Can California Public Transit Agencies Survive the “Rideshare Revolution”? 

David Kersten

Kersten Institute for Governance and Public Policy


There has been nothing short of a “rideshare revolution” in the California transportation industry over the past few years with Uber and Lyft continuing to shuttle more and more passengers every day, particularly in major urban areas.

The growth of Uber and Lyft, and their impact on public transportation continues to increase and there has been very few formal studies and research on their impact on public transit, particularly since the recent wave of fare reductions.

Some studies have found that the rise of Uber and Lyft have helped public transit agencies by working to complement public systems and increase overall usage, according to a recent USA Today report.

But a closer examination of some recent ridership figures and comments made by major transit agencies in California indicate that Uber and Lyft are clearly causing declines in the ridership of public transit.

To illustrate, recent ridership figures released by the Bay Area Rapid Transit (BART) system indicate that “the number of people riding BART is actually falling, forcing the transit agency to begin tough conversations about how to make up for lost revenue” including service cuts and fare increases, according to a report by the East Bay Times.

Furthermore, after six years of ridership growth staff had anticipated a similar increase for the 2016-17 fiscal, which began on July 1, 2016.  But the agency reported that ridership through December was 5.2% below what it had projected with weekend trips the hardest hit coming in at 9% below projections, compared to 4.2% below projections for weekday trips.

Perhaps what is most telling is that ridership for the BART airport connector services is coming in way below projections, leading to large revenue losses that must be bridged by the entire system.

“We didn’t anticipate Uber and Lyft and others, and that’s hurting us,” said BART spokesman Jim Allison to the San Francisco Chronicle in March.

“With the competition, ridership on BART’s connector has been dropping below the 2,800 riders a day needed to cover the line’s $6.1 million annual operating costs,” according to the San Francisco Chronicle report.

But that was not always the case.  In the months following its November 2014 opening the line was averaging 3,200 daily riders–or about 400 riders over the break-even point, according to the report.

Oakland International reports that the number of airline passengers taking ride-hailing services as increased by more than 50% from July 2016 to January 2017, according to the San Francisco Chronicle.

At San Francisco International Airport (SFO), the figures are more pronounced, indicating nothing short of an explosion in the use of Uber and Lyft for rides to and from SFO since 2014.

In October 2014 Lyft picked up and dropped off at SFO 16,784 times in October 2014, while Uber picked up and dropped off at SFO 80,995 times, according to the San Francisco Examiner.

By October 2016, Lyft was used at SFO 108,388 times, and Uber was used 469,823 times, according to figures provided to the San Francisco Examiner.

Similar declines in the usage of public transit services have been reported in Los Angeles for the Metro system, albeit for bus services which are considered a critical link for rail services and comprise the majority of system riders.

In Los Angeles, the number of passengers served by the Metro agency fell in 2016, despite an uptick in train riders, according to a report by Curbed Los Angeles.  Metro expanded its rail network in 2016 with the opening of the Gold and Expo rail lines “but a surge in the number of people taking trains was not enough to overcome a sharp decline in bus ridership,” according to the report.

The Los Angeles rail system is essentially brand new, compared to the dilapidated BART system, which is thought to be a factor in the ridership increases, particularly in light of the new service lines recently opened.

“Bus ridership plunged nearly 9%, and systemwide Metro tallied 25 million fewer rides last year than in 2015, a 6% drop,” according to the Los Angeles Times.

Since 2009, Metro has opened four new rail extensions at a cost of more than $4 billion.  In the same period, rail ridership soared 21% but bus trips—a much larger share of overall ridership—dropped 18%, according to the Times report.

“Even if the rail network doubles in size, experts say, ample bus service will still be an essential cog in the transit system to shuttle passengers. To and from train stations, to add capacity along major corridors, and to serve neighborhood where rail won’t be built,” according to the Times.

The Los Angeles Times report cites Uber and Lyft as a possible cause of the decline in the usage of bus services in Los Angeles County, and elsewhere in Southern California.

More study is needed, but for someone who regularly uses Uber and Lyft and takes a look at the facts it becomes readily apparent that the rise of these ridesharing companies has provided increased market competition for public transit and cheap alternatives to using public transportation.

Not surprisingly, public transit agencies have been slow to adjust to the new market realities and continue to focus more on how to cover their mounting deficits by asking taxpayers for more money rather than how to cut costs and increase ridership, which has been primary focus of Uber and Lyft.

The “rideshare revolution” provides a very insightful case study of what happens when the private sector comes into direct competition with public agencies for the provision of the same or similar good or service.

In this case, the private rideshare companies are focused on how to best serve the consumer at the lowest possible cost.  Public transit agencies, on the other hand, have continued to focus on how they can sustain their mounting operating deficits by obtaining increased public subsidies from state and local taxpayers.

This has been seen through the passages of recent transportation tax measures at the state and local levels of government, including SB 1 (state gas taxes to fund transit, 2017), Measure RR (BART property tax increase, 2016), and Measure M (LA Metro sales tax increase, 2016).

Furthermore, in recent months BART was considering raising fares or reducing services to close a $31 million budget deficit for the upcoming fiscal year.  The BART Board failed to seriously consider the biggest key driver of its persistent budget deficits–out-of-control public employee compensation costs, particularly pension and health care costs.

In April 2017, BART ended up getting bailed out by the California Legislature with passage of the recent gas tax increase which now provides them with an additional $16 million in annual funding, no strings attached.

Needless to say, the private “rideshare” companies would go out of business if they adopted the same approach used by public transit agencies.

The only question is can the public transit agencies survive the “rideshare revolution” over the long-term?

In this new and emerging transportation marketplace public agencies are forced to directly compete with private companies that are much better equipped and inclined to best serve the needs of the consumer at the lowest possible cost—a concept that is largely foreign to public agencies, but shouldn’t be.

David Kersten is the president of the Kersten Institute for Governance and Public Policy—a Bay Area-based public policy think tank and consulting organization. Kersten is also an adjunct professor of public budgeting at the University of San Francisco and previously served as one of the lead budget analysts in the 2013 BART labor standoff. 

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