Towards a New Model of Public Transportation How Uber is offering public transportation agencies new tools to operate more efficient, connected and equitable mobility networks

Transit Horizons

Part 1: Introduction 3

Part 2: Public transportation 2030 vision 5

Part 3: The economic case for integrating ridesharing services as a new mode in public transportation 12 The state of public transportation subsidies in the United States by mode 14 Theeconomicsoffixedversusvariablecostsupply 17 Estimatingwhereridesharingservicescanenableagenciestodeliverequivalent or better transportation access at a lower cost per trip 19

Part 4: How Uber offers agencies new tools to operate more efficient, connected, and equitable mobility networks 27 About Uber Transit 27 Ourvaluepropositiontopublictransportationagencies 30 Our product ecosystem 33

Part 5: How Uber Transit’s products and services work 37 Our approach to complementing public transportation 37 Our approach to paratransit 40 Our approach to microtransit 42

Part 6: Conclusion - Towards a new model of public transportation 46

Appendix: HowCOVID-19isimpactingthecost-optimalmixofridesharing 48

Table of contents

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Public transportation is the vital backbone by which cities and towns move. Globally, more people rely on public transportation than they do on personal vehicles. Efficient public trans-portationenablescitiesandtownstoflourishbyproviding mobility for essential workers, olderadults, people with disabilities, those who forgo car ownership by choice or by circumstance, and is the only available option bywhichmillions ofpeopleaccesseconomicopportunities.Withoutefficientpublictransportation,citieswouldgrindtoahalt.

And yet public transportation today is facing a very challenging environment. Consumers aredemandinghigherqualityandmoredynamicservices togetherwith integrateddigitalexperi-ences.Agenciesmeanwhileareexpectednottoleaveanyonebehind.Addingtothechallenges,the COVID-19 crisis has decimated ridership, fundingsourceshaveevaporated,andtherecov-ery isprogressing slowly.Against thisbackdrop,the need for public transportation agencies to evolve and innovate on their service deliverymodelhasneverbeenhigher.

The good news is that agencies today have access to new tools, new technologies, new supply modes, and new business models to plan, deploy, and optimize a new type of pub-lic transportation system. This system has thepotential toofferamoreequitable service, atalowercostforagencies,whiledeliveringabetterexperienceforriders.

The role of public transportation agencies is also changing as they shift their capabilities from operating transportation to increasing-ly managing mobility. Agencies will increasing-

Part 1Introduction

lyhavetoevaluate,contract, integrate,andthenmanage the right portfolio of products and part-nerships - both physical and digital - to get to the rightsystemsolutionfor theirspecificneeds.Atthesametime,networkplanningshouldtakeintoaccount the new modes and technologies that agencieshaveattheirdisposal.

Our goal with this paper is to establish the strategic foundation for how we at Uber ex-pect public transportation to evolve over the coming decade. While our perspectives anddataanalysisisbasedprimarilyontheUSmarket,webelievemanyof the conceptswedescribehavethepotentialtobeappliedglobally.Wealsoshare an overview of Uber Transit, a division ofUberexclusivelyfocusedonservingpublictrans-portation where we describe our strategy and product portfolio.We explain howUber Transitoffers public transportation agencies new tools to operatemore efficient, connected, and eq-uitablemobilitynetworks. Insubsequentpapersand publications, we will share additional content on our case studies, policy positions, and imple-mentationapproaches inmoredetail.For read-erslookingforanexecutivesummaryofthecon-tent in this paper, we recommend you read the conclusioninpart6.

Uber Transit is committed to serving our communities and cities by making our tech-nology,ourapp,ournetwork,andourexpertiseavailabletopublictransportationagenciestouseastheirown.Wehopethisperspectivewillspurfurther discussions and we welcome your feed-back.

“We look forward to strengthening our partnership with public transportation so that together we can bring safe,

sustainable, and equitable movement and opportunity to as many people as we can, in communities across the world.

