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3 ways to save money with microtransit

Learn how cities and agencies across the country are saving money with microtransit while offering higher-quality service.

Elspeth Green •

Want to skip the long read and get your questions answered now? Jump right into the quick Q&A session, where we address all the key points of this article. 

With U.S. senators doing ridealongs and representatives advocating to Secretary Buttigieg , it’s safe to say the microtransit has gone mainstream. Proponents cite equity , accessibility , and sustainability as the on-demand shared transit mode’s chief benefits. Microtransit can expand the catchment area of traditional public transit to enable better job access, deliver equitable service for riders with disabilities, and draw people out of their private cars for a greener future. 

But microtransit hardly has a reputation as a money-saver for transit agencies — until now. Microtransit’s proliferation, and in particular its maturation from an industry dominated by small pilots to one increasingly characterized by long-term, large-scale services , has led to better understanding of where and how the mode can be implemented at a lower cost than traditional fixed-route services. 

After reviewing data from our hundreds of microtransit services, we’ve characterized three ways of thinking about cost-savings for microtransit, highlighting a handful of cities not only saving money, but delivering far superior services:

Reducing absolute costs with microtransit. 

Transit agencies are perennially strapped for cash, and a simple reduction in absolute cost — of one route, or the entire network — is often what’s needed to balance the budget. Can converting a fixed-route bus line to microtransit reduce absolute costs?  Critics point out that microtransit vehicles — typically minivan-sized, seating 6 passengers — carry far fewer people than transit buses, and that more of them are usually required to handle the same patronage. But microtransit vehicles are also typically much cheaper to operate :

  • They require less fuel.
  • They incur lower maintenance costs.
  • They can be driven by non-CDL operators.

In Hall County, Georgia, we worked with Hall Area Transit to convert underperforming fixed-route bus lines to microtransit — and achieve an overall reduction in weekly costs post-launch.

 

 

Even as trips per week rose in the early months of 2021, due to an increase in service quality (the average ETA for an on-demand trip is 12 minutes, compared to 60-minute bus headways), the overall weekly cost of operations decreased from $9,750 to $5,930.

Reducing cost-per-trip with microtransit. 

Transit agencies who are looking to expand service coverage as efficiently as possible target cost-per-trip as their metric of cost-saving success. These agencies welcome significant increases in ridership, even if it raises absolute costs — so long as the service achieves these gains in a financially-sustainable way. 

Microtransit has the potential not only to only replace underperforming fixed-route services cost-effectively, but to expand overall service coverage and increase the proportion of residents regularly using public transit. Though some early programs offering subsidies for on-demand rides delivered by TNCs faced problems with costs spiraling out of control as ridership grew, Via shared services are designed to scale, growing more efficient on a cost-per-passenger basis the more passengers who ride. 

In Sarasota County, Florida, microtransit has seen enthusiastic adoption since its introduction in June 2021. In the North Port city zone, high ridership — and successful aggregation of trips by Via’s algorithm — has dramatically reduced the cost-per-trip when compared to the fixed-route buses the microtransit service replaced.

 

 

Delivering high-quality service for a lower cost. 

Public transit is most effective and useful when passengers can rely on buses and trains to come frequently and reliably. Services with headways greater than 30 minutes are difficult for passengers to rely on for quick trips and for time-sensitive travel, whether commuting or visiting the doctor’s office. 

But delivering frequent fixed-route service is expensive, and can only be achieved cost-effectively on the most heavily trafficked corridors. Offering a 10- or 15-minute headway service in a sprawling suburb would drive cost-per-trip sky-high. A comprehensive analysis of Via services shows that the cost to offer a given average wait time (15 minutes, for example) with microtransit is often significantly lower than the cost to offer the same 15-minute fixed-route headway. Microtransit is even more likely to be the cheaper option the shorter the desired wait time or when the population density of the service zone is lower. 

Agencies introducing microtransit in these circumstances may spend more than they would on the typical 30- or even 60-minute headway buses common in suburban and rural areas. But they are able to provide a service that is far more useful to their residents, and which draws more riders into wider public transportation network. Interested in learning more about how your community can save money with microtransit? Book time on our team's calendar below.

 

FAQ

What is microtransit and how does it differ from traditional fixed-route services?

Microtransit is an on-demand shared transit service that uses smaller vehicles, typically minivans or shuttles, to provide flexible routing and scheduling. Unlike traditional fixed-route services, which operate on set schedules and routes, microtransit adapts to real-time demand and can provide more direct and efficient service to passengers. This flexibility can lead to improved accessibility, equity, and sustainability in transit networks.

How can microtransit reduce absolute costs for transit agencies?

Microtransit can reduce absolute costs by converting underperforming fixed-route bus lines to more efficient on-demand services. For example, in Hall County, Georgia, transitioning to microtransit led to a reduction in weekly operational costs from $9,750 to $5,930, even with an increase in the number of trips. This cost reduction is due to lower fuel and maintenance costs, and the use of non-CDL operators.

What are the benefits of reducing the cost-per-trip with microtransit?

Reducing the cost-per-trip with microtransit allows transit agencies to expand service coverage efficiently while maintaining financial sustainability. High ridership and effective trip aggregation, as seen in Sarasota County, Florida, can dramatically lower the cost-per-trip compared to fixed-route buses. This approach not only increases transit accessibility but also makes it a viable and attractive option for more residents.

How does microtransit provide high-quality service at a lower cost?

Microtransit offers high-quality service by ensuring shorter wait times and more reliable service compared to traditional fixed-route buses with longer headways. For instance, providing a 15-minute average wait time with microtransit is often cheaper than offering the same frequency with fixed-route services, especially in lower-density areas. This enhanced service quality can attract more riders and integrate them into the broader public transportation network, ultimately driving down overall costs.

Can you provide examples of cities that have successfully implemented cost-saving microtransit solutions?

Several cities have successfully implemented microtransit solutions to save costs and improve service quality. In Hall County, Georgia, microtransit replaced underperforming fixed-route services, significantly reducing operational costs. In Sarasota County, Florida, high ridership and efficient trip aggregation have lowered the cost-per-trip. These examples demonstrate how microtransit can be both a cost-effective and high-quality alternative to traditional public transit.

How can transit agencies get started with microtransit in their communities?

Transit agencies interested in launching microtransit services can start by conducting a comprehensive analysis of their current transit network to identify underperforming routes and areas where microtransit could provide better service. Collaborating with experienced microtransit providers like Via can help design and implement a tailored solution that meets the specific needs of their community. For more information and to explore how microtransit can benefit your city, agencies can book time with Via's team of experts.

What are the main challenges transit agencies might face when implementing microtransit, and how can they overcome them?

One of the main challenges is ensuring financial sustainability while scaling services to meet demand. Agencies can overcome this by leveraging advanced algorithms for efficient trip aggregation and focusing on areas where microtransit can replace underperforming fixed routes. Additionally, partnering with experienced microtransit providers can offer valuable insights and operational support to navigate these challenges successfully.

How does microtransit support equity and accessibility in public transportation?

Microtransit supports equity and accessibility by providing flexible, on-demand service that can better meet the needs of underserved populations, including those with disabilities. By expanding the reach of traditional public transit, microtransit ensures that more residents have reliable access to jobs, healthcare, and other essential services, thereby promoting greater social and economic inclusion.

 
Elspeth Green avatar
Elspeth Green

Via Resource Editor