Uber Says Small Town Public Transit Partnerships Are 'Critical' to Its Success

One small Canadian town took 25,000 Uber rides in less than a year.

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Jan 19 2018, 4:00pm

Image: Shutterstock

Since last May, more than 25,000 trips have been taken with Uber in a town near Toronto, Ontario called Innisfil. That number, provided to Motherboard by the town, is particularly significant because Innisfil only had around 36,000 residents in 2016.

Innisfil—like many of the world’s rural and small towns—doesn’t have public transit, and residents need a car to get pretty much anywhere. Faced with mounting public pressure to find a solution, last year the town’s administration decided to hire Uber to provide transportation for its residents instead of building a bus service. The Uber service came into effect May 15, 2017, and as of August Innisfil was still very pleased with the partnership.

Now, Innisfil’s partnership with Uber has caught the attention of an even smaller Canadian town, turning one municipality’s experiment into a potential trend.

Enderby, a town of 3,000 in British Columbia’s Okanagan Valley, is actively lobbying to bring ride hailing companies like Uber and Lyft—which are still illegal in BC—to the community. In an article posted to the town’s website earlier this month, mayor Greg McCune is quoted as saying, “In small communities where there is less access to services, there is the greatest need for transportation options.”

Read More: Uber Won't Say Whether Its Public Transit Initiative Is Making Money

Having a private technology company step in to provide essential services normally offered—and paid for—by governments is a potentially worrisome trend. After all, public services have the option of operating at a loss (within reason), but there aren’t many incentives for corporations to continue unprofitable operations. Imagine, for instance, what would happen if Uber, after securing what amounts to a monopoly on public transport in a town, suddenly decided to leave, or increase prices dramatically?

Still, the cost savings that ride sharing promises (versus public transit) make it an irresistible option to some. For example, Innisfil looked at starting a bus service, but decided the average $365,000 CAD per year it would cost to have two buses on fixed routes was just too steep. Instead, it paid Uber $71,000 in subsidies for four and a half months of 24/7, door-to-door service, and committed to a minimum of $125,000 in 2018.

Paul Pentikainen, Innisfil’s senior policy planner, told me in an email that, “The service is also proving to be considerably cheaper than what a bus system to provide service to the entire town would cost.”

And on that note, Uber has been tight-lipped on whether the Innisfil partnership is actually profitable or mainly serving as good PR for the embattled company (which, it should be noted, still hasn’t turned a profit).

Innisfil’s agreement with Uber gives people flat rates to certain destinations within the town. For instance, it costs $3 each way to go to the rec centre or town hall, and $5 to go to the commuter rail station. Other trips within Innisfil’s boundaries get a $5 discount (Uber drives in Innisfil make the same amount of money as drivers anywhere else, according to the company). For comparison’s sake, Innisfil sprawls across 101 square miles—five times the surface area of Manhattan.

Screengrab: Town of Innisfil

That model—where the town or local transit authority subsidizes residents’ Uber usage within city limits—is becoming more popular, said Paige Tsai, a senior associate on Uber’s transportation policy and research team. Uber currently has 35 Innisfil-like partnerships, mostly in North America, and it independently services many more small and rural communities.

“We’re really excited to provide that access to people. We see it as a core part of our mission as a company,” said Tsai over the phone, adding that these kinds of private-public partnerships on public transit have become an area of renewed focus under Uber’s new leadership. “It’s critical to our long-term success,” she said.

Despite Uber’s optimism, privatizing public transit is extremely controversial. It can let local governments shirk responsibility for their residents’ mobility needs, letting a corporation do the planning, and push the bulk of the cost of transportation onto citizens. And Uber has historically played hardball with host cities, threatening to pull out when local governments try to introduce regulations around ride hailing.

Still, there are definite benefits to having ride sharing and ride hailing act as public transit in small communities, especially when the fares are subsidized. For instance, door-to-door service can enable people with reduced mobility to get around more easily, and it lets seniors stay in their homes longer. “Making such systems viable in rural areas could provide more mobility for rural folks,” Natalie Villwock-Witte, a researcher at Montana State University’s Western Transportation Institute, told me over email.

Read More: What It Takes to Lure Uber to Your Small Town

Ride hailing can also reduce the number of private cars on the road, and could potentially save individuals a lot of money. It costs an average $8,469 a year to own a car, according to AAA. Meanwhile, according to data Motherboard compiled in 2016, the frequent Uber user spends about $95 a month, while frequent Lyft users average $76. Subsidized fares would likely bring these totals down.

Many of these benefits can also be gained through traditional public transit like buses, or even taxis, but there’s one big difference for towns when partnering with a company like Uber to deliver a transit solution: It’s cheap.

It’s an idea that’s clearly catching on, because Innisfil and Enderby aren’t the only small town turning to tech companies for transportation support, either.

A “mobility-as-a-service” startup in the US called Liberty Mobility provides rural communities in several US states with ride-sharing services (it charges $1.25 to book a ride and then $1 per mile). Local micro-startups have also cropped up in various parts of the continent. Near Fresno, California, Van y Vienan provides a shared electric van, and in Lawrence, Kansas, a local resident made a “hitchhiking” app. Lyft, meanwhile, says it offers full coverage of 40 states, including rural areas.

It all sounds like a pretty sweet deal, from a financial perspective, but rural communities face a risk that bigger cities don’t in adopting these alternatives. In cities with multiple modes of transportation, it’s not the end of the world when a private-transit option fails. But in small towns, being beholden to a private company for an essential service can put local administrators over a barrel.

Innisfil is feeling optimistic. When asked if the town was at all concerned about a scenario where Uber leaves, its senior policy planner said, “We continue to have a strong working relationship with our partners at Uber.”

For the town’s sake, let’s hope so.

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