Post #414: Vienna Retail-Oriented Omnibus Microtransit

At the last Town Council meeting, Councilman Majdi asked Town staff to look for grant money to fund startup of a microtransit system in Vienna.

In Post #407, I did my best to explain what microtransit is.  But my discussion missed an important piece of the puzzle.  As Councilman Majdi sees it, Vienna microtransit would be closely tied to Vienna-based businesses.  It’s as much a way to feed customers to Vienna businesses as it is a way to get cars off the road.

That’s a sufficiently different idea that I thought I might update my prior posting.  Here goes.


Introduction

Microtransit in Vienna would be a low priced (possibly free) Uber-like service, sponsored by the Town of Vienna.  Probably, it would use vans to take people to and from destinations in and around town.  Like Uber, you’d use your smart phone to call up a ride.  Unlike Uber, it might not come all the way to your door — you might have to walk to the nearest street corner.  And you’d have to share rides, like Uberpool.   If you want to know more, see Post #407.

My initial reaction was, why not just use Uber? Who would give Vienna a grant to sponsor its own local Uber-like service?

And now comes the part that Councilman Majdi had not explained at the prior Town Council meeting.  At least initially, you’d tie this in with retail/commercial destinations in the Town of Vienna.


It could work like parking validation

Let me just line out one way in which this could work. Here I’m going to work out a system whereby a basic round-trip rides to a Vienna retail locations costs the rider $2.  Then get a little more sophisticated.

Parking validation.  If you know how parking validation works, you get the essence of how this would work.  In many locations, businesses are willing to pay for the cost of parking your car, as a way to get you to patronize the business.  By analogy, participating Vienna retail businesses would pay the cost of your microtransit trip. Again, as a way to get you to patronize the business.

Parking validation meets Uber.  In this case, you’d use a smartphone app to call up a microtransit ride, just as you might with Uber.  Rides would have to start or end at some Vienna retail business.  You pay (say) $2 for the ride, and you get a coupon for $2 off today’s purchase at your chosen retail destination.  (The coupon could be a physical piece of paper or could be on your smartphone.)  To you, the trip inbound (to the retailer) is free.  You’d still pay $2 out-of-pocket for the trip home.

Parking validation meets Uber meets Groupon.  But in the modern world, the actual payment flows could be a lot more sophisticated than a simple $2 coupon.

First, businesses could make special offers.  Those could be keyed to time-of-day, day-of-the-week, specific types of purchases, and so on.  (E.g., a restaurant with empty tables but a full parking lot might be willing to offer more than $2).  So think of microtransit as a marketing tool, Groupon-style.

Second, money could flow independently of these $2 coupons.  Just as some of the purchase price for Groupon deals comes back to Groupon, you could set up “kickbacks” to the microtransit system.   One obvious choice would be to set the actual net cost to the retailer at some fraction of the customer’s purchase.  Retailers with small typical purchase amounts (coffee shop) could still participate profitably, while those with large typical amounts (grocery store) would take up the slack.  (Done properly, this type of price discrimination increases total revenues to the transit system beyond would would be raised with a flat $2 fee.)


Is this feasible?

First, in some circumstances, it’s feasible to build or extend a public transit system by literally using subsidized Uber rides.  Here’s an example of a successful system in a Canadian city of 37,000.  Here’s an Florida city that integrated subsidized Uber into its existing transit system. That article also provides links to several other systems, but successful and unsuccessful.

Our own Washington Metropolitan Area Transit Authority is looking to use  Uber/Lyft to provide subsidized “on-demand” late-night transport.  In their press release, they state that “At least 29 transit agencies or cities across the country are considering or have partnered with ride-hailing or taxi services as transportation alternatives.”

Public transit is a market that Uber is actively seeking to exploit.  In some cases, it integrates public transit directly into its app.  Some might even say that these companies engage in predatory pricing to pull business away from traditional mass transit.  And, unsurprisingly, on net, Uber and Lyft appear to be  responsible for significant declines in public transit ridership.  Standard Uber and Lyft rides also probably increase rather than reduce traffic congestion.

Second, some US cities are moving ahead with their own microtransit systems with fleets of dedicated vans (instead of just subsidizing rides from existing Uber/Lyft drivers).  These systems have vehicles dedicated to a public transit role, but use an Uber-like system to call and pay for rides.   Here’s a writeup of a system for Jersey CityCupertino, CA is developing a system with a flat five-dollar charge per ride.  The same company selected by Cupertino is providing on-demand public transport in Arlington, TX and Sacremento, CA.

Finally, there are other systems that are, in effect, upscale on-demand private bus systems.  There don’t seem to be a lot of success stores in that market segment,  with the two major providers, Bridj  and Leap having rapidly met with failure.

