Public transit agencies – and state and local governments – are hurting now because of the impact of the COVID-19 pandemic, and they will need new efficiencies and revenue sources. The pandemic has wreaked havoc on the global economy, with a devastating impact on the national and local economies. This has triggered a severe budget crisis for cities and states across the United States.

New York City projects an $8.33 billion shortfall in its 2021 fiscal year budget, and the National League of Cities predicts that cities, towns, and villages can expect to face a cumulative $360 billion budget shortfall from 2020 through 2022.

The severe decline in public transit ridership will also have devastating effects on transit agencies. When New York City emerged as an epicenter of COVID-19 in mid-April, subway ridership dropped 92% and commuter train ridership dropped 98%. Service has yet to return to anything near pre-pandemic levels, and the 2020 Metropolitan Transportation Authority (MTA) November Financial Plan (the “November Plan”) estimates deficits of $2.49 billion in 2020, $6.12 billion in 2021, and multibillion-dollar deficits through 2024.

Cuts have already begun. The MTA has focused on three areas to cut costs, including non-personnel expenses. Municipalities and transit agencies may be looking for additional ways to cut costs while continuing to provide necessary services. Technology innovations and multi-modal integration have the potential to reduce operational costs while increasing safety, efficiency, and access to transportation.

Innovations in trip planning and optimization software are turning public transportation into efficient digital networks through the use of on-demand and pre-scheduled taxis, for-hire vehicles, and micro-mobility to complement fixed-route services and expand transit access. This crisis could pave the way for expedited implementation of Mobility-as-a-Service (MaaS) partnerships, expand the use of broker car services to provide paratransit service, and replace government fleet vehicles and social service programs with taxis and for-hire vehicles, among other cost-saving measures.

Mobility-as-a-Service & Mobility on Demand

Mobility-as-a-Service is the integration of multiple forms of transportation services (rideshare, taxis, scooters, bikes, public transit, etc.) into a single user interface that allows travelers to plan, book, and pay for multiple types of mobility services in one place. It allows for a fluid system that incorporates various modes of transport so travelers can reach their destination seamlessly, allowing for complete point-to-point trips. Modes that may be facilitated through a MaaS operator include ridesharing, car-sharing, bike-sharing, taxis, car rental/leasing, public transit (buses, subways, rail, etc.) – or a combination thereof.

There are potential uses for MaaS. Ultimately, providing an alternative for the use of private cars, MaaS should help jurisdictions reduce congestion and improve a system’s capacity and sustainability. MaaS also allows transportation agencies to use new business models to organize and operate various transportation modes, giving agencies the added advantages of improved information on ridership and demand. For transit users, MaaS should be the “best value proposition” by meeting mobility needs, while also solving the inconvenient parts of an individual journey (e.g., first mile/last mile).

A few international cities are already implementing MaaS. In July 2018, Finland became the first country in the world to enact laws integrating modes of transportation to promote the MaaS concept. The Act on Transport Services (the “Act”) created preconditions for digitalization, new business models, and new kinds of services in transport. The reform enables new business models that can offer customers a package of services, where city bikes, public transport, car rental, and taxis are all available under a single MaaS platform. All mobility service providers – private or public – are required to share the essential data of their services through open Application Programming Interface (API). Depending on the mode of service, such essential data may consist of routes, stops, timetables, prices, and fares – as well as information on the availability and accessibility of services. In addition, mobility service providers and providers of integrated mobility services must be given access to the sales interface of ticket and payment systems on fair, reasonable, and non-discriminatory terms.

In October 2019, the Finnish company MaaS Global will launched its Whim mobility app – a MaaS solution that integrates public and private transport service – in the Austrian capital of Vienna. Whim had already launched in Helsinki, Finland (Winter 2017), in Birmingham, England (Spring 2018), and in Antwerp, Belgium (Autumn 2018).

In the U.S., a few cities are experimenting with MaaS concepts. Dallas Area Rapid Transit (DART) uses GoPass, an all-in-one travel tool that gives customers real-time travel information, mobile ticketing, and on-demand services for transit through a mobile app. Similarly, the Regional Transportation District of Denver collaborated with Uber to let customers choose public transportation options directly through the Uber app. Customers are able to choose their destination and starting points, select “transit” from the product options, review a route list and select their best choice, choose how they want to view trip details, and pay for fares via mobile ticketing.

A related concept to MaaS is mobility on demand (MOD), which the U.S. Department of Transportation describes as “an innovative transportation concept where consumers can access mobility, goods, and services on demand by dispatching or using shared mobility, courier services, unmanned aerial vehicles (U AVs), and public transportation solutions.”