- Dara Khosrowshahi, Chief Executive Officer, Uber

”

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We believe that public transportation is well into the early stages of a massive transforma-tion that will play out over the course of the next decade. Atthehighestlevel,weseepub-lic transportation systems transforming from de-centralizednetworks,wheredifferentmodescanoften operate in silos, toward a system that is truly integrated, connected, and optimized in a highly agileway.

Today, leading agencies take a network viewbut many agencies still plan and manage public transportation operations in silos - often unable to consider the network holistically to optimizefor the journey rather than the mode. Networkplanning, routing, and dispatching operations must become increasingly connected, central-ized and optimized across modes of transporta-tion.Networkdesignwillbecomemorefrequentandwill leverage the latestanalytical approach-estooverlaynewmodesontopoftheexistingpublictransportationnetwork.Agencieswillhavereal-timevisibilityacross theentirepublic trans-portation system, providing them the agility tomakechangesasdisruptionsarise,andeventu-ally automating many parts of the planning pro-cess through integrated data that considers sys-tem-wideimplications.

Part 2 Public Transportation 2030 Vision

Ontheriderside,userswillplan,book,payfor,andaccess their trips across any mode - both public and private - via Mobility-as-a-Service (MaaS)apps. Rewards, bundles, andmobility subscrip-tionswillfollowshortlythereafter.

Furthermore,thenumberofmodesthatformthefabric of public transportation will continue to in-crease.Themainstaysofbusandrailwill remainatthecoreofpublictransportation,movinglargenumbersofpeoplealongdenseurbancorridors.These modes will be complemented by the ad-dition of microtransit, ridesharing, and micromo-bility modes which will gain an increasing share of thepublictransportationsupplymix.Theadditionofnewmodeswithavariablecoststructure likeridesharing and the proliferation of on-demand serviceswillunlocknewoptimumsofefficiencyand lower cost structures for public transporta-tion agencies. This transformationwill also offeragenciesmoreopportunitiestoimprovetheeq-uity,accessibility,resilience,andflexibilityoftheirnetworks.

Figure 1 Public transportation systems will become increasingly integrated and connected with new modes in the mix

New technologies and new business modelsthatareavailabletobothconsumersandagen-ciesareenablingthistransformation.Adoptionisstill in its early stages but will dramatically acceler-ateintheyearstocome.Noteveryinnovationorsolutionwillbeapplicabletoeveryagency.Therightmixofsolutionswilldifferbylocation-whathighly dense cities need will surely be different fromwhat small towns require. Somepilotpro-grams may fail while others succeed. However,agenciesthatadopttherightmixofsolutionswillexperience an improvement in service qualityandcommunityoutcomeswhile increasingeq-uity, accessibility, efficiency, ridership, resilience,andloweringoperatingcosts.

Thefutureisbrightandweexpectpublictrans-portation to look significantly differently in thenext10years than itdoes today.Belowwede-scribethechangeswearealreadyseeing.

>> MobilityManage-ment

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Figure 2 Major trends shaping public transportation in the next 10 years

>>

• Improved equity and access• Increased ridership• Better customer experience• Lower operating costs• Higher resilience• Improved flexibilty

equals

Agencies becoming mobility managers

Many public transportation agencies see theirroles expanding well beyond just running tradi-tional services such asbus and rail service. Theyincreasinglyviewthemselvesnotjustastransportoperators but as mobility managers; and with goodreason.

The role of mobility managers is to orchestrate the overallmobilitynetworktodeliverasetofdesiredoutcomes. Asmobility managers, agencies pickandchoose theoptimalmixofmodes, technol-ogies,andproviders-anddecidewhattodoin-houseandwhat tooutsource.Thecapability setrequiredtomanagemobilityisdifferentfromthatrequiredtooperatetransport.Managingmobilityrequires new skills across analytics, data science,technology integration, procurement, vendormanagement,andstakeholderengagement.

Under the mobility management approach, agen-cieshavethemandateto introducenew innova-tions,improveservices,andtolowercostsinwaysthatpuretransportoperatorscannotachieve.

New supply modes in the public transportation mix

Bus, rail, and subways have dominated publictransportforthelast80+years.Thosemodesareheretostay-simplyput,thereisnomoreefficientalternativethanhigh-demandtrunklinesonfixedroutes tomovea largenumberofpeoplealongdensecorridors.