So, the answer to “Is this feasible?” seems to be yes.  Certainly, for a large enough city, with deep enough pockets, some form of on-demand (i.e., Uber-like) public transportation is possible.  That can be done literally with subsidized Uber rides, or with a dedicated fleet of vans operated as a stand-alone transit system.  Whether or not it’s feasible for a municipality the size of Vienna remains uncertain.  The smallest town I found (the Canadian example above) had more than twice the population of Vienna.


Is this feasible without tax subsidy?

The more interesting question is whether this could plausibly be funded by Vienna’s retail sector alone, and provide enough value that Vienna retailers would make a profit by doing so.   To put this in perspective, the US Census Bureau says that Vienna has about $300M in retail sales annually.  I have no idea how that number is derived, but taking that at face value, the estimated $400K annual cost of a microtransit system for Vienna would amount to just over 0.1% of retail sales.  So, at that level, it doesn’t seem flatly impossible.

To be clear, I’m not talking about any type of tax.  Not only does Vienna have no power to levy such a tax, Maple Avenue merchants already pay a transportation tax of $0.125 per $100 of assessed real estate value if they are part of a Fairfax County transportation district (which most are).  The question here is whether this could be self-supporting with voluntary participation by Vienna retailers, not via a mandatory contribution.

A retail-serving, retail-funded transit system appears to be unusual.  As in, I could not find any on-line description of another such system.  The only things I stumbled across for business-financed transport were dedicated shuttle services, such as an airport shuttle for major hotel or a metro shuttle for a large business enterprise.  Neither of those are “public transport” in the sense that anyone in the community could use the service.

So I think the clear answer to this one is, I have no clue.  I could not find another published example of a retail-tied, retail-financed public transportation system.


Who would ride?

The bane of local transit service is low ridership.  If there is a dedicated set of vans or buses, the system has a lot of fixed costs to pay,  regardless of ridership.  If the riders don’t show up, that can generate substantial losses.

As I documented in Post #407, local bus service in Fairfax County is sparsely used.  Fares cover only a fraction of costs, and trends in local bus ridership are not good.

Could microtransit tied to retail escape this trap?  That’s tough to say.  But, for sure, it’s difficult to find a local bus service that does not require taxpayer subsidy to stay in business.

As for ridership, you’d have to take your best guess at the answers to a few simple questions.

First, how large is your potential market for this new service?  To what extent do the traffic and parking hassles in downtown Vienna discourage people from using our retail establishments?  How much business do local merchants lose now from people who aren’t willing or able to fight Vienna traffic, struggle to find parking, and so on?

E.g.: How many older drivers hesitate to patronize Vienna shops because of traffic/parking issues?  How many potential bar or restaurant patrons avoid Vienna locations because the only option is to drive, and they don’t want to drink and drive?  How many Town residents are Amazon shoppers for (say) routine drugstore purchases because it’s easier than driving to downtown Vienna?

More generally, how many Vienna residents are on the cusp of shopping downtown or elsewhere, and could be persuaded to patronize Vienna with the offer of a free ride?   This hits home with me because I fall into that category.  Despite living just a half-block off Maple, I’ll frequently do my grocery shopping at the Pan Am Safeway.  Why?  Ask Google Maps.  At almost any time of day, it takes me just no longer to get to Pan Am Safeway then it does to get to Vienna Giant.  And the trip down Nutley is much less hassle, and far more predictable, than the trip down Maple.

Second, would the offer of a cheap ride to a Vienna retail location change people’s behavior?  That’s completely un-knowable.  The only way to find that out would be to offer the service.

Third, to what extent would this represent net new (additional) shopping, versus merely cannibalizing the existing shopper base?  In other words, there’s a risk that this would merely divert people who would have driven to Maple anyway, absent this new low-cost microtransport service.  To the extent that happens, Vienna merchants would be paying for nothing.  They are giving free transportation to individuals who would have shopped there anyway.

Summary

Well, it’s not flatly impossible.  Our local scheduled bus service appears to be in modest decline.  Plausibly, that’s at least in part due to competition from Uber and Lyft.  But this would not be scheduled, fixed-location service.  Instead, this would be on-demand, more-or-less door-to-door service. It would be, for want of a better term, more Uber-like and less bus-like.

Other metropolitan areas have appropriated the Uber model of “on-demand” service and applied it to their public bus systems.  But I could not find even one example, on-line, for a municipality the size of Vienna.  And as far as I can tell, the idea of making this retail-focused and retail-financed, that appears to be rare if not unique.

As always for transit systems, the biggest unknown is the ridership.  A system with dedicated vans needs substantial ridership to achieve reasonable average cost per transport.  It’s not clear that this system would get the hundreds of passengers per day needed to achieve reasonable average cost per trip.