They’ve been portrayed as both transit saviors and villains, shrewd capitalists and snake oil salesmen. They like to call themselves disruptors, but some say they’re taxis with better technology. Uber and Lyft are very likely a combination of all of the above descriptors. But in the past few months, the future of these private-sector ride hailing companies (for the purpose of this article, we’ll be using the terms Transportation Network Company, TNC, ride-hailing and ridesharing companies interchangeably) has, if possible, both come into focus and grown murkier at the same time.
Here’s what CTAA members need to know right now.
Lyft Goes Public, Uber files its Initial Public Offering (IPO)
Both Lyft and Uber have filed public disclosure documents (Lyft prospectus here, Uber prospectus here) to become publicly owned companies. These two filings – known as “S-1s” in the financial world – offer the first real glimpse into Uber and Lyft’s financials and there is a lot of fascinating information to be gleaned from them, including:
Ridesharing and the National Transit Database
In late March, Uber announced its principles for infrastructure (link: https://medium.com/uber-under-the-hood/ubers-federal-infrastructure-principles-9f214841ff3b), which includes a proposal to allow public transit providers the ability to count ride-hailing trips, along with docked and dock-less mode trips, in their NTD reporting when these services are conducted in partnership or contract with a transit agency. Because the number of trips is a key factor in Section 5307 urban transit formula funding, this principle would have the effect of incentivizing transit agencies to contract with Uber and Lyft. FTA, for its part, has already proposed NTD rules seeking to add TNC trips.
TNCs and Accessibility
Since their inception, both Uber and Lyft have consistently sought to avoid having to meet the requirements of the Americans with Disabilities Act (ADA). Even though they provide millions of rides every day across the country, the TNCs have successfully made the argument that they are not transportation providers, but serve as conveners of providers and passengers and are thus technology companies. This distinction is the backbone of avoiding ADA regulations. However, at least based on Uber’s published Infrastructure Principles, they are eager to contract with public transit agencies to provide paratransit.
Uber proposes in its principles that transit agencies be allowed to contract with ridesharing companies if the transit agency can demonstrate that both service response times and reliability – for both accessible and ambulatory trips – are improved as compared with current service characteristics.
Some jurisdictions are working on innovative options to improve the availability of wheelchair accessible vehicles (WAVs) within TNCs. One such example is the pilot program underway in Boston launched by the Massachusetts Department of Transportation and the Massachusetts Bay Transportation Authority (MBTA) which offers a subsidy to Uber and Lyft on a per-hour basis for every operating and available accessible vehicle
TNCs and NEMT: A New Frontier
As part of their effort to constantly expand market share, both Uber and Lyft have moved aggressively into the non-emergency medical transportation field, originally by developing ride hailing platforms for private sector health care entities like Uber Health and Lyft Concierge and more recently through a series of bills that allow TNCs to become reimbursable providers for NEMT services, often by allowing Managed Care Organizations to directly contract with ridesharing companies.
Many hospitals have, for years, relied on local taxi services to handle patient transportation needs around issues like discharge or the lack of a personal automobile. Uber and Lyft have supplanted taxi operations in this line of business through the development of stand-alone, HIPAA-compliant platforms that reduce wait times, enhance reporting and lower costs. As one official with a hospital chain recently told CTAA: “Uber Health is easy to use and reduces no shows.” The Florida House of Representatives approved HB 411 in early April – which would allow the state Medicaid agency, through managed care organizations, to contract directly with Uber and Lyft. This bill largely mirrors a similar effort in Texas (HB 1576) and Arkansas. The real concern with these efforts, however, is the push by the ridesharing companies to reduce or exempt them from the traditional regulatory burden (background checks, for example) that Medicaid has placed on NEMT drivers.
The Amazon Model
Uber and Lyft – at least in urban areas – are not going to go away any time soon; and they’re diversifying. In the rush to each company’s initial public offering, both are eager to pursue virtually any line of business that increases market share (users and riders). For the time being, the fact that Uber and Lyft lose money on each of these trips doesn’t seem to matter to them – though investors may have something to say about that in the near future.
Many experts, when examining the ridesharing companies, point to Amazon as the model Uber and Lyft are attempting to emulate. And that’s where it’s critical to take a look at one issue: pricing. Amazon is famous (some might say, notorious) for identifying competition and using pricing to win market share and eliminate competitors.
Right now, both Uber and Lyft are subsidizing each trip they provide, thus offering customers a price for the trip that’s lower than the cost of providing the trip. Public transit providers certainly understand this model, as its trips are subsidized by public investment in return for adherence to federal and state regulations on issues like safety, environmental justice, accessibility and others.
Given the TNCs current pricing model, increasing volume only increases losses. So, for either of these private-sector companies to move toward profitability, they’re either going to need to raise the price of each trip, or lower the cost of providing the trip (or both). That’s why the lure of driver-less cars and autonomous technologies is so central to the TNCs business model: it’s the simplest way of lowering current costs.
Raising fares – as long as both TNCs and viable, efficient public transportation exist – is near impossible to do without the entity raising fares hemorrhaging customers and losing valuable market share. The Amazon model here is instructive: Competition must be eliminated in order to control pricing. Frankly, a future where the ridesharing companies (or more likely, a single TNC) can completely control pricing is one in which public transit has been significantly weakened. Further, many of our nation’s urban spaces are already hopelessly congested – replacing efficient fixed-route bus and high capacity corridor transit (rail and bus) service with ride hailing cars is geographically impossible. There just isn’t enough space.
So Where are We Headed? Our Best Guess…
So what does peaceful co-existence between public transit and TNCs look like? First and foremost, CTAA believes strongly that if any federal transit funds go directly to the ridesharing companies, they must adhere to the entirety of the Federal Transit Administration’s regulations, as well as the Americans with Disabilities Act (ADA). But as noted earlier in the article, that doesn’t seem to be the current approach.
CTAA believes that the most likely future is a networked, multi-modal approach where traditional urban (both large and small) transit agencies operate efficient high-capacity corridor and route service, augmented by first-mile/last-mile, as well as paratransit and NEMT, provided either by TNCs or with a TNC-like approach. Technology, both in terms of scheduling and paying for the trips, will be universal across the networked mobility services to ease customer use. In rural America, we think hybrids of this approach will emerge with rural public transit agencies assuming the role of both provider and facilitator, deploying scalable technologies that merge trip-planning and fare payment.
The Community Transportation Association of America (CTAA) and its members believe that mobility is a basic human right. From work and education to life-sustaining health care and human services programs to shopping and visiting with family and friends, mobility directly impacts quality of life.