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Uber and Lyft want to replace public buses

Joshua Brustein
Bloomberg News

Pinellas Park, Florida, isn’t the kind of place where you'd expect to gain insight about the future of mass transit. But recently the agency responsible for the area’s public transportation began a novel experiment: It stopped running two bus lines and started paying for a portion of Uber rides instead.

In Uber’s early days, it said it wanted to be “everyone’s private driver.” Now the company and its main U.S. competitor, Lyft, are playing around with the idea of becoming the bus driver, too. Uber has partnered with a handful of local public transportation agencies to strike deals like the one in Pinellas Park, which it expanded earlier this month. Later this month Lyft plans to launch a partnership with Centennial, Colorado, its first deal where a local government will subsidize its rides. The company also said it has helped a dozen transit agencies apply for federal grants that would pay for a portion of Lyft fares.

Each of the current projects is tiny, but they could eventually be combined into something big, said Emily Castor, director of transportation policy at Lyft. “This is an area that has the potential to be a very significant part of Lyft’s work in the future,” she said. “How quickly will it progress from small pilots to being institutionalized in transit agencies? I think that’s harder to predict.”

Governments already pay for taxis in some situations, but the deals with Uber and Lyft could usher in more fundamental change. What happens to people without smartphones? What happens if the cities come to rely on the apps, only to have the private companies decide the partnerships are no longer a sensible business venture?

As officials grapple with those questions, it’s hard to ignore the real savings for governments and real revenue for Uber and Lyft. In 2014, Americans spent $15 billion in fares on public transportation at the 850 public transit agencies that share data with the Federal Transit Administration. The operating expenses at those agencies was $42 billion. Much of the remaining 65 percent of the cost of running the systems came from public subsidies.

Suburban areas with less density and lower ridership are particularly expensive to run, making ride- hailing an attractive alternative, said Adie Tomer, a fellow at Brookings Institution’s Metropolitan Policy Program. “If they can provide better outcomes for your population and do it at either the same cost if not lower, that’s a win-win for society,” he said.

In late 2014, Pinellas County voters rejected a referendum that would have increased local taxes to fund more bus lines and a light rail system. The Pinellas Suncoast Transit Authority drew up plans to cut off the least popular of its four-dozen bus lines.

Residents in two areas complained they’d be stranded. So the transportation agency decided to share the cost of Uber rides for anyone traveling those routes. Earlier this year it started a pilot program where people received a 50 percent discount for rides, with a maximum subsidy per ride of $3, to help riders connect to the transit system.

It quickly became apparent that in areas with few riders, paying for part of a private ride was cheaper than running a bus. The program will cost $40,000 a year, or about a quarter the cost of the two bus lines it replaced, according to the transit authority. On Aug. 1, the agency began offering subsidies for all rides in the county that end at about 20 designated transit stops.