But public transportation agencies may alsochoose to serve areas where travel patterns donotallowthemtoefficientlyprovidevehicleswithcapacities of 40-80 passengers at frequenciesthatridersfinduseful.Theresultisthat,insuchar-eas, we see routes with headways of one hour or moreorhighlyinefficientroutesthatrequirelargesubsidies.

The good news is that public transportation agen-cieshavenewmodesandservicesattheirdispos-

al to integrate into theirnetworks. Inmanycitiesaround the world, on-demand microtransit, ride-sharingpartnerships,andevenbikesandscoot-ers are already becoming a part of the fabric of publictransportation.

Havinganexpanded rangeofvehicleswithdif-ferent capacities, accessibility options, and cost structures will allow mobility managers to match the rightvehiclewith the rightpassengerat therighttime.

When integrated strategically, new modes candeliver an expanded public transportation net-workandabettermobilityexperienceforriders.Bythoughtfullydistributingthesemodesacrosstheir networks, transportation agencies can im-proveequity,lowercosts,increaseresilienceandprovidemoreflexibilitythanconventionalmodesalone.

Increasing focus on variable cost supply

The cost structure of public transportation, similar toairlines, is largelyfixed.Whethertheyoperateat90%or5%capacity,agency-ownedvehicleshaveacostpersupplyhourthatvarieslittle, ifatall.

In low-ridership environments, such a rigid coststructuremaylimitanagency’sabilitytoprovidehigh quality service. By supplementing variablecost supply to their mix, public transportationagenciescanbecomemoreefficientaswellasmoreresilienttosuddendropsindemand.

Oneexampleofvariablecostsupplyisrideshar-ing.AgenciesarecontractingwithUberfortech-nology solutions to support various programsincluding first and last mile programs, guaran-teed-rides-home, microtransit programs, late nightprograms,andparatransitservicetonameafew.

In these partnerships, agencies create mobility programs to pay only for completed ridesharing trips their customers take in a pay-for-perfor-

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mancemodel. These programs are particularlywell suited for low-demand areas where it is too costlytorunabusorarailline.

Under such a model, agencies are building more resilience into their networks. When ridershipdrops, agencies experience a correspondingdrop in spending, thereby reducing costs when theyneeditthemost.

Agile and dynamic network planning

Comprehensive network planning and rede-signiscurrentlya labor-intensiveandinfrequentprocess. Data collection and analysis, togetherwithlong-termforecastingoftraveldemand,re-quires substantial time and resources to deriveinsights.Ongoing urban development coupledwith changes in demographics and/or rider be-haviormaydivergematerially fromtheassump-tions underpinning the original design of a public transportation system.Thiscan result in a trans-portation network that is not optimized for thecommunityitserves.

We see a future where public transportationagencies regularly and proactively re-examinetheir networks. Network redesigns will becomemore frequent, integrating newmodes, likemi-crotransitandridesharing,thathavenottradition-allybeenconsideredatscale.Agencieswillstartto assess the merits of all modes at their disposal acrosstheirfullnetworktodeterminetheoptimalmixofservices.

Networkdesignwillbecomeevenmoredeeplyrooted in comprehensive traveldata, advancedanalytics, and real-world frequent experimen-tation with strong feedback loops. Rather thancompleting a network studyonce adecadeorless,theleadingagencieswillmakenetworkopti-mizationacoreandcontinuousprocess.Gettingto that optimal configurationwill not happen inonego,itcanonlybeachievedthroughongoingiteration. Flexible and on-demand services to-gether with mobility apps will lower the costs of experimentingquicklyandaffordably.

The longer-term trend is that public transporta-tion agencies will be empowered to redeploy dedicated assets like buses, eventually even inreal time, towhere theywillbebestutilized.Thisisonlypossiblewithon-demandservicesattheirdisposaltofillgapssonoriderisleftbehind.Rid-erswillmerelyhavetoplanandbooktheirjourneyviaanapporcallcenter tobedirectedtoabusstoponeday,whilethenextdayamicrotransitvanmaypick themup insteadbecause thatbushasbeenredeployedtoadifferentroute.

