How ride-hailing is disrupting transit, the auto industry, and our communities

This is a two-part series on ride-hailing carpool-like services. Part 1 introduced us to Via, now operating in Washington D.C., and included the results of a test ride with the service.

Via launched in 2012 in Manhattan and now also operates in Chicago and Washington, D.C.

And it’s similar to other services such as San Francisco’s Chariot and the now-defunct Bridj and Split in being oriented to multiple passengers. Yet it differs, according to Gabrielle McCaig, vice president of communications at Via, in that “the algorithm, when booking it, is thinking not just about a fixed route.” Rather, “at the point that you request, we basically create a bus stop out of thin air,” and “in real time, route you and the vehicle to this virtual bus stop,” picking up passengers without detours.

Those virtual bus stops are needed because Via requires passengers to walk, although only a block or two, in order to provide faster and less-expensive rides. And although it lacks fixed routes, the service does operate in a limited area, with a flat rate of $5 in New York City, $2.95 in Washington, D.C., and starting at $3 in Chicago.

One of the interesting parts of Via’s business model is that it’s not just a private service. It also partners extensively with public transit agencies, making its proprietary software available to them. Capital Metro in Austin, Texas; Keolis in France; and Arriva in the United Kingdom are among the partners, and the company also licenses its technology to car companies, notably Daimler.

Vehicles include standard cars that can take three or four people, larger sedans, and cutaway buses that can fit 15 or 20, bridging the gap between taxis and buses and making transit services more flexible.

Who will ride Via?

The traditional bus, while maligned as slow and inefficient, has extended mobility to huge populations. In contrast, modern ride-hailing depends upon the end user having access to a smartphone. To help alleviate what could become an equity problem, Via has initiated a telephone option in Austin, with dispatchers. Nevertheless, scaling this system up and keeping it affordable may be a separate problem.

There is a chance that ride-hail services could “take away so many riders” from traditional bus service that it puts buses at an even further disadvantage among all the transportation options to choose between, explains Malcolm Kenton, a passenger rail and transit consultant in Washington, D.C., whom you may recall took the Via ride with me. If bus service declines, those unable to access ride-hailing – generally, the poorest and most politically disadvantaged already – will be hurt most.

McCaig says that where the bus route is direct, people will still use the bus, but “in areas that are pockets to the bus” or when bus lines are overflowing, they will “hop onto Via.”

What are the possibilities for Via reshaping our communities for the better?

A crucial question is whether ride-share systems will augment public transit or compete with it.

“We very much see ourselves as a complement to public transit,” says McCaig. She explains that the service started in a part of New York City isolated from transit, so Via was often used to access the subway. Where “people live in little transportation desert pockets,” says McCaig, Via is most useful. It can also eliminate the need for multiple transfers or changes of vehicle during a single trip – consistently one of public transit’s most unattractive features.

Another question is whether Via will increase or decrease traffic congestion.

Certainly, by encouraging multiple passengers, the service is more likely to relieve congestion than are Uber and Lyft. And having cars in continual use saves on the need for parking, which currently occupies prime urban space.

“I would like to see some data on how well Via vehicles are used,” says Kenton, such as “is the vehicle occupied most of the time or unoccupied” and how much they are simply circling around.

It is also possible that Via, by making inexpensive pick-up available, will lead to more people in automobiles rather than on buses and trains or on bicycles and their own feet.

Perhaps the most prominent critique of existing ride-hailing services has been the way they treat their drivers, generally classified as “independent contractors,” which circumvents labor laws. Drivers assume insurance, capital, and operating costs. They are able to set their own hours, but not the amount they charge or what chunk of that goes to the company owning the software.

Via does also consider its drivers independent contractors. However, explains McCaig, “we’ve always provided real-time phone support” at any hour. A driver with, for instance, a flat tire “can get in touch with a real human at Via,” a benefit now being copied by other ride-hail companies. Riders can also receive a set hourly rate or, if they prefer, can be paid based on the number of trips. “We’ve found that drivers really enjoy driving with Via,” says McCaig.

Only the tip of the iceberg for “mobility as a service”

Kenton disputes the theory that public transit is viable only because of government services, whereas other transportation options operate strictly through free-market principles. Uber and Lyft “are heavily subsidized by Silicon Valley venture capitalists.” Both otherwise lose money, and are operating based on speculation about their future profitability.

The future of transit is therefore being planned through an amalgamation of companies that must fight for their own survival, which makes it difficult to prioritize a harmonious, environmentally friendly society. For transit policymakers, the question is whether and how these services will spur a system that serves more people in a sustainable way.

Despite his reservations about ride-hailing, Kenton believes that “ideally, having competition should force transit to up its game.” This could include incorporating innovations and working together with ride-hailing companies. Chicago, for instance, is partnering with Uber to create a more flexible network.

Still, the only certainty is change, a condition of capitalism’s creative destruction. “All the car companies are really freaked out about e-hailing,” says Zack Wasserman, head of Business Global Development at Via. “Over the long term, people are going to buy automobiles less” and move to “consuming mobility as a service.”

Hedging their bets, the smart car manufacturers are partnering with companies like Via, as are smart public-transit systems. Innovation and entrepreneurship may be a necessary component in moving our transit systems forward, but thoughtful policymaking is also needed.

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