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Transit agencies and TNCs

written by andy on

This is a response to comments made by SamTrans board members at its board meeting in April. Considering the suburban environment and the desire for more transportation options, there seems to be an interest by transit agencies in leveraging Transportatation Networking Companies. While I support the concept of having more transportation choices, I am also concerned about the business models of these companies and their compatibility with those at transit agencies. If we have a better understanding about our choices, we can get the benefits of the TNCs but without having the rest of the TNC business models that may not work so well.

My chief concern about the TNCs is that their business model relies on non-professional, part time drivers.

– They’re paid not by time worked, but by rides given, and no compensation for the time waiting for rides.

– While drivers own their vehicles, they also have to pay for it, which can be a burden. They are also financially responsible for the vehicle if it is damaged when they’re not on duty, or for whatever reason they’re unable to work temporarily.

– Drivers are minimally trained. Considering the part time and short term nature of driving for TNCs, TNC companies do not invest in drivers as human capital. Their human capital is software developers that enable such business model. While most people cannot tell the difference between rides given by a untrained and a trained driver, many of the more transit or para-transit dependent population should appreciate drivers who are trained and are sensitive to their needs.

Transit agencies, on the other hand, not only engage in fair labor practices, but also develop transit operators as human capital (providing in-house, paid training). While transit agencies may have a higher cost burden and overhead compared to private transportation companies, it is also the public’s expectation to invest in high quality and safe service locally with our tax dollars. Simply, I think while transit agencies should watch their budgets carefully and make sure that transit service is well planned and well used, transit agencies do not and should not have to compromise on safety and quality of the service because there’s a cheaper way to provide transportation.

The most attractive aspect of TNC is the technology of arranging rides through an app. Traditional dial-a-ride service require a much longer time to request rides (like a day before) so the service is not attractive to those who are not completely dependent on transit (someone who rides a bike can travel more conveniently by bike instead). The technology behind of TNC is not exclusive.

It is my belief that compared to TNCs, transit agencies provide transportation service that are safer and of higher quality. If the budget allows, transit agencies are capable of hiring drivers, train them, and provide them with safe vehicles, so in this aspect it can do everything a TNC can do, but better. On the other hand, transit agencies do not hire software developers and do not have the technology in-house to book rides through an app.

However, because of the non-exclusive nature of the technology, some transit agencies are able to seek vendors to provide the technology but with transportation provided in-house. Local examples include VTA FLEX and AC Transit FLEX. These services are somewhat similar to SamTrans FLX routes but allow on-demand ride scheduling via an app or online, and pick up at designated bus stops within the service area.

Another resource is the local taxi providers. Today some of the companies are contracted with SamTrans to provide rides for Redi-Wheels customers. While its business aspect of taxi companies are closer to TNCs than transit agencies, taxi companies are locally licensed and local jurisdictions can set policies (many of the SamTrans board members sit on city councils that can regulate taxi cabs). If we were to make a policy decision to subsidize car rides for some of our transit customers, I think taxi companies, as well as other for-profit and non-profit transportation companies, should be offered an opportunity to provide rides (even if they have to upgrade their technology to do so) before considering TNCs.

Basically, I believe that the technology aspect can be separated from the transportation aspect. If it is done right, transit agencies and their customers can enjoy more convenient and cost effective services enabled by technology without endorsing the gig-economy.