The difference between MaaS and MOD is that “MOD focuses on the commodification of passenger mobility and goods delivery and transportation systems management, whereas MaaS primarily focuses on passenger mobility aggregation and subscription services.”

Transportation Network Companies (TNCs) dominate the on-demand ride services market, and taxis have struggled to make meaningful gains in that arena and compete, likely because of the decentralized nature of the taxi industry. Universal e-hail apps allow any locally-available taxis to be hailed electronically through a single app, similar to booking a TNC.

Legislation was recently introduced in New York City that would require the Taxi & Limousine Commission (TLC) to establish a universal e-hail app for yellow and green taxis. The proposed legislation would also require the creation of a city-run API (an open software language) to let companies build apps that hail taxis and other for-hire vehicles and allow taxis to be hailed through a TNC’s app.

First Mile/Last Mile

COVID-19 has devastated public transit ridership. In New York City, while some straphangers have trickled back out of necessity as the city reopened, subway ridership is still down approximately 70% from this time last year. Commuter trains are experiencing the same ridership decline. However, according to a growing body of research, “there is scant evidence tying major coronavirus outbreaks to buses and trains.”

As our understanding of the virus continues to grow, people may be more comfortable with the idea of public transit. However, there is still the issue of convenience. The term “first mile/last mile” describes the beginning and end of an individual’s public transportation journey. In other words, it is how people travel to and from transit hubs (train stations, bus stops, etc.) and their starting points and destinations. In transit rich areas like Manhattan, this usually means walking. In the suburbs and transit deserts, where it could be miles to the nearest transit stop, some type of “wheels” may be necessary. To encourage people to use public transit – and reduce vehicles on the road and emissions – cities are turning to MOD solutions that take the pain out of the first mile and last mile of people’s commutes.

In 2019, Jersey City collaborated with Via Transportation for the New Jersey’s first on-demand bus network to enhance service, close transit gaps, and expand connectivity. “Via Jersey City” launched on February 25, 2019, and the service has been a success despite the pandemic. The service complements and extends the existing public transit infrastructure to provide better connections. Riders use the Via app to select a pick-up and drop-off location within the service zone, and fares are $2 per ride. This is just one of many partnerships that Via has with cities, private operators, school districts, corporations, and universities to transform transit systems into efficient digital networks. Via’s technology powers first mile/last mile, school bus, transit desert, paratransit, and non-emergency medical solutions around the world.

Vanderbilt University researchers predict there may be “extreme traffic” for some cities post-pandemic as more people opt for the relative safety of riding solo. First mile/last mile may be the future of getting people to take public transportation, and taxis and for-hire vehicles (FHVs) could help power the multimodal transportation solution.

According to a Harvard researcher, “expanding a transit station’s reach from a half-mile to just 1.5 miles makes it accessible to nine times as many potential passengers (assuming uniform population density and a grid-like street layout).” If it is more convenient for people to get to the bus, subway, and train, then they may be more willing to take public transit to avoid traffic congestion.

Paratransit & Accessible Service Innovation

Paratransit means comparable transportation service required by the Americans with Disabilities Act (ADA) for individuals with disabilities who are unable to use fixed route transportation systems. Complementary paratransit service is required where public entities provide fixed route service, except for commuter bus and rail and intercity rail systems.

Paratransit systems exist because the United States government enacted laws such as Section 504 of the Rehabilitation Act of 1973 and the ADA, which prohibit discrimination on the basis of disability in, among other areas, transportation, and which require the government to provide transportation for all U.S. residents, including for individuals with disabilities.

Paratransit operations are often described as dial-a-ride, on-demand, curb-to-curb, or door-to-door services, but are more accurately termed “origin-to-destination” services. There are two primary ways to provide paratransit service: dedicated service and non-dedicated service. Dedicated service providers transport paratransit customers using transit-agency owned vehicles. Non-dedicated service providers, such as a broker car service, provide paratransit service in concert with their existing operations using taxis and FHVs. The broker model uses contractors to schedule and dispatch prearranged trips for paratransit customers through a non-dedicated subcontractor network of taxi, livery, and black car service providers.

In October 2020, the MTA Board approved Broker Car Service for Paratransit Access-A-Ride (AAR) contracts that will shape NYC Transit’s paratransit operations for years to come. The contracts, valued at $579 million, give four companies the exclusive right to complete brokered paratransit rides for three years. The recently approved contracts increase the availability of power-lift equipped wheelchair accessible vehicles (WAVs) for oversized wheelchairs and scooters. The new contracts also incentivize the brokers to perform greater than 25% of their daily trips as shared rides, while providing lower pricing.

