Corey Harper, an assistant professor of civil and environmental engineering at Carnegie Mellon, says, “there’s a negative side to this, too,” depending on how Uber gets used by public transit customers. “Uber impacts congestion and energy use and impacts the efficiency of our transportation system,” he says. “Transit agencies have to think this through—what you don’t really want is people just switching from the transit agency to take Uber.”

RTD and Uber: The Denver experience

In 2019, Denver, population 705,576, became the first city in the world to start selling public transit mobile tickets through the Uber app. The Regional Transportation District (RTD), which operates in the Denver-Aurora-Boulder area in Colorado, sells mobile tickets via four different channels (including the Lyft app beginning in December). In 2020, 11% of the agency’s ticket revenue came through mobile channels. Tonya Anderson, a senior product manager of electronic fare operations at RTD, says most of the revenue came from the agency’s app, while about 4% currently comes from the Uber app.

Mobile tickets provide convenience for users, but not everyone wants to download another app, she says. Selling tickets on Uber’s app offers another way to reach customers.

In the long run, Anderson says the agency’s goal in working with Uber is to replace inefficient routes. But she says the RTD still needs to collect and analyze the data and “have these experiments running for a little bit longer” before it can “more confidently engage with Uber and TNCs [transportation network companies] to augment our services.” The agency also is wary of the potential implications for congestion.

There are several other potential sticking points—for example, what to charge customers for replacement rides offered by Uber. (At $3, the current price of a one-way local fare ticket costs a lot less than the average Uber ride. Ideally the new price is fair to customers and would reduce the agency’s operating costs.) Anderson says it’s also likely the RTD will need to negotiate with its union workers before it can implement something with Uber at scale.

I think, just to be transparent and honest, but trying to stay positive, there is a little bit of apprehension when it comes to public transportation agencies working with Uber because of some of not-so-great experiences in the past,” says Anderson. The agency’s initial conversation with Uber “wasn’t very collaborative,” she says. But over the last year, she says the agency has found that the new Uber Transit division, which is specifically focused on public transit, genuinely wants to learn about the agency’s goals and help it achieve them.

Uber’s global domination of transportation

There’s still a question of where Uber Transit fits within Uber’s overall strategy and its goal of becoming profitable. Uber, which reported a $6.7 billion loss for 2020, declined to disclose how much it has invested in Uber Transit.

Uber’s rides business has taken an earnings hit in the pandemic, and the company has sold the divisions that were spearheading its bets on things like air taxis and autonomous vehicles. But Mihov notes that the 220-member Uber Transit team hasn’t lost any headcount throughout the crisis. He says that “it’s still one of the bets within Uber” with “an area of growth and opportunity.”

Mihov, who formerly worked at Zoox, a Bay Area autonomous vehicle startup, adds that the deployment of AV technology “is a really long-term thing.” Assuming that self-driving vehicles become standard a decade from now, or whenever, they would be another mode plugged into Uber’s transit offerings, Pangilinan says.

Working with transit agencies certainly fits well into the goal of creating an ecosystem where users will have more choice. “We really do think that a better public transportation system is, one, better for cities, but two, it is also good for Uber,” says Pangilinan. “It’s also good for all of us that are not in the business of selling people cars.”

But it will be up to transit agencies to make sure whatever deals they strike with private providers don’t end up cannibalizing their ridership. Perhaps that will mean limiting Uber’s involvement to trips taken to or from rail or bus stations, or during disruptions in regular service, Carnegie Mellon’s Harper suggests. The agencies and private transportation companies “will have to work together to figure out a mutually beneficial partnership,” he says.

After working with Uber Transit for a little over a year, Anderson says, “[t]here’s still a lot of work that we can still do just for Uber to understand public transportation and for us to understand Uber.”

With RTD’s revenue shortfall for 2021 projected to be $140 million, Anderson says transit-agency officials are asking more questions about whether Uber might be a solution.“If the pandemic didn’t happen, if we didn’t have coronavirus and we were just going along our merry way,” she said, “I don’t think we would be having these conversations with Uber.”

📬 Sign up for the Daily Brief

Our free, fast, and fun briefing on the global economy, delivered every weekday morning.