The case of transport vouchers

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In our last article, we discussed how some small towns have started contract programs with ride-sharing providers like Via and Uber, rather than operating their own transit. But one problem with this method is that it blocks single vendors, who receive government grants and exclusive operating rights in those jurisdictions.

A more radical approachYet one solution that might be more effective would be for municipal governments to instead provide transportation vouchers and allow suppliers to compete for customers. Then, if demand justifies it, they should be allowed to move towards a higher capacity service.

In most markets, it is de facto illegal to operate transit privately. Uber, Lyft, and their contemporaries like Via have faced an uphill battle in most cities, and virtually nowhere can they do it at their preferred full capacity. London banned Uber from operating for 18 months; regulations in Austin pushed Uber and Lyft to temporarily exit the market; and California could drive them out altogether. Even before the emergence of TNCs, taxi services were regulated by a medallion system in most cities, resulting in high costs for passengers and drivers, minimal competition and a lack of innovation.

At the same time, many American cities are spending a lot of money on public transportation, with little return on their investment. Take Dallas: Transit company DART received an annual subsidy of $ 538 million from sales taxes, but only 50 millions annual riders. Bus ridership fell by 15 million passengers between 2008 and 2018. For four decades now, Los Angeles has invested heavily in expanding public transport to alleviate its notorious traffic jam, but ridership remains painfully low and a fall. Outside of former US cities, transit ridership is equivalent to rounding error in overall modal share, in growing and stagnant markets, and was declining long before the pandemic.

But what is little known, even to many public transport advocates, is that even sprawling cities have, at various times and to varying degrees, harbored informal and semi-underground private transport networks. Small entrepreneurs have operated services in subways as diverse as New York, Pittsburgh, Miami and Southern California. Called “jitneys” or “dollar vans,” these routes feature informal but consistent service at low fares. Ridership figures are difficult to determine, due to the phantom nature of these businesses, but they are known to carry heavy traffic. They work both in competition with public transport and as feeder, and are even more common in foreign countries, as I have already done covered for Catalyst.

Because the services are illegal or operate in a gray area, their potential is limited. They are often not able to advertise, access sidewalks, or use the same road right-of-way as public transit. In the system of “transport vouchers” that we propose, these services would benefit from liberalization and a new flow of cash distributed by the city, helping them to develop.

The concept would work as follows: rather than operating a public transport provider or subsidizing specific businesses, a city, county or other administrative body would distribute transport funds to residents, much like a voucher. housing or other direct assistance program. Authorities could either grant it to all residents without restriction or limit it to low-income residents through a means test. In exchange, the authority would remove all regulations relating to passenger transport unrelated to safety and consumer protection. Specifically, there would be no rules governing fares, coverage and frequency of services, or the distance between stops. There are some advantages to this concept, as opposed to entering into contracts with specific suppliers.

First, such a model would avoid locking cities into monopoly contracts and reduce overall subsidies. Rather than going through a lengthy contracting process for a government lien for, say, a five-year term, suppliers should compete in the field to attract customers, receiving market feedback like any other. business. Without constraints on the start or end of service, multiple providers could dynamically respond to consumer needs.

Second, it would reduce the bureaucracy inherent in providing public transport: if operators could experiment with route planning and service delivery models, service could be delivered faster than through conventional public processes.

Third, it would allow testing of service delivery models. Some cities are ideally suited for fixed route, high capacity service. Others, like Arlington, TX, the city that pioneered procurement with Via, are more dispersed and on-demand models are more efficient.

Public transit today, by contrast, operates on political demands, whether they come from unions, transit agency administrators, politically connected entrepreneurs, or squeaky customers who can distort the goals of agency coverage. These demands would not entirely disappear in a “good” model, but the potential for experimentation is worth trying.

The question then becomes what should be the amount of the voucher to give those who do not own a car real mobility. One way to determine this would be to look at what agencies are currently paying per passenger. This can be surprisingly high when looking at the National Transit Database, which tracks each agency’s spending. SEPTA, serving the Philadelphia metro area, spent $ 0.94 on each passenger-mile and $ 4.80 per “unrelated” trip, while spending more than $ 880 million in local, state and federal funds. Looking at Dallas again, DART spent $ 1.30 per passenger-mile and $ 16.80 per “unrelated” trip, receiving more than $ 634 million in grants from taxpayers.

We believe the vouchers would be much cheaper than these numbers, for the reasons mentioned above. DRT providers have generally been successful in avoiding union labor agreements, large capital expenditures, and overhead costs. This will be reflected in their ability to provide more services at a lower cost to a city. They have also proven to offer better mobility than public transport. If you’re in a rush, you’ll likely hail an Uber rather than taking a public bus.

So a voucher system that takes advantage of a private DRT market, while it may seem abstract and politically unlikely, is worth trying for cities in the United States that want an alternative approach to public transit.

This article was co-authored by Market town planning report content staff member Ethan Finlan.


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