The transportation revolution

It’s time to let the revolution in transportation take its course.

There is a revolution happening in the world of public transit. Politicians and regulators should be welcoming it rather than fighting it.

This revolution is replacing those in charge of how we travel around our cities and towns from centralized public agencies that have overseen the sector for decades to data-centric and technologically-focused companies capable of better meeting customer demands and changing the way we fund transit.

The most recent example of this trend is a private bus service in Liberty Village launched by a pair of entrepreneurs. The co-founders of the bus service, which will take residents from one of the many new condo towers in Liberty Village to their jobs in the downtown core every morning, used a new form of funding to attract riders. The founders relied on “crowd funding” where  anyone interested to ride the “Liberty Village Express” donated $25 to the company – Line Six Transit – and were then guaranteed a seat each weekday morning for its one week trial.

The new bus service is a direct response to the overcrowded and underserved riders who rely on Toronto’s King Street streetcar, which moves 60,000 riders everyday and is the TTC”s busiest surface route, yet, even the TTC admits, doesn’t meet the needs of its customers.

The Liberty Village Express is not an anomaly.

In Boston, a start-up called Bridj has created a “pop-up” bus service that creates bus routes by pulling together millions of tiny bits of data to better determine where people live and work. Once it has the data, the company creates custom bus routes that respond to the needs of customers. The more popular it becomes, the more data is has to analyze and the more refined it can make its routes.

Once riders are on the bus – an express shuttle bus – they are guaranteed a seat and free wi-fi. The cost of $5 – compared to $2 on the subway or $1.50 for the regular bus – has already attracted thousands of riders, according to its founder. It’s also cut the commute time for some of those riders in half.

But it’s not just the public transportation sector that’s being overthrown, as the traditional taxi industry in recent years has been under consistent attack from a number of startups. The most famous of these upstarts is Uber. Uber allows riders to simply tap a button on their phone to order a cab – which, when it first launched, was a Lincoln town car, but now includes traditional cabs. When the ride is over, customers, who are already registered online with the company, don’t have to pay or tip the driver – it’s automatically deducted from their account.

Uber is also slashing prices for its customers. In New York City a ride with an Uber cab is typically cheaper than its traditional counterpart. Unlike traditional taxi companies, the price of Uber fluctuates with demand. During peak periods – New Year’s Eve, for example – the price of using Uber can increase dramatically, thereby enticing more drivers out to work and ensure that everyone has a ride home.

Even though it has its critics, customers love Uber and its many competitors (such as Lyft and Sidecar), which have been disrupting protected taxi markets around the world in recent years. In San Francisco, the average number of trips on traditional cabs has plunged 65% as more customers flee to Uber and other taxi upstarts.

Even the way we pay for fares is changing. The notion of paying a fare – whether it’s to board a bus, subway or taxi – in cash is a relic of a bygone era. All of the new transit operators use mobile payments for fares.

The gap between the new transit companies and traditional public transportation is so stark that most of the new companies don’t even consider themselves transit operators at all, but rather data providers that match customers’ needs with a service. Bridj’s founder Matt George recently admitted as much, saying that “internally we look at ourselves as a technology and big data provider… the output happens to be transportation rather than the other way around.”

Uber referred to itself more as a “digital mesh” or a “grid” that goes over cities more akin to a logistics company, not just a taxi cab company. It doesn’t even involve itself with maintaining a fleet, leaving that to the individual drivers to manage.

Yet, in nearly every one of these cases public agencies or governments have put up road blocks, rather than pave the way towards innovation and competition, which has done more to hamper the transit sector and it customers than help it. It’s time to unleash the transit revolution.

Brady Yauch is an economist and Executive Director of the Consumer Policy Institute (CPI). You can reach Brady by email at: bradyyauch (at) consumerpolicyinstitute.org or by phone at (416) 964-9223 ext 236.

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