According to the MTA, over the past 10 years, demand for paratransit trips has “skyrocketed from approximately 20,000 per day in 2008, to over 30,000 currently (pre-pandemic).” Prior to the pandemic, the allocation of AAR trips was approximately 30% for dedicated service providers and 70% for non-dedicated service providers. The new contract will reduce the average cost the MTA pays for the brokered trips from $34 to $31, which is less than one-half of the $83 per trip cost for dedicated service trips. The agency is planning to shift 75% of trips to brokers over the next three years. The MTA estimates the new contracts could save the agency more than $85 million over the course of the contract.

In September 2012, New York City started the Accessible Dispatch Program (ADP), an initiative that provides wheelchair-accessible taxi dispatching services to disabled residents of, and visitors to, New York City, and it blossomed. ADP was meant to alleviate the problems with AAR and the lack of accessible taxis in the city’s fleet. A private dispatch company vendor was awarded the city contract to dispatch accessible taxicabs to locations within Manhattan. The ADP is now a centralized service providing on-demand transportation continually.

There are multiple ways to book a taxi from the ADP, including calling 311, calling or sending a text message to the dispatch center directly, using the ADP app, or booking online. Drivers are compensated for drive time from the point they accept the request until the customer is dropped off, but ADP customers pay only the metered taxi fare for the time they are in the vehicle.

Similar to – but separate from – paratransit is Non-Emergency Medical Transportation (NEMT). Launched as a joint federal and state program in 1966 to Medicaid beneficiaries, NEMT is a ground transportation service provided to individuals without access to public transportation who need to travel to medical appointments.

NEMT services are generally supported by Medicaid funds. Many different studies have shown that paying for an individual’s transportation to the doctor’s office can prevent the condition from deteriorating into an emergency situation, which costs hospitals and insurance companies thousands of dollars. Studies have shown that brokers, who operate on a fixed budget rather than a fee-for-service amount, have improved service quality and controlled costs. In 2005, Congress passed the Deficit Reduction Act that gave state NEMT programs enough flexibility for local governments to seek out cost-saving opportunities by outsourcing the day-to-day management of NEMT services to brokers.

Broker car service can reduce costs for both NEMT and paratransit. Non-dedicated service provided by brokers is significantly less expensive.

I coordinated the start of a program with NY’s MTA when I was TLC Commissioner/Chair in the 2000s, that for the first time integrated for hire vehicles for point-to-point Access-A-Ride trips, in lieu of multi-passenger accessible vans, for both wheelchair accessible and ambulatory passenger services. This program has been successfully and expanded over the years and has saved the MTA millions of dollars. The cost saving were identified as part of a federally funded research project several years ago, where I reported my findings in a published article entitled, Accessible Transportation Reform: Transforming the Public Paratransit and Private For-Hire Ground Transportation Systems. The main finding was that “[t]he lack of coordinated policymaking, diverse funding streams, and inefficient use of multi- passenger vans over non-fixed routes has, in New York City for example, created government subsidized costs in excess of $60 per passenger. As a solution, point-to-point transportation via taxicab or sedan can be delivered for less than $15 per passenger.”

Brokered service also improves paratransit and NEMT service. Brokers have access to a larger vehicle fleet and are able to perform a high volume of trips, while the transit agency does not bear the vehicle maintenance and operating costs. Apps and brokerage services provide a more flexible model that allows for multi-modality and shared rides.

As the need for paratransit and NEMT services continues to grow, there will be opportunities for taxis and FHVs to fill service gaps. In the TNC space, Uber and Lyft have partnered with healthcare-related businesses to provide transportation for patients.

Taxi companies could have similar strategies. While traditional taxi companies typically only provided NEMT services to larger state contracts, they could approach local healthcare facilities in an attempt to procure private contracts as well.

Delivery Service

The pandemic drove e-commerce sales at Walmart up 97%, and Target set a sales record as its same-day fulfillment services grew 273%, while Amazon reported a 40% increase in sales. According to the Q2 2020 report from the U.S. Census Bureau, U.S. retail e-commerce was up 31.8% from the first quarter of 2020, and 44.5% year-over-year.

Urban deliveries do not require highly sophisticated or large trucks. Taxis and FHVs could be a straightforward solution to maximize the efficient use of vehicles. When not transporting passengers, these vehicles could pivot to on-demand delivery services, such as DoorDash, Grubhub, Instacart, and Postmates, or scheduled deliveries for Amazon and other parcel delivery services.

