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COVID-19 ISO Insights

Cities Use Ridesharing to Handle Some Transit Routes During COVID-19 Crisis

May 26, 2020

By: Christopher Sirota, CPCU

The COVID-19 crisis lockdowns have prevented people from traveling far from their homes, which have impacted ridesharing services dramatically. In April, according to The Motley Fool, Lyft reported a 75% drop in the number of gross bookings for rides, and Uber reported a similarly high 80% decrease as well.

Mass transit systems in many cities have also reportedly experienced a decline in ridership due to the crisis. For example, Curbed reported that New York City's Metropolitan Transit Authority has experienced a drop of more than 90% in ridership because New Yorkers are sheltering in place as required by the state government. Also, on the west coast, per KOMO News, King County Metro Transit in the Seattle region in Washington state has experienced a 75% drop in ridership (for some insight on what cities abroad are doing as they reopen up sooner than the U.S., see our previous post here).

In response to such drops in ridership, some transit systems have reportedly chosen to reduce services in order to keep costs down. However, especially in cities, many essential workers depend on mass transit to get to their workplaces, which include warehouses, factories and hospitals and healthcare centers.

Now, Reuters has reported that to address that need, some city mass transit systems have begun to leverage ridesharing services to help essential workers during their commutes.

According to the article, "[a] handful of transit agencies are paying Uber Technologies Inc. and subsidizing rider costs during the pandemic to offer transportation at off-peak hours or in less busy areas."

Per the article, it may cost a city less money to subsidize a few trips through a ridesharing platform rather than to run nearly empty buses on routes, which can cost about $150 per hour to operate. Some cities have reportedly provided vouchers for a limited number of ridesharing rides, and some have paid for regular commutes to and from essential work locations.

The article explains that before the crisis Uber had integrated some mass transit systems into its app to allow for ticket purchases. Although not reportedly expected to be a large revenue stream for Uber, the article notes that Uber is interested in working with public mass transit systems, and is now leveraging such integration in several cities to provide this service for essential workers, including in Denver, Las Vegas, Miami-Dade County; Indianapolis; Des Moines, Iowa; Central Midlands, South Carolina, and Livermore, California.

Of note, the president of the mass transit system in Indianapolis reportedly commented that the city is also considering "to continue supplementing some routes with Uber even after the crisis, saying that fixed bus lines made sense for the most frequently used routes but were not efficient in less traveled areas."

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