We think that amore frequent optimization andexperimentation approach to network planningwillresultinabettermobilitynetworkforridersandagencies.Thiswillensure that the rightvehicle ismatchedtoeachriderattherighttime.

Detailed and timely ridership data, in conjunction with dynamic long-term forecasts, will inform the optimalnetworkonamonthly,weekly,orevendai-lybasis.Bybettermatchingthenetworktoactualtravel demand, we believe public transportationcan reverse the trendof declining ridership andexpanditsmodesharecomparedtoprivatevehi-clesintheyearsahead.

Increased digitalization of both rider experiences and agency systems

Today, public transportation spending on IT and technology is a fraction of what digitally nativecompanies spend. Many processes remain an-aloguewhich sometimes results in an inefficientandsub-paruserexperienceforbothridersandagencystaff.

ForRiders,planning,bookingandpayingfortripsacrosspublic andprivatemodes is complicatedandcumbersome.Navigatingmultipleapps,call-ing-in24hoursinadvance,locatingkiosks,loadingsmartcards,payingwithexactchange,managingtransfers-itcanbeanoverwhelmingexperience. Mobility-as-a-service (MaaS) will allow riders toplan,book, andpay for their completemulti-legjourney across both public and private modes,

allwithinasingleapp.Fromseamlessmultimodaltripswithasinglepaymenttobookingparatransittrips on-demand, riders should be able to access alltheirservicesfromwithinoneapp.

Foragencies,operationalsystemsandprocessestoowillbenefitfromincreaseddigitalization.Fromdigitalnetworkplanningtomodernfarecollectionandticketingsystemstomobilityapps,agencieswillneedtosystematicallyevaluatewheretoinvestin digital transformation. The good news is thatmany technology companies are building com-pellingproductsandservices specifically for thepublictransportationmarket.AgenciescanlowerIT costs by going with off-the-shelf products rath-erthaninvestingincustomorhome-growndevel-opments.Andwhilethecurrentfiscalenvironmentmakesincrementalinvestmentsintechnologydif-ficulttofund,thoseagenciesthat invest indigitaltransformationtoday,willbetheonesthatwillhaveamong themost efficient, connected, and cus-tomer-centric public transportation networks inthenearfuture. More options for riders with an increasing share of on-demand trips

Theconvergenceofnewserviceslikeridesharing(includingpooledtrips),andmicrotransittogeth-erwith the shift towardsMaaSwillgiveconsum-ers better choices for how to get from point A to pointBatthetouchofabutton.

Forexample,mostparatransit trips today requirecall-in booking 24 hours in advance. This allowsdispatchers to plan complex route schedulesin a nightly batch computation to match supply anddemandgiventheirfixedfleetsize.Withtheseamless integration of microtransit and ride shar-ingserviceforparatransittrips,consumerscanre-questtheirtripsinrealtime.Thiswouldunlocknewmobility and freedom for riders while also lower-ingcostsforagencies.

Asagenciesimplementlargerfleetsizesandbig-ger service areas, on-demand microtransit canbecomeamoreusefulserviceformorepeopleaswait timesdeclinewhileusecases increase.Thisshould inducedemand for theservicewhichwill

boost ridership. Integrating ridesharing servicewith pooling (a variable cost structure for theagency)togetherwithmicrotransit(fixedsupply,fixedcost)will allowagencies to right-size theirfleets tomaximize utilization and cost recoverywhileusingridesharingserviceasflexiblesupplyfor“peakshaving”1.Webelievethis willcreateavirtuouscycleofincreasingridershipwhilelower-ingtheaveragecostpertrip,whichisstilltoohighinmanymicrotransitpilotstoday.

By adding ridesharing into the public transpor-tationmodemixattherighttimes,agenciescandeliver a better mobility experience for riderswhile also counterintuitively lowering averagecostpertrip.

