Yeah, GRTC buses have bicycle racks now. But bus companies aren't pursuing disruptive innovation.
Yeah, GRTC buses have bicycle racks now. But bus companies aren’t pursuing disruptive innovation.

by James A. Bacon

The GRTC Transit System, like most municipal bus systems, provides a one-size-fits-all transportation service. Whatever the route, time of day and level of demand, GRTC runs a standard city bus capable of carrying nearly 60 seated and standing passengers along fixed routes. Everyone pays the same fare ($1.50 on local routes), regardless of time or distance traveled. We’ve all seen the big GRTC buses driving around with two or three passengers. We all know that, given the cost of paying a driver and operating a vehicle, many if not most bus routes operate at a loss. It would surprise few to hear that GRTC costs U.S., state and local taxpayers $33 million in subsidies to operate in fiscal year 2014.

Many people justify this significant subsidy on the grounds that buses provide a way for car-less poor people to get to their jobs. What the Richmond metropolitan region needs, they say, is more bus service so poor people can reach a broader range of job opportunities. Environmentalists also favor buses on the ground that they generate less pollution and carbon dioxide emissions than automobiles do. Local government officials in Henrico and Chesterfield counties tend to oppose the expansion of bus routes not on grounds of principle but on grounds of economy. Their argument: We just can’t afford it.

If we count on fiscally strapped local governments to loosen up the purse strings to pay GRTC to open new routes, we’ll be waiting a very long time. Maybe it’s time to start thinking differently: how to expand mass transit without GRTC. A free market in transportation services, I contend, would provide superior service to poor people. It would increase shared ridership and reduce pollution emissions. As a bonus, it would save taxpayers millions of dollars in subsidies.

Yes, mass transit in the United States is that bad. GRTC is reasonably well run by the standards of other government-owned monopoly transit systems. Government-owned monopolies worked adequately for decades when innovation in cars and buses was incremental in nature – installing seatbelts or switching from diesel to natural gas. But the traditional model is hopelessly inadequate when the transportation industry stands on the edge of the most momentous transformation since Henry Ford’s invention of the assembly line.

The information technology-communications revolution is sweeping through transportation, just as it is through consumer electronics, building automation, health care, manufacturing and every other sector of the economy. Thanks to smartphones, it is easier than ever for drivers and passengers to locate one another. Thanks to Big Data analytics, it is easier for transportation-service companies to predict where and when transportation demand will occur and to mobilize assets accordingly. New technology is inspiring new business models that literally no one was thinking about 10 years ago.

The heralds of this new wave are Uber and Lyft, Silicon Valley-funded companies that have started competing with taxicab services in many metropolitan regions across the country. These companies are targeting the high end of the transportation services market, charging premium rates for customers willing to pay for a limousine-like ride at a moment’s notice. Predictably, they are getting pushback here in Virginia from taxicab companies. The regulatory future is uncertain. But whatever happens to Uber and Lyft, the new technology is here to stay. Taxi companies are already adopting it themselves.

Bridj, a Boston-area company, charges $6 per ride in comfortable, Wi-Fi- equipped coaches to travel from suburban locations to downtown Cambridge and Boston. Thousands of riders, it appears, are willing to pay a premium price for a premium service that municipal bus companies can’t match with their one-size-fits-all mind-set. As this new industry continues to innovate, it’s just a matter of time before entrepreneurs use the same technologies to serve lower price points. In a free market, there are few barriers to entry; someone will figure out how to serve poor people and do it cheaper than the transit companies can.

Eventually, someone will devise a smartphone driver-rider matching service open to all comers. Anyone with decent credit and a good driving record will be able to fork out $32,000 for a 12-seat van and start his own jitney service. In developing countries around the world – even in countries where $32,000 is a lot of money – jitney service is affordable to poor city dwellers. Surely in America, where we have some of the richest poor people in the world, someone will figure out how to convey them to major employment centers.

The transportation revolution doesn’t end there. Automobile companies are rethinking the idea that everyone needs to own his or her own car. Some think that the future is transportation-as-a-service. Outside San Diego, Calif., real estate developer Rancho Mission Viejo is partnering with Daimler AG, owner of Mercedes Benz, to roll out a service that provides subscribers access to cars, scooters, buses, shuttle vans and car-pooling, primarily for use in its Ladera and Sendero communities. The aim isn’t to persuade residents to go totally car-free, just to go car-lite. The goal is to cut the cost of mobility – $9,000 yearly to own and operate the average car – in half.

Environmentalists and anti-poverty warriors will continue to pressure Henrico and Chesterfield officials to subsidize the expansion of GRTC into the two counties. Given the paucity of walkable, higher-density neighborhoods in suburban Richmond and the lack of congestion – it’s the least congested of America’s 51 largest metros – the economics for mass transit will always be difficult. Rather than throwing money at an antiquated business model, government officials should encourage the emerging free-market alternatives. Roll out the welcome mat to Uber and Lyft. Ask Bridj to check out our market. Sweep away barriers that prevent jitneys from going into business. Beg Daimler AG to bring its transportation-as-a-service to the Richmond region.

We have a choice: Embrace the transportation past or the transportation future. I’ll take the future.

