There is a reason that San Francisco is the home of both Uber and Lyft — and it’s not because the town is the beating heart of global innovation. The real cause is much more prosaic: San Francisco’s public transport system is terrible. The city has only one subway line, combined with a couple of old tram lines that are so clogged at rush hour as to be barely usable.
I realise that all city dwellers like to complain about this but, having spent years living in Hong Kong, Beijing and London, I can attest that San Francisco’s public transportation is the worst. It has reached such a state that commuters can often be seen running, skateboarding or riding electric unicycles to work.
This, of course, is a godsend for Uber and Lyft, which thrive in environments with limited transport options. But as the two companies have grown, something strange has happened: they are starting to behave more and more like some of the public transit systems that are so lacking.
The latest example is a new service from Lyft called Shuttle, which offers passengers a fixed-fare, fixed-route trip in a shared vehicle — in other words, a bus. Or rather, a private car acting like a bus. Uber has been testing a similar concept in Manila, dubbed Uberhop.
This raises the question of whether Uber and Lyft are helping or hurting public transport. In many US cities, transport start-ups are highly competitive in terms of price and convenience — a carpool Uber or Lyft is usually just a dollar more than a bus fare, and takes half the time. This is less true in global capitals such as London or Hong Kong, where the subway is faster and cheaper than Uber. But in San Francisco, the “bus” concept has caused a lot of local hand-wringing about whether Uber and Lyft are cannibalising public transport and reducing bus revenues.
For Lyft, it is not accidental that its new service is, basically, a bus. Logan Green, the company’s co-founder, was for years a bus advocate, serving on the Santa Barbara transportation board when he was in college and refusing to own a car. He lobbied to raise money for a better bus system with higher taxes but, when voters rejected the measure, Green became disillusioned. Now, with Lyft, he is essentially offering better bus and transport options through the private sector.
Some cities and towns in North America have turned this challenge on its head by hiring Uber or Lyft to provide public transport services. Just outside Toronto, the town of Innisfil inked a deal to subsidise the cost of Uber rides for residents; it calculated this would be cheaper than installing two new bus lines.
In Summit, New Jersey, the town is subsidising Uber rides rather than spend $20m on a new parking garage next to the train station. “People are going to use cars differently in the future, so why would we want to make a giant capital investment?” Amy Cairns, a spokesperson, told me. Lyft has done similar deals in Colorado.
Uber and Lyft, perhaps sensing the potential to broaden their market, have been eager to embrace this development. They imagine a future in which fewer people own cars and instead rely on a combination of ride-hailing and trains. The companies are already spending promotional dollars to change habits: earlier this month, for example, Uber announced subsidised rides to certain Seattle light-rail stations, with the company itself providing the subsidy.
But along with this strategy comes a risk. If Uber makes itself an indispensable public service, it could end up being regulated like one. Already a string of pricing disputes have trailed the company, which adjusts fares dynamically based on an algorithm. If Uber or Lyft were the sole provider of a public good in a city, regulatory scrutiny would increase.
Other towns have taken a third approach — harnessing the technology of the ride-hailing companies to make public transport services work better. Austin launched its own on-demand, carpool van app earlier this year. A similar pilot is under way in Nashville. Maybe it is possible to reinvent the bus after all.
Leslie Hook is the FT’s San Francisco correspondent
Illustration by Christopher de Lorenzo
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