As app-based ride-hail services emerged in the last decade, public transit systems lost ridership. This is particularly true for ones in medium- and small-sized cities, where service is infrequent and never attracted high ridership to begin with. Midway through the last decade, an intermediate option—demand-response transit (DRT)—emerged between ride-hail and traditional bus services. This included the ride-pool options from Uber and Lyft, now-shuttered services like Chariot, and most notably Via. The DRT model generally deploys smaller vehicles to carry multiple passengers; runs flexible routes that include point-to-point pick-up and drop-off; and leverages ehailing technology.  

Recognizing this modal shift, various cities are contracting with DRT companies to either complement or replace their government-run transit. How are these programs working and should the experiment continue?

The most notable example is Arlington, TX, which is the largest U.S. city to fully outsource transit. The 395,000-person city between Dallas and Fort Worth is now entering its fourth year of partnership with Via.

Alicia Winkelblech, the city’s Senior Strategic Initiatives Officer, explained in a Zoom interview that voters had long rebuffed attempts to fund a transit system. But in the 2010’s the city’s growth had reached a point where it became necessary to explore the options. Following a ConnectArlington project study, the city concluded that traditional public transit was not viable because of the city’s sprawling land use and hostility to tax increases. So at first Arlington contracted with Dallas Area Rapid Transit to provide a commuter bus. It only ran every 30-60 minutes, cost $5 per passenger trip, and had pitifully low ridership, leading Arlington not to renew the contract.  

The contract with Via began in late 2017. Initially, service ran through a zone including the downtown area and a commuter rail station but gradually expanded. The system has provided 787,000 rides, and 91,000 people have accounts through the program. A CBS News report cites a 97% customer satisfaction rate, and the program now covers the whole city.

Winkelbech describes the city’s relationship with Via as a “turnkey contract” where the city pays the company a fixed amount and provides land to park vehicles, while Via provides everything else, including the app, vehicles, drivers, and maintenance. To ensure accessibility, the vans accommodate wheelchairs and provide a dial-in option for customers without smartphones. Winkelblech noted that the arrangement was particularly resilient during the COVID downturn.

“We had the same drop that every other public transit agency had,” she said. “The difference was, because Via is so easily scalable, the moment demand went down, we pulled drivers and vans off the road, so we were actually able to save $1.1 million…whereas most transit agencies were in the hole.”

Another major city to partner with Via is Jersey City. As with Arlington, the service operates within a defined zone. Riders pay $2 for trips in the downtown zone, with an additional $0.50 per-mile surcharge for trips beyond; the city covers the rest. According to Via, 216,000 rides had been provided as of this April (the program launched in February 2020). At a time when public transit ridership has declined elsewhere due to COVID, ridership has grown by 78% for this system.

There are several such initiatives in the Boston area, where Via operates or provides software for demand-response service under contract with the suburbs of Newton, Salem, and Gloucester. Winkleblech says that transit authorities serving Dallas, Fort Worth, and Denton County have also adopted Via partnerships.

Other cities subsidize trips rather than services, although they too use outsourcing for this. Altamonte Springs, FL conducted a pilot of providing discounts for Uber rides, as did the San Joaquin Regional Transit District in California. Other agencies are trying to shift the high costs of running paratransit service in-house over to DRTs. Uber, for example, has developed a program targeted for this and has deployed it to multiple cities.

Some transit analysts are skeptical, arguing that the costs and economies of scale of fixed-route transit are superior. One example they point to is Innisfil, Ontario, which outsourced transit to Uber. The service became so well-used, across such a broad area, that it created a fiscal burden, leading the city to cap the number of subsidized rides individuals could take.

While fixed-route transit has its place, especially in dense cities, many U.S. cities are not compact and struggle to attract transit riders, meaning the more flexible a service is, the better it is.

“At least for our landscape here in North Texas, and the way we’re set up…I think that Via can be a long-term solution,” says Winkelblech. Higher-capacity options, such as bus rapid transit or an automated people mover, may be viable as the city grows. In that case, Winkleblech says, Via would likely stick around as a first/last-mile function.  

But DRT can benefit denser cities, too. In Jersey City, Via helps supplement New Jersey Transit’s fixed-route services; provides data that helps city officials locate demand; and reduces the need for car ownership. The company states that “41% of riders surveyed said they would have used private vehicles if the service was not available.”

If there is one drawback to these pilot DRT programs, it is that they lock in one provider for exclusive operating rights. Perhaps a better approach—which we will describe next week—would be for local governments to provide vouchers to riders and legalize competition amongst providers, in lieu of subsidy-based contracts. That way public and private services could compete for voucher money. That idea notwithstanding, DRT programs are proving popular, and deserve the chance to be further tested in cities that wish to improve transit provision.

[This article was co-authored by Scott Beyer, and originally published by the Independent Institute. It's pt. 1 in a 2-part series on how to improve U.S. public transit.]