is not that good at supplying buggy whips in mass quantities these days? If we’re thinking about the role of transportation start-ups in America, there’s a lot more scope for improving people’s lives by enticing them out of their cars by offering a cheaper/faster/better taxi-like alternative, than for improving the world by getting the miniscule percentage of bus-riders out of their buses.

        We all know that rail lines have a great advantage in grade separation, in having very high corridor capacities, and in having the best farebox recovery ratios of American transit modes, so in a city like New York or Chicago I can see that mode persisting for trips to/through the most built-up parts of town. But urban transit buses? I can imagine plenty of lines that would be decimated by a simple rule change allowing old-fashioned dollar vans to compete on the corridor (M-86, wink-wink, nudge-nudge), let alone any of the other developments discussed here.

        I can hardly think what would happen on a great many other lines if digitally-dispatched shared-ride taxis and vans gained traction. Alon’s counter-statement that “sharing a car with a stranger ends the entire advantage of being in a car rather than on a train or bus” is patently ridiculous. Making, say, 3 total stops, instead of 30, massively trip speeds down a corridor. Having your own car seat and seatbelt massively improves comfort over a hard plastic bench or hanging from a strap. Having a locked trunk or cargo compartment makes it much easier to travel with suitcases or parcels. Having some flexibility to deviate from a defined corridor to drop off passengers at the door solves a lot of last-mile problems (but if you allow the route to deviate too much you begin to loose a lot of time). It’s not as nice as a purely private car, but it’s also a world apart from a bus.

        The numbers in the original post are a bit of a mess. Comparing 48 cents per vehicle mile ex-driver’s labor for a car to 34 cents per passenger mile including operator’s labor for a subway is meaningless. Notably, urban bus passenger-mile costs aren’t even given, but figures I’ve seen are shockingly expensive — often around 50 to 90 cents per passenger mile (http://iurd.berkeley.edu/wp/2010-04.pdf). Cars can and do carry more than one passenger, and we’re only at the early stages of developing digital dispatch tools — and developing social acceptance of these tools — to match unrelated passengers with similar origin-destination pairs in real time. If an iPhone slugging app becomes popular then we divide 48 cents per vehicle mile across two to four occupants and beat even NYC subway costs by a country mile, and almost certainly with increased comfort and quality of service. If it’s professionally-driven ride share, then, using the NYC taxi rate of $2.50 per vehicle mile, it doesn’t take more than 3 passengers to beat most urban bus services for cost, and again, with massive increases in service quality. If, being a bit more speculative, we can envision a self-driving minivan that can operate a $1 per vehicle mile (between a self-drive and taxi costs) and carry up to six passengers then I really don’t see many bus lines surviving.

        The big point in the original post was about “network effects” and how private start-ups cannot offer them in the same way big established public agencies can. But start-ups already have the advantage of the original and most important network effect — the city’s street grid. Cross-honoring transfers and flat-rate monthly tickets are illusory pricing gimmicks. If I have $116 a month to spend on transit I’m ultimately indifferent as to whether that’s paid all at once for a pass or whether I spend it pay-as-you-go on a van service made faster/better/cheaper by digital technology.

        • Alon Levy

          In New York, the introduction of the MetroCard, which instituted free bus-subway transfers and unlimited monthly tickets, was followed by a sharp increase in ridership that continues today. It’s not a meaningless gimmick; it’s a major feature of large systems.

          The high bus costs you cite are averages of core and branch routes. It’s not a fair comparison when the existing private transit services (e.g. dollar vans) only plow the trunk routes. In Vancouver, the core bus routes average not much more than a dollar per passenger boarding, and many of these routes have quite long average trips: two-thirds of the B-99’s ridership is end-to-end, a distance of 12 km, which means we’re talking a single-digit number of cents per km (and it’d still save operating expenses to replace it with a SkyTrain line). It’s in the context of very high crowding levels, but, well, putting four people in a midsize car is even more overcrowded. The non-core routes are in many cases explicitly used as social services, providing last-ditch transit to people who live kilometers away from buses that can be justified on financial performance metrics.

          Finally, the line that the US transit mode share is 5%, so it’s irrelevant to most Americans, is kind of stupid in an argument over taxis, which have even lower mode share.

          • Ben Kurtz

            “In New York, the introduction of the MetroCard, which instituted free bus-subway transfers and unlimited monthly tickets, was followed by a sharp increase in ridership that continues today.”

            At a minimum, that’s a correlation/causation error there that’s going to take all day to unpack. Co-incidentally with the introduction of the Metrocard (early 1990s), NYC started to clean up the streets and the subways, cut crime on the streets and subways, and go through a major population shift and redevelopment phase that continues to this day. Frankly, all of those sound like a far more plausible driver of those shifts in transit usage than some change in the fare media.