This column was published originally in Henrico Monthly and Chesterfield Monthly this month.

Share this article


(comments below)


(comments below)


8 responses to “A Better Route”

  1. well here goes.. Hill City Jim or not….


    re: ” A free market in transportation services, I contend, would provide superior service to poor people.”

    ” Thanks to smartphones, it is easier than ever for drivers and passengers to locate one another”

    I have some agreement that I’ll share but first – can you:

    1. – give some examples where the free market has improved life for the poor.

    2. – explain how the poor get smartphones without govt subsidies – or do you support the govt providing smartphones to the poor?

  2. TooManyTaxes Avatar

    If we had presidents – both Ds and Rs — who would enforce the immigration laws against companies, changing demographics would likely have resulted in higher pay for unskilled labor.

    And the poor area already getting free smartphones courtesy of the FCC’s Universal Service Fund program. In fact, the program is so littered with fraud, many poor people have more than one.

    1. I know I’m on the HillCityJim “clock” here so forgive me Jim. Man do I hate those posts about dominating the conversation!

      but free govt phones are basic flip-phones .. right? and no credit card?

      and I’m still a little confused as to how immigration is affecting transit.

      Now I’m quite sure if we did Jitney’s as Bacon has proposed it would pull those illegals out of the woodwork like no body’s business!

      so .. SHOOT – let’s give illegals even cheaper rates, free jitneys- and find out where they work and rip their boss a new butt for violating Federal Laws. Talk about killing two birds with one stone – woo hoo!

      but let’s presume that we’ve walled off illegals from free transit and smartphones…

      if you have a flip-phone and not a full-featured smart phone and if you don’t have a credit card – my understanding is you’re out of luck for those “free market” services that Bacon is alluding to – and last I heard – those services cost far, far more than transit does especially when they are “surge” pricing.

      An honest question – are uber services for the poor cheaper than transit?
      what we don’t know but probably could calculate is the cost per trip per passenger. If that cost is more than Uber + free phones + credit card – then game on!

      Methinks, Bacon reads too many libertarian type think tank propaganda…. which I tend to discount because they portray something as a costly system but their real goal is to get rid of the service all together and go to a “free market” system.

      I will admit that the HOT Lane idea came from the think tanks – and I like it but the polls from the folks who say they like the free market – eh.. not so much. They think HOT Lanes sucks big time!

      anyhow – if you go back to the Libertarian types who advocate getting rid of transit and going to smartphones – the key question is – do they support free smartphones and credit cards?

      basically this boils down to two competing premises:

      1. – we should NOT be providing services to the poor no matter how cost effective – the poor are better served with a pure free market and no govt assistance. keep the govt out of all of it.

      2. – we SHOULD be providing services to the poor but in a cost-effective way – utilizing free market principles but if free phones are needed, so be it.

      the problem I have sometimes is trying to figure out what is the real Libertarian proposal?

      is it to get rid of transit all together because it’s clearly not free market – or is it to find a more cost-effective way to provide a service – that clearly violates free market precepts?

      I tend to like “user-pays” ideas but I also think there are consequences to no subsidizing the poor – and we have to decide which is the worse of the evils.

      Are we prepared – as a country to move more toward a 3rd world economy – which if you think about it – is far more Libertarian than we are.

      Is such a thing a step back – or basically an admission that there are limits to what govt can do – and transit is an example of a govt service that, over time, has failed at it’s original premise and mission.

  3. Cville Resident Avatar
    Cville Resident

    I could support this.

    The real question for “mass” transit concerns “mass” events. Every major metro has enormous events. Usually, the buses are packed for these events. I’m not sure these private services are able or willing to deal with large events and the need to move large amounts of people.

    And then there’s the issue of mass disasters. Maybe not a concern in Kansas, but it’s no secret that Hampton Roads is not prepared for a major hurricane. If we end mass transit, what capabilities do we have to move large amounts of people if/when a major natural disaster strikes?


    1. The organizers of mass events, not taxpayers, should shoulder the burden of ensuring that people can get in and out of the event on a timely basis. If that means contracting with private bus companies to run shuttles, that’s what they should do.

      Mass disasters — that’s a tougher question. Again, I think the answer is for local emergency response agencies to contract with private companies, paying them a retainer to have their vehicles on call at moment’s notice. something like that.

      1. re: ” Mass disasters — that’s a tougher question. Again, I think the answer is for local emergency response agencies to contract with private companies, paying them a retainer to have their vehicles on call at moment’s notice. something like that”

        what FEMA does – is to hire private providers … FEMA is the “retainer”.

        should FEMA exist and function that way (as a tax-funded service) or is that something the private sector should be doing without govt involved at all.

        or… should the State or Locality do it – as a tax service or no govt at all and let each person make their own arrangements via the free market?

        1. TooManyTaxes Avatar

          Mass disasters. God forbid that one occur in the Greater Washington Area (or anywhere else for that matter). Where would Washington area residents go in an evacuation? I think most people feel Washington is largely shelter in place. It’s a helluva lot different than evacuating the Outer Banks. My two cents.

      2. Cville Resident Avatar
        Cville Resident

        Thanks for the response.

Leave a Reply