The delivery space is unregulated, which is good, and may remain that way permanently.

A group of researchers is proposing an intriguing solution to the problem of package delivery in urban environments – a crowdsourcing platform that uses taxis to deliver packages. In a study published in IEEE Transactions on Big Data, the researchers “show that such an approach could be used to deliver 9,500 packages on time per day in a city the size of New York City.”

Crowdsourcing platforms could allow customers to set deadlines to have packages delivered, and then source taxis that are already on the road to deliver the packages, relying on current and anticipated taxi and for-hire vehicles requests for its algorithm. Taxi drivers would be responsible for picking-up and dropping-off the packages between passenger trips, so as not to inconvenience passengers. In addition, supply-side aggregation apps and platforms are being introduced, which interface private packaged delivery options with base dispatch systems and smartphone applications for the passenger transportation industry, supplying a short-term revenue source to keep the struggling industries moving. Concepts like this could also ease congestion caused by delivery vehicles, and as more fully set forth below, could involve government sourced contracts and revenue streams as well.

Government Contracts

Taxis and FHVs could fill current or potential gaps in the public sector, in particular as replacements or substitutes for government fleets, as providers of employee travel, for social services, or as providers of meal delivery services.

Governments looking to cut costs may follow the lead of the federal government. In April 2020, the U.S. General Services Administration (GSA) awarded Uber and Lyft contracts to provide government-wide rideshare/ride-hail services for official travel. The five-year contracts are worth up to $810 million and are expected to reduce travel expenses and the related burdensome back office functions, such as reports, analytics, and business improvement processes. The GSA’s Blanket Purchase Agreements (BPAs) with Uber and Lyft “modernize official travel and will make it easier, and cheaper, to use rideshare services for official travel. No new apps to download – and no paper receipts to lose.”

With universal e-hail apps, similar programs could be replicated at the state and local levels using taxis. Black car operators and other for-hire vehicles that have a booking app could also compete for these government contracts if they become available. While the GSA’s government-wide BPAs for ridesharing and ride-hailing services are intended to reduce costs for TNC services, using taxis and FHVs as a service could replace government fleet vehicles as well.

Government contracts for social services and meals on wheels are also a potential business line for taxis and FHVs. Many state and local governments and non-profit organizations provide home-delivered meals (hot or frozen) for seniors who are unable to leave their homes and cannot prepare their own meals (e.g., Meals on Wheels).

The now-shuttered TLC Food Delivery was a key component of the GetFoodNYC program to ensure “food insecure” New Yorkers had access to meals during the COVID-19 pandemic. According to the TLC, during the program’s run, drivers “working in their cabs, their livery cars or their family minivans have delivered over 65 million meals and earned over $39 million.” While this program is no longer running, delivery and e-commerce have been the lifeblood of the pandemic and show no signs of stopping now.

There are approximately 5,000 Meals on Wheels programs that deliver or serve meals to about 2.4 million older Americans each year. Meals on Wheels has seen an influx of older adults who are self-isolating due to the coronavirus outbreak and who are in need of services.

The Families First Coronavirus Response Act, signed into law by on March 18, 2020, provided additional funding for the nutrition services programs authorized by the Older Americans Act (OAA) of 1965, with additional funding coming from state and local governments and private sources. The COVID-19 pandemic has increased the state and local governments’ need for fleets of vehicles to support these programs to bring meals safely to those who need them. Taxis and FHVs could seek contracts with state and local government agencies to provide these services using existing vehicles – permanently.

The Future – 2021 & Beyond!

As we enter 2021, we can see glimmers of hope in the year to come. While it looks like the pandemic’s economic impact on public transit agencies and state and local governments will continue for the near future, the pandemic is also causing many governments to reimagine transportation policy and systems. While the short-term impact can be seen – fewer cars on the roads, less people using public transit, and cities like New York are reallocating street space from cars to pedestrians and cyclists – the medium- and long-term impacts are less clear.

There are a few things to watch for while the U.S. emerges from the pandemic. Mobility needs have not gone away during the pandemic, but they have changed. Cities will need to develop ways to meet mobility needs with less funding, particularly in the face of unprecedented disruptions. Transportation workers will be among the first groups eligible for vaccination since they are deemed essential workers. Thus, in 2021, the taxi and for-hire industry could be leading the way to continue to transport commuters, provide innovative solutions for paratransit services, support delivery services, and contract with government entities.

Article by Matthew W. Daus, Esq.
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