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Uber and Lyft Take Customers Shares from U.S. Public Transit

Ride-hailing operators Uber and Lyft seem to be responsible for a decrease in public transit ridership across the U.S. [1].

According to a recent study by the University of Kentucky, actions like service reductions or maintenance cannot themselves explain the recurring decrease of public transit ridership observed in many U.S. cities. Even with major investments in their rail network, the L.A Metro suffered a 3.4 per cent ridership decrease last year to mention one.

Authors of the study now argue (based on examining the effects in 22 major cities) that ride-hailing services provided by Uber and Lyft are the main cause of these declining trends. For instance, in New York City the daily Uber and Lyft trips increased from 60,000 to 600,000 during the period 2015 to 2018, whilst daily public transit decreased by 580,000 – an almost identical disparity. In summary, the study claims that when these companies enter a city, the average rail and bus ridership decrease by 1.29 and 1.7 per cent per year respectively.

 

Personal comments

The fact that Uber and Lyft are not yet profitable could expose one part of their business strategy – to continue offering low fares to attract more customers from other modes of transport, which could eventually (if the transit agencies continue business as usual) lead to profitability on the expense of an outcompeted public transit system. Hence, the transit agencies will probably need the assistance of policies and other types of pricing (like congestion and use of road space pricing) in order to gain back customer shares from these ride-hailing companies. An important tipping point creeping up that will deepen the discrepancy between ride-hailing and public transit ridership is the day driverless robo-taxis arrive.

 

Written by Hampus Alfredsson, RISE Viktoria.

 

Source

1. 2019-02-05. Study: Uber and Lyft Caused U.S. Transit Decline