The Coming Private Transit Revolution

by Reihan Salam

Politico’s Byron Tau and Kevin Robillard report that politicians, and particularly Republican politicians, are trying to associate themselves with Uber and other sharing services that have fought local regulators and incumbent industries to better meet the needs of consumers. Many on the right, myself included, see Uber as a vivid illustration of how “strangling regulations” and “unnecessary red tape” can stymie the emergence of innovative business models. I would go further. Consumer protection, the chief justification for the regulation of taxi services, is baked into Uber’s business model, as drivers and passengers rate each other, and Uber doesn’t allow drivers who fall below a certain rating to make use of the service while drivers have the discretion to not pick up passengers who’ve been deemed abusive or otherwise problematic by other drivers. Uber doesn’t just illustrate how excessive regulation retards innovation — it illustrates how new business models can render certain (not all) regulations obsolete.

Yet as David Schleicher of George Mason University School of Law has observed, there is good reason to believe that Uber is just the tip of the iceberg. In a forthcoming article, Schleicher explores a number of ways local governments might move from resisting the rise of sharing services to leveraging them to achieve various public policy goals. 

One intriguing new development is the rise of new sharing services that are designed to further lower the cost of smartphone-enabled car-hailing and ride-sharing by facilitating the sharing of rides by strangers taking similar routes. SuperShuttle is a business that has long provided shared rides to the airports of major cities; by grouping together passengers, it can offer a cheaper, albeit less convenient ride, to a fixed destination. It is easy to see how this might have been challenging in an earlier era when computing power was expensive, and SuperShuttle had no choice but to engage in painstaking route-planning; fortunately, this process was greatly simplified by having a fixed destination. Now, however, the price of computing power has collapsed, and sharing services have the tools at their disposal to group together passengers traveling to a many different destinations. 

And so Uber is releasing UberPool, which pairs riders with strangers traveling along a similar route. Lyft’s new Lyft Line service does something very similar, albeit more ambitious, as Ryan Lawler of TechCrunch reports:

For Lyft users in San Francisco, Lyft Line will appear as yet another option users can toggle between when trying to hail a ride. When chosen, passengers select their starting point and end point, and the number of passengers they’ll be riding with. The app actually tells passengers the cost of the ride upfront, and Lyft says that fares could be as low as 60 percent off depending on where someone starts or is going.

Once a ride is confirmed, Lyft sends a car while trying to match up another passenger heading in the same direction. The belief is that it will be able to do so fairly often — according to Lyft CEO Logan Green, about 90 percent of all Lyfts requested today have a nearby passenger heading in the same general direction within five minutes.

When a Lyft picks a user up, the expectation will be that the passenger is at their front door, ready to go — no lollygagging. The reason for that is pretty obvious: The shared ride service is dependent on passengers being on time to make it work, otherwise everyone’s late and frustrated and grumpy. Drivers will wait for up to a minute for a passenger, but after that will move along to the next stop.

Over time, one can imagine services like UberPool and Lyft Line evolving into a sophisticated paratransit system that greatly reduces demand for private automobile ownership in dense cities. One is reminded of Helsinki’s initiative to reinvent public mass transit as a universal payment platform that would connect users to a wide range of mobility services, public and private.

Another start-up, Chariot, is not technically a sharing service. Rather, it is a fairly straightforward competitor for public transit. The service offers van and bus service along two heavily-traveled routes frequently traversed by affluent San Francisco office workers. Rides are more expensive than those offered by San Francisco’s (notoriously poor) public transit service, but less expensive than taking an Uber solo. Modern American city-dwellers forget that private transit services were once the norm in U.S. cities, and one assumes that there will be over-the-top opposition to Chariot on the grounds that, say, it will skim affluent passengers from public transit, ignoring the possibility that it might instead reduce the number of people who drive to work or that it might make public transit more attractive by easing congestion, both on the roads and on public transit vehicles, thus making rides faster and more pleasant. I don’t know if Chariot will be successful or not. I will say, however, that it is very exciting that mobility within cities has become, at long last, a space for business model innovation — a development that will make America’s big cities more livable. This is a very good thing indeed, and conservatives have good reason to celebrate it.