Will ride-hailing companies be effectively able to win trust and provide a long-term alternative to public-funded transit operations such as dedicated bus routes in small towns?
Despite there being little understanding yet on whether these kind of agreements are environmentally sustainable or keep traffic manageable, some places are willing to risk doing it based strictly on the considerable cost savings such arrangements can offer.
Since last May, more than 25,000 trips have been taken with Uber in a town near Toronto, Ontario called Innisfil, which only had around 36,000 residents in 2016.
Innisfil—like many of the world’s rural and small towns—doesn’t have public transit, and residents need a car to get pretty much anywhere. Faced with mounting public pressure to find a solution, last year the town’s administration decided to hire Uber to provide transportation for its residents instead of building a bus service.
Now, Innisfil’s partnership with Uber has caught the attention of an even smaller Canadian town, turning one municipality’s experiment into a potential trend. Enderby, a town of 3,000 in British Columbia’s Okanagan Valley, is actively lobbying to bring ride hailing companies like Uber and Lyft—which are still illegal in BC—to the community.
Having a private technology company step in to provide essential services normally offered—and paid for—by governments is a potentially worrisome trend. After all, public services have the option of operating at a loss (within reason), but there aren’t many incentives for corporations to continue unprofitable operations.
Still, the cost savings that ride sharing promises (versus public transit) make it an irresistible option to some. For example, Innisfil looked at starting a bus service, but decided the average $365,000 CAD per year it would cost to have two buses on fixed routes was just too steep. Instead, it paid Uber $71,000 in subsidies for four and a half months of 24/7, door-to-door service, and committed to a minimum of $125,000 in 2018.
Ride hailing can also reduce the number of private cars on the road, and could potentially save individuals a lot of money. It costs an average $8,469 a year to own a car, according to AAA. Meanwhile, according to data Motherboard compiled in 2016, the frequent Uber user spends about $95 a month, while frequent Lyft users average $76. Subsidized fares would likely bring these totals down.
Many of these benefits can also be gained through traditional public transit like buses, or even taxis, but there’s one big difference for towns when partnering with a company like Uber to deliver a transit solution: It’s cheap.
It’s an idea that’s clearly catching on, because Innisfil and Enderby aren’t the only small town turning to tech companies for transportation support, either. A “mobility-as-a-service” startup in the US called Liberty Mobility provides rural communities in several US states with ride-sharing services (it charges $1.25 to book a ride and then $1 per mile). Local micro-startups have also cropped up in various parts of the continent. Near Fresno, California, Van y Vienan provides a shared electric van, and in Lawrence, Kansas, a local resident made a “hitchhiking” app. Lyft, meanwhile, says it offers full coverage of 40 states, including rural areas.
It all sounds like a pretty sweet deal, from a financial perspective, but rural communities face a risk that bigger cities don’t in adopting these alternatives.
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