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Will Public Transit Get a Lift from Rising Ride-Share Prices?

As the economy reopens, there’s increased demand for Uber and Lyft, which are still short on riders. That may push some riders back to transit, but systems are still well under capacity.

A sign at an airport entry that reads "Lyft, Uber, pickup here."
Jonathan Weiss/Shutterstock
Moses Nakamura always preferred taking public transit or biking to ride-hailing services, but he did use Lyft when running late or when he had to reach some corner of New York City untouched by transit. In recent weeks, however, rising prices have turned him away from ride-hailing.

“After being vaccinated, I started taking the train more often again and also taking [rideshare] cars,” says Nakamura, a software developer who lives in Manhattan. “A couple of times it was appealing to take a [Lyft] car because I wanted to get somewhere quicker, but after looking at the price, I changed my mind.”

Ride-hailing prices have exploded in recent weeks. Vaccinations are allowing people to return to normal activities, which in turn is generating a surge in demand. Meanwhile, the supply of drivers remains limited, with many having switched to driving for food delivery services during the pandemic. The fluke gas shortage in the South and East has driven up prices, too.

The spike has captured headlines across the country, from Charlotte to Boston to Chicago. Some transportation experts predict that swelling prices could push hesitant users back toward public transit, where ridership has plummeted in an unprecedented and sustained fashion.

“People are price sensitive,” says Megan Ryerson, a professor of transportation at the University of Pennsylvania. “If taking an Uber is much more expensive than they were prepared for, it could make more people take public transportation. This moment is a good reminder that they’re profit-driven companies, not a public service, and those prices can go up at any time.”

A sustained price spike could be especially helpful to transit ridership in some of the nation’s largest cities, particularly New York, where public transit was an essential part of life before 2020.

That being said, it’s not a panacea for struggling transit systems. Not everyone has returned to in-person work. Some remain nervous about entering tight spaces with strangers.

“There are probably a lot of people who are still cautious about riding the subway and I don’t think they’ll change their minds in any dramatic way because car prices are higher,” says Arun Sundararajan, professor of technology, operations and statistics at New York University.

What’s Driving the Price Hike?

Nakamura first noticed the extreme price increase when he tried to book a ride from West 60th Street to South Street on Manhattan’s Lower East Side, which would take about 30 minutes. The quoted cost was $58.47 before tip, roughly three times the price he expected. He had a similar experience while visiting the Washington, D.C., area, where an eight-minute ride would have cost $30. He opted to take the subway instead and be a little late.

“It was shocking,” Nakamura says. He notes that a cost-saving possibility in the past was a feature that allowed users to share a ride with a stranger. “That’s not really an option right now, so that’s also making it more expensive.”

Ride-hailing companies are well aware of the imbalance between supply and demand. An Uber press representative said that the company did not have details on pricing changes in specific cities. In a mid-April disclosure form, the company noted that it is seeking to increase enticements to lure drivers back. “As vaccination rates increase in the United States, we are observing that consumer demand for mobility is recovering faster than driver availability,” the document reads.

Lyft did not immediately respond to requests for comment.

Will Riders Return?

Following previous downturns in public transit use, riders have been inspired to return to rails and buses when faced with price shocks with other types of transportation. After a trough in transit ridership during the 1960s and 1970s, riders returned to urban systems and to the newly created Amtrak intercity rail once gas prices shot up. Similar effects were found due to higher gas prices about a decade ago.

But any gains transit systems are seeing due to elevated Uber and Lyft prices may not be enough to restore pre-pandemic ridership. The oil crisis of the 1970s dragged on for years. By contrast, it is not at all clear how long the dynamics currently driving up ride-hailing costs will last. The ransomware-created gas shortage, after all, proved to be short-lived.

Public transportation ridership levels, meanwhile, could face a long-term challenge that even a sustained rideshare price hike may not ease. If some substantial percentage of white-collar workers never go back to the office, and more only go in three to four days a week, fare revenues might not recover. Commuter rail systems would be especially devastated by such a dynamic, but subways, light rail, and buses would suffer, too — although the $30 billion included for transit in the March stimulus package will certainly help in the short term.

There’s also the question of how long it will take people to feel comfortable in cramped settings again.

“It is hard for me to imagine that we will go back to the packed subway cars that we used to see pre-pandemic,” Sundararajan says.

The pandemic accelerated trends Sundararajan believes were already in motion. Alternatives to mass transit in large urban areas had already been proliferating, from bike share and scooters to the big ride-hailing companies. In a society where car ownership is the norm, it will always be a challenge for transit systems to gain market share.

No surge in rideshare prices will change that, Sundararajan argues.

“It’s hard for me to imagine that these newer large cities or smaller cities who might be considering transit options can justify the costs,” he says. “The future of public transit doesn’t seem bright.”
Jake Blumgart is a senior writer for Governing and covers transportation and infrastructure. He lives in Philadelphia. Follow him on Twitter @jblumgart
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