How Uber Hopes to Profit From Public Transit


Since billion of losses continue to mount, the ride-hailing corporation Uber reported its first-quarter earnings on Thursday. After the company’s disappointing I.P.O., and the similarly moderate debut of its nearest rival Lyft, it’s increasingly clear both will have to expand and extend their business models to something that might actually turn a profit business.

They are making a plan and that one of their strategies is to replace public transportation— an ambition that affects all of us and the environment, not just passengers and drivers.

Both Uber and Lyft have been cleared about their intentions. At Uber’s apex of candor, in documents filed with the Securities and Exchange Commission, it identifies a “massive market opportunity” in the estimated 4.4 trillion miles travelled by people on public transportation in 175 countries in 2017


. “A part of our trips can be place of another for public transportation,” the company said in the filing. Uber continues to heavily subsidize per-ride costs and pursue  a vision of transporting people in which it provides a wheeled conveyance for every occasion, distance and duration — ride-hailing cars, vans, scooters, bikes and, lastly but not the least, self-driving vehicles.

The initial step for these companies on the way to replacing community systems is to cover fill obvious gaps. Lyft’s filing emphasizes its capacity to supplement public transportation “by providing rides for the first and last leg of commute trips, late-night rides home and shuttle replacement rides.” Uber, too, says it wants to solve the “first-mile, last-mile” problem of getting riders to and from a bus stop or train station.

The benefit will go to the cities only, said the companies. Uber bills itself to public-transit agencies and investors as a helpful resource that can “reduce costs of under used routes” and “provide access to underserved communities.”

Both companies have started to begun trying out a range of public partnerships. In the Tampa-St. Petersburg area in Florida, the local transit authority offers a discounted amount of $1 Uber trips among the passenger’s bus stop and final destination, for a reasonable distance (usually about five miles). In Denver, the Regional Transportation District integrated Uber into its app alongside the public bus and commuter-rail system. In some part of cities, Lyft’s app displays public options nearby, a bid to get customers to think of ride-hailing as just another way to commute.

Both Uber and Lyft anticipate that these public-private partnerships will, in sufficient quantity, become profit centres. In the Tampa-St. Petersburg program, for example, while the commuter pays only $1, the city (using taxpayers’ money) subsidizes the actual cost of that ride. Of course, drivers who provide this service, unlike public-transit workers, are not considered employees, let alone employees with union protections and benefits.

Americans are so much concerned and badly needed for more convenient public transport, however the risks of privatization are in danger. Last year, Uber logged some five billion trips and $1.8 billion in losses; Lyft provided 619 million rides and reportedly estimated around $900 million or more in losses. These apps are popular because they’re artificially cheap: Uber and Lyft subsidize rides to increase their number of monthly users, a key metric for investors, while allocating relatively little per trip to drivers.

Anyhow, by reducing the price of individual rides, both Uber and Lyft also draw a profitable subset of passengers away from public transit systems. That, in turn, undermines support for public transportation.

Researchers have also found that ride-hailing hope to make cities more crowded and polluted which is so hazardous, not less. Alejandro Henao of the National Renewable Energy Laboratory, who drove for Uber and Lyft as part of his research, showed that in Denver, ride-hailing was responsible for an 83 percent increase in the miles that would otherwise have been travelled by car. Much of that increase came from “deadheading,” or driving in search of the next fare. As Mr. Henio puts it, Uber may be reducing the public-transit base without providing enough services “to make up for that negative effect.”

 Then there’s the question of responsibility. “With public agencies, there’s a protocol for how to tackle and hold them responsible, whereas with private companies, their bottom line is profit,” said Naomi Iwasaki, a transportation planner and advocate in Los Angeles. “They look at their users as customers, not constituents.”

 Ride-hailing companies “make a lot of money off these streets and sidewalks,” she noted, but they have no obligation to invest in the infrastructure they use. Nor are they required to serve low-income neighbourhoods or cater to the elderly, non-English speakers or people with disabilities.

All of this erodes the fundamental idea of public transportation as a service that everyone uses. Jarrett Walker, a transit-design consultant, recently noted on the “Rideshare Guy” podcast that when Uber and Lyft divert relatively affluent riders from public transit, there’s a damaging effect on “elite opinion.” He added: “The idea among elites that, ‘Well, Uber is the thing, because it’s so convenient to me. Therefore, public transit should somehow become more like Uber.’”

As the stereotype goes, the public sector is swollen and inefficient; the private sector, lean and ruthlessly productive. And yet Uber and Lyft, billions of dollars in the red, have set their sights on community transit — not because they can do it better but because they need to be bailed out.