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3 ways to save money with microtransit

  •   3 min read

Cities and transit agencies across the country are using microtransit to save money while delivering higher-quality service: read on to learn about three ways we can measure those savings.

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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. 

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. 

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.

Leave a comment to let us know what you think of microtransit as a cost-cutting tool, or drop us a line at partnerships@ridewithvia.com.

 

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