More connected, resilient, and integrated public transportation system

Theculminationof the trendsdescribedabove-theintegrationofnewservices,newcoststruc-tures,newwaysofagilenetworkplanning,andthedevelopmentofMaaSandconnectedbackendsoftware systems presents a huge step-change improvement for how public transportation willbemanagedanddeliveredtoconsumers.

Theresultwillbeabettermobilitynetwork-bet-teroptionsforriders,betterservicedelivery,moreresiliencetodemandfluctuations,withhigheref-ficiencyandlowercostsforagencies.

And while creating an integrated operating sys-temforpublictransportationwilltakeyears,therearestepsthatagenciescantaketodaytodeliveronmanyofthebenefitswedescribeabove.

Agenciescanstartrealizingmanyofthebenefitsofsuchanintegratedmobilitysystemusingexist-ingtoolsandtechnologies.Andthesetoolsandtechnologies will only get better over time fol-lowingtypicaltechnologydevelopmentiteration

1 PeakshavingistheabilitytooffloadtripstotheUbernetworkwhenagencyvehiclescannotmeetthelevelofdemandorthewaittimesfortherideraretoolong.See“Ourapproachtomicro-transit”belowforadeeperexplanationofhowthisworks.

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cycles, with early-adopting agencies moreequippedtocapitalizeonthese improvements.Thetimeforagenciestostarttakingboldactionsisnow.

Increasing focus on community outcomes

Lastly, among all the talk about transformationand efficiency, we would be remiss if we don’tremind ourselves of the true purpose of pub-lic transportation - to connect people with their communitiesandeconomicopportunityconve-niently,safely,sustainably,andequitably.

Heretooweseeroomfor innovation.Thetoolswenowhaveatourdisposalallowus todelivermicro-targeted mobility solutions down to the individual level if we so chose.We are also notonlyconstrainedtomovingpeople-wecannowalsomovethingstopeoplesuchasprescriptionmedicines,food,andpackages,supportinglocalcommerceintheprocess.

Wethinkthiswillallowpublictransportationagen-ciestore-thinktheirkeyperformanceindicators(KPIs) andmetrics forhow theychose tomea-suresuccess.Wecouldbegintomeasurepub-lic transportation’s impact and performance in new and incremental ways - considering access to jobs or healthcare, measures of a network’sequity, theeconomicoutputpublic transporta-tionenables,andevensocialoutcomesinselectcommunities.

Because we can deploy hyper-targeted pub-lic transportation solutions and we can couple thoseofferingswithbetterdatatracking,wethinkagencieswill have a newwayofmeasuring im-pact and outcomes of that which matters most-people.

Part 3The economic case for integrating ridesharing services as a new mode in public transit

Executive Summary:

• Most public transportation systems are subsi-dizedandhaveapredominantlyfixedcoststruc-tureforeachmodeorvehicle(similartoairlines).Ridesharingmeanwhile,whenintegratedinpublictransportation,hasavariablecoststructurewhereagenciesonlypayforcompletedtrips.

• Forthevastmajorityoftrips,conventionalpublictransportation is very efficient at moving manypeople fromA toB at lowcost.However,whendemand is lowandduringoff-peakhours, con-ventionalmodesoften face very high costspertrip while riders suffer from longer access times andreducedfrequencies.

• Agency-subsidizedridesharingservicecanbeahighly effective solution to complement publictransportation (e.g., first/last mile programs) orto enable agencies to reallocate resources from inefficientbusroutesanddemandresponseser-vices.Thiscanhelpagencies reduce theircostswhile increasing the overall accessibility of thenetwork.

• Thecost-optimalmixofridesharingservicesdif-fers agency by agency and requires analysis todetermine the optimal mix and cost reductionpotential.

• Using a sampling of publicly available agen-cy route performance reports from the United States,weestimatethat~1-6%ofbustripscouldbe replaced by ridesharing at a cost reduction for agencies (basedonUberPoolpricingandpre-COVID ridership levels). These trips represent~5% to25%of allbus routes.Agenciescanex-pectcost reductionsper tripof~15-30%on in-efficient routesthatare replacedwithUberPool(assuming ridership remains constant).212 Using UberX pricing, which is higher than Uber Pool, weestimatethatonly0.1%to1%ofbustrips(atpre-COVID ridership levels) could be replacedbyridesharingatacostreductionfortheagency.Thesetripstakeplaceonbetween~2%and13%oftheavailablebusroutes.

