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Illustration: Jayachandran/Mint
Illustration: Jayachandran/Mint

How public transit can learn from Ola and Uber

Indian cities should co-opt their technological solutions for public benefit

Vehicle utilization is about 4%, occupancy in... cars is about 20%. So you basically have about a 1% utilization rate on something that accounts for about 13% of global GDP (gross domestic product). I saw that as a big opportunity," John Zimmer, co-founder and president of on-demand car service Lyft, says in Arun Sundararajan’s The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism. That big opportunity Zimmer and fellow peer-to-peer (P2P) transportation mogul Travis Kalanick—Uber’s co-founder—talk about often is to some day replace private car ownership entirely by maximizing vehicle usage efficiency via their networks.

It’s an audacious vision, particularly given the regulatory pushback from New York to New Delhi. That pushback and the opposition from taxi unions see on-demand services as competing with conventional taxis and three-wheelers. The scale of the vision, however, suggests that Zimmer, Kalanick et al see P2P transportation encroaching in the intra-city mass transit space.

But an interesting new trend has turned that vision on its head. In places as diverse as Chicago, various towns in Florida and in Helsinki, local administrations have started projects to co-opt P2P services into their public transit systems. This is being done in two ways. The first is using these services in a feeder capacity to solve the first-mile/last-mile problem when it comes to bus and metro stops. The second is dropping bus routes with low ridership entirely and subsidizing P2P services on that route to bring prices into the mass transit range.

It’s too early to predict how these will pan out, but the initial results seem encouraging. And a report released in March by the American Public Transportation Association said that people who used “shared modes" were “more likely to use public transport, own fewer cars and spend less on transportation overall". It also said that shared modes enhanced public transport and boosted urban mobility.

Does this hold lessons for India? There are substantial differences between developed and developing economy urban transportation needs, after all. US cities are prone to suburban sprawl, making public transit relatively inefficient; higher density Indian cities get relatively more bang for their buck. And the socioeconomic disparities mean that the Indian urban population is more vulnerable to disruptions in the public transit space; as per the 2011 census, there are over 13.2 million urban workers regularly using buses to commute daily for employment.

Yale University economist William D. Nordhaus provided perhaps the best prism through which to view this question in his paper Schumpeterian Profits and the Alchemist Fallacy. He estimated that only a tiny fraction of the social returns from technological advances in the 1948-2001 period went to producers; consumers were the major beneficiaries of technological change. Thus the alchemist fallacy—the belief that once a simple method is found to transform lead into gold, the latter will remain precious. On the contrary, once a company has innovated, others will follow the same path until the innovation becomes ubiquitous.

In other words, Indian cities in desperate need of a public transportation overhaul—the Jawaharlal Nehru National Urban Renewal Mission has managed precious little here, and it remains to be seen whether its successor Atal Mission for Rejuvenation and Urban Transformation can do any better—should stop seeing companies like Uber and Ola as antagonists and start looking at ways to co-opt their technological solutions for public benefit.

It could take the form of a platform integrating public buses equipped with GPS and an app that allows commuters to see bus locations and wait times, as G. Ananthakrishnan has written in The Hindu. Back-end tweaks could enable data gathering via this platform as well, enabling the data analysis necessary for efficient transport planning. New townships planned with more urban sprawl could utilize a mix of planned routes and on-demand routes that have no fixed stops. Public-private partnerships with on-demand services—whether already established or, as in Kansas City, new platforms that use buses instead of cars—could potentially be useful in certain urban scenarios as well.

Morgan Stanley has estimated that shared modes of transport will account for a quarter of all kilometres driven globally by 2030. The rapid spread of Uber and Ola has shown that India is not immune to this disruption. Ensuring that mass transit doesn’t lose ground will require the flexibility to co-opt the technological innovation currently happening in the transport space. That, in its own way, is as audacious a vision as Zimmer’s and Kalanick’s.

Can on-demand car services threaten public transport? Tell us at views@livemint.com

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