            Your core/branch point is interesting, but I think cuts as much my way as yours. High passenger-mile costs on branches imply low ridership and, as you point out, a key underlying motivation of subsidy and social-service. It would be economical, then, for the government transit agency to cut all such branch lines and contract out the carriage of those passengers to a provider who could do it for less than, say, 2.00 or 3.00 per passenger mile (can’t quickly find reliable cost figures for appropriate branch line examples, but figure the subsidy has to be at least that high) while maintaining an equal level of service — which to be fair is usually pretty low on branch lines. A technology-enhanced taxi service, to say nothing of a self-driving car service, could easily be in a position to meet that price and win the contract. Or the government agency could try to clone the Uber or Lyft technology — but I don’t see any of them trying, and I can imagine unionized transit labor being an obstacle to a home-grown or contracted-out solution. And network effects can be made irrelevant if the real issue is social service — if people were using the highly-subsidized branch to connect to an efficient trunk, the government, seeing as it’s already in the subsidy business, could simply give the subsidized Uber rides away for free to anyone meeting whatever eligibility criteria, and only at the transfer point do the riders then take out their fare media.

            “It’s in the context of very high crowding levels, but, well, putting four people in a midsize car is even more overcrowded.”

            I’m just going to have to disagree with you here on subjective grounds. I’ve spent plenty of time in crowded buses and trains as well as in mid-sized sedans carrying four people, and in my mind it is not even close — the sedan is a far nicer experience. If you mean four passengers plus a driver, implying three passengers across in the rear of a sedan — I grant that’s a lot less nice, especially with strangers, but then just get a three-row minivan — that should only add about 6 cents per vehicle mile, or 1.5 cents per passenger mile (the AAA publishes cost per mile figures for various classes of cars, and puts midsized sedans at something like 59 cents per mile and minivans at 65 cents per mile), which is entirely trivial. In fact, at one point in my life I gave up riding the 4/5/6 trains in Manhattan at rush hour basically to share a car pool with friends, costs be damned (though I think they were not much higher than transit when split up) because the sardine-can crowding was too appalling.

            “Finally, the line that the US transit mode share is 5%, so it’s irrelevant to most Americans, is kind of stupid in an argument over taxis, which have even lower mode share.”

            You weren’t paying attention to my original point, which was not to argue over the existing taxi market, or even, frankly, the existing transit market. We all agree those are small potatoes. My point is that that digitally enhanced taxis and self-driving cars can compete with, and to a substantial degree transform, the drive-alone and car-pool modes, and do so in ways that can probably promote reduced individual car ownership, less parking, enhanced urban densities with mixed use / walkable development, and a number of other goods which many people want but have a hard time finding in modern America. That’s where the real money and transformative potential is — those modes, at something like 75% and 10% share respectively, are how the vast majority of Americans move around every day. That these technologies could also displace traditional taxi services and a material fraction of traditional existing urban transit buses is an interesting — and I think accurate — side note.

          • Alon Levy

            Digital taxis are still taxis. If it’s so obvious to you that they can compete with cars, why is it not obvious that public transit that’s run to the same standards as in Swiss, Swedish, Japanese, etc. cities can compete with cars as successfully as in Swiss, Swedish, Japanese, etc. cities?

            A midsize sedan weighs perhaps 1.6 t (I’m making up numbers to get round numbers). At 4 passengers, it’s 400 kg per passenger. The lighter-end subway and commuter rail EMUs just about fill all of their seats at that weight per passenger. New York has heavier subway cars than is normal, but even then, the sardine can densities you’re talking about are on the order of 250-300 kg per passenger. In Japan, where trains are much lighter, the rated capacity is around 210, and then at crush load it’s 110, i.e. the passengers weigh almost as much as the train. Cars don’t go that low unless you’re literally sitting on top of other people.

            So let’s compare 4 people in a sedan and an EMU filled to seating capacity. The EMU is roomier, and you can choose to stand in the vestibule if you don’t feel like sitting next to other people. On the train, you can read. When you sit in a car, motion sickness is much more likely to happen, especially if you’re sitting at the back. I can’t even read sitting at the front in the passenger’s seat when the car is on a well-paved freeways. Even then, I get motion sick, which I simply don’t even on a bus, let alone on a train.

            As for New York’s subway ridership growth, the city itself began its turnaround in 1980. Population grew that decade, but the cycle of fare hikes and ridership stagnation continued. By the early 1990s, the subway was already much better, with better rolling stock, fewer breakdowns, and less crime (the subway’s crime drop began a few years before the rest of the city’s). The Dinkins- and Giuliani-era crime drop may have made the city more appealing to suburbanites who think of the city as the Other, but in the city itself, the people most in danger of crime always took the subway.

            Finally, re thick and thin markets, some cities do in fact contract out the thinner routes. Vancouver does so, in something called the community shuttles, and this improves operating performance. It’s still subsidized, but, well, Uber doesn’t even serve these thin routes and isn’t making money either. More to the point, the “Uber is game over for transit” boosters do not pitch rideshare as a way to contract out the marginal transit cases (after all, most transit ridership is not on these marginal routes).

        • Adirondacker12800

          Smartphone apps, no matter how hard you try, can’t make streets wider.

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