• Usingasampleof10agenciesofdifferentsizesfrom theNational TransitDatabase,weestimatecostpertripreductionsofbetween~13%to70%from leveraging ridesharing services like UberXforambulatorydemandresponsetrips.InmarketswhereUberPool isavailable,wehave found thecostreductionspertripcouldbehigherthan70%onaverage.

22 Thesecostsavingsdonotcapturethecostsassociatedwithprovidingwheelchairaccessiblevehicles(WAV)fornon-ambu-latorytrips.

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• In the currentCOVID environment where rider-ship is significantly depressed, the cost-optimalmixofridesharinghasincreased.AtonelargeUSagency,bus ridershiphaddeclined~67% in thespringof2020comparedtothesameperiodlastyear.Basedonpre-COVIDridershiplevels,UberXwould have been cheaper on ~1% of trips and13%ofroutes.Inlatespring2020,thatincreasedto23%oftripsand73%ofroutes.Theestimatedcost reductions for the agency on affected routes wereinthe26-30%rangeassumingridershipre-mainsatthesamelevels.

• Adding ridesharing services to thepublic trans-portationmixnotonlyhasthepotential to loweroperating costs for agencies but also empowers agenciestoincreaseaccessandequitythrough-out their service area, reaching areas previouslyunderservedby theexisting fixed-route system,and builds resilience in public transportation net-workstohandlefluctuations inridership.Theex-act cost-optimal mix will vary by mode and byagency.

“The biggest innovation of incorporating ridesharing in public transportation is not

offering consumers an on-demand service, it’s about giving agencies a new supply mode

with a variable cost structure that can serve the many low demand routes more affordably

while also increasing equity and access.

”

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Passenger trips by modeBillion and as percent of all modes

Agency operating subsidies by modeUSD Billion and as percent of all modes

Subsidy per tripUSD

Cost recoveryPercent of operating costrecovered through fares

Bus

HeavyRail

CommuterRail

LightRail

DemandResponse

Other

Source:NationalTransitDatabase-2018data

Figure 3 An overview of public transportation subsidies in the United States by mode

The state of public transportation subsidies in the United States by mode

In many parts around the world, public transportation is highly subsidized by the government and for good reasons. Accordingtothe2018datafromtheNationalTransitDatabase,publictransportationintheUnitedStatesdelivered~10Bpassengertripsacrossallmodes.Overalloperatingsubsidies3 amounted to ~$33Bor~$3.31perpassengertripwithanaveragecostrecoveryratio4of~33%acrossallmodes.

Bymode,busaccountedforthelargestshareoftrips(4.5Bor48%ofalltrips)andhadanaveragecostre-coveryratio41of22%.Heavyrailhadthebesteconomicperformancewithacostrecoveryratioof61%whileaccountingfor40%ofalltrips.Demandresponsewasthemostexpensiveandsubsidizedmodewithanav-eragesubsidyof~$30pertrip.Demandresponseaccountedfor2%oftripsbut15%oftheoveralloperatingsubsidiesintheUS.

³ Definedastotaloperatingexpenseslesstotalfarerevenues4 Costrecoveryratioisthepercentageofoperatingexpensesthatarepaidforbyfarerevenues.

Thisdatacanbefurtherdissectedbyagency,byroute,andevenbytimeofday.Lookingatthesubsidypertripattheagencylevel,weseealargedistributioninsubsidypertripacrossagencies.

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Subsidy per trip - Bus

$180

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Subsidy per trip - Heavy RailUSDn = 15 agencies

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Subsidy per trip - Demand Response Subsidy per trip - Light RailUSDn = 1,998 agencies

USDn = 23 agencies

$180

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Subsidy per trip - Commuter RailUSDn = 26 agencies

$180

$160

$140

$120

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$20

$0

-$20

Figure 4 The distribution of public transport subsidies per trip across agencies in the US

Source:NationalTransitDatabase-2018results

