Ride-sharing companies and municipalities: Partners in public transit?

By Ainslie Pierrynowski (AIMS on Campus Student Fellow) 

Earlier this year, the town of Innisfil, Ontario took an unusual step to address its lack of public transit. Rather than invest in conventional modes of public transportation, Innisfil has become the first municipality in Canada to partner with Uber, a popular ride-sharing company. Innisfil residents can book trips to any location via the Uber app, paying a reduced rate. Several frequent destinations, such as the Innisfil Recreation Centre, have set fares of $3 to $5. The remainder of the typical fee for a ride with Uber is subsidized by the municipality. This new partnership has seemingly been met with a warm reception. Could similar partnerships between municipalities and ride-sharing companies benefit in Atlantic Canada? Several key advantages of ride-sharing services suggest that this option is worth investigating.

In particular, the on-demand nature of ride-sharing services as well as their lack of reliance on fixed routes makes them well-suited to the region’s many small, spread-out, and largely rural communities. For locations unable to sustain large-scale transit systems—or any transit systems—ride-sharing can provide residents with a vital link to essential services and economic opportunities. Likewise, given the Atlantic provinces’ struggle to provide healthcare to an aging—and often geographically scattered—population, such a partnership could enable seniors in outlying areas to access centrally located health facilities.

In fact, this unorthodox approach to public transit may save local governments money. In Innisfil, Uber’s services cost the municipality an average $5 per passenger, compared to a projected $17 per passenger in a bussing system. Indeed, implementing the partnership with Uber was expected to cost the local government $175 000, as opposed to the estimated $ 1 million that a bus service would cost. In practice, more Innisfil residents have opted to share Uber vehicles with other customers than originally anticipated. As a result, the municipality has paid a mere $ $26,462.41 during the partnership’s two month pilot stage—in contrast to the $100 000 budget slated for this period of the partnership. Innisfil’s experience, coupled with the importance of municipal financial policy as a factor in combating Atlantic Canada’s economic decline, make a similar transit partnership an enticing option for the Atlantic region.

Speaking of Atlantic Canada’s economic challenges, partnerships between ride-sharing companies and local government offer employment opportunities to residents. For instance, unemployed or underemployed individuals can serve as drivers. Residents can also take advantage of ride-sharing services to access job interviews, training and education facilities, and workplaces located farther afield. This advantage holds special significance for towns with little economic diversification—especially those reliant on declining, seasonal, or vulnerable industries, like many locales in Atlantic Canada.

Despite these substantial benefits, communities considering a partnership with a ride-share company must bear numerous concerns in mind. Specifically, municipalities must ensure that their commercial partners’ vehicles meet the accessibility requirements set out by law and by transit regulations. Moreover, the development of automated or driver-less vehicles could put the long-term job security of local ride-share employees into jeopardy. Nonetheless, the other economic advantages of ride-sharing—that is, access to distant economic opportunities—would persist. Meanwhile, the job security of taxi drivers and their employers may prompt resistance to municipal partnerships with ride-sharing companies. Consequently, local governments considering such partnerships must address these worries.

As well, ride-sharing companies rely on apps and technology to deliver their services. Therefore, local governments need to find a way to extend ride-sharing to individuals without Internet and those without personal electronics. This issue, however, could be mitigated by installing tablets and computers in public areas, like libraries and community centres.

An additional concern arises because a partnership based on the Innisfil model would shield a single, handpicked ride-sharing company from competition through the use of subsidies. In essence, by keeping transit fares artificially low through municipal government subsidies, the chosen ride-share partner is protected from potentially more cost-effective competitors. This situation thus shuts competing ride-sharing companies out of communities that ascribe to Innisfil-style partnerships, leaving customers with limited choice and, in some cases, a greater financial cost. Admittedly, a similar problem of inefficiency exists with traditional public transit, given its subsidized monopoly on inexpensive, large-scale transportation. Further, communities faced with this concern must weigh these downsides, the aforementioned economic benefits of a partnership with a ride-sharing company, and the feasibility of alternatives—like changes to laws and regulations in order to make one’s town friendlier to ride-sharing companies.

Overall, this new mode of public transit offers several benefits that correspond to the specific demographic and financial challenges of Atlantic Canada. While not immune from practical concerns, the gains produced by partnerships between ride-sharing companies and local governments are numerous and significant. From enhancing labour mobility to connecting residents to key services and beyond, these partnerships offer the region’s municipalities an intriguing and advantageous approach to public transit.

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