Why do Uber, Lyft, Didi, OLA and other ride-sharing companies want to partner with public transit companies?
For Uber and Lyft, the reason is simple: their business plans were based on the ultimate use of driverless vehicles to eliminate their main cost, driver labor costs. But human drivers will not be replaced for some time.
While many of these companies have increased lots of money by venture capitalists, they burn through it at an alarming rate. Uber made a loss $8.8 billion in 2022. Lyft, Uber’s main competitor in the United States, lost $1.28 billion.
These companies, collectively known as transportation network companies (TNCs), have two options to become profitable. They have to pay more for their services or find other sources of income. So most have ventured into e-bikes and e-scooters, food and cargo delivery, and public transportation.
Uber wants the “Amazon of transportation“by creating a one-stop platform for all transportation services – known as mobility as a service (Mesh). The switch to public transport is a natural development.
— Sandra (@Sandra_Ri051) April 7, 2022
Uber added trains, buses, planes and car rentals to its UK app last April. While it doesn’t provide these services, it plans to partner with other carriers so customers can use the Uber app to purchase tickets. If this service succeeds, Uber plans to expand it to other countries.
There are more than 4 trillion passenger miles taken annually by public transport. Given this volume, surprisingly few public transport companies make money. One of the few is in Hong Kong, as the operator develops the large amount of real estate it owns around its stations.
Public transport is subsidized because it is essential to our cities; they couldn’t function if everyone used a car to get around.
So how do ride-sharing companies think they can make money by getting involved in public transportation? Do they know something they won’t reveal?
How widespread are these partnerships?
By 2019 Uber had about 20 such deals and Lyft about 50. Neither company has disclosed whether the number of matches has increased or decreased in the post-COVID environment.
Uber’s 2021 Report, Towards a new public transport modelidentifies four key areas of collaboration with public transport companies.
The most common is the integration of public transport information in the TNC app. Uber has done this on a limited scale, among other things Sydney, where the app has been providing public transport information since mid-2019.
Sydney is the first city in the Southern Hemisphere to gain access to a new one #Uber feature that integrates real-time public transport information into the app @Uber_Australia @clarethunter #KIISnews pic.twitter.com/4HGIS15EAz
— KIIS1065 (@KIIS1065) July 29, 2019
The second most common area of collaboration involves providing first mile, last mile transportation – transferring a commuter between a public transit stop and their home or destination – or providing transportation in areas with low public transit frequency. transport. Dallas was the first city to subsidize shorts in 2015 shared Uber rides to and from a train station. Transportation officials in Dallas said it costs US$15 per passenger on one of their buses, but only US$5 per rider with Uber.
The third area allows users to buy public transportation tickets in their Uber app. The first of only a few operational examples has arrived Deventer in 2019, followed by Vegas in January 2020. A consortium of 13 small transit agencies in Ohio and northern Kentucky was added a year later Uber feature.
The fourth area is to replace public transport. To date, there is only one example – in Innisfil, Ontario. Innisfil had no public transportation, but needed a service for its growing population. The city enlisted Uber to provide bus service. Within a year it was carrying about 8,000 passengers a month.
What is stopping more public transport deals?
share rides reduces public transport patronage
worry about whether these companies will cooperate or divert riders
tempting people from public transport to shared cars increased traffic
these companies have historically not shared their data
the agencies don’t want to become dependent on companies whose financial viability is questionable – how can they make money and continue this partnership if public transport companies can’t?
— (@MarketPictorial) May 18, 2021
So why do some public transport companies sign up?
What is the motivation for public transport companies to cooperate with these companies? For large public transport companies, this is about improve operations related to:
- increasing the use of public transport by subsidizing rides to and from commuter rail, bus and tram stations
- services in the late hours when it is expensive to run routes, or to provide services where public transport routes do not run
- more mobility through multiple transport options
- paratransit, an adjunct to public transport that offers individualized rides without fixed schedules or routes, which is costly for public transport companies because they lack appropriately sized vehicles and are unable to respond efficiently to demand.
However, most of these partnerships can be found in smaller towns. This is because small improvements – such as ride sharing replacing an underused bus route – can have a significant impact on their budget.
Another trend emerging from the pandemic is that public transport companies are rethinking how they operate and how they can improve services. Some have partnered with transportation network companies, others have decided to implement it TNC-like services in house in an effort to increase passenger numbers.
While things were moving fast before the pandemic, progress slowed due to lockdowns and more people working from home. It’s still unclear how these companies will fare in a post-COVID environment, including whether travelers will use them as a replacement for some public transit services, particularly on low-frequency routes and for first-mile, last-mile travel.
The companies have indicated that the goal of these partnerships is to get people out of their cars. If they can make it easier for people to use public transportation, then that’s good for these companies because people might buy fewer cars and use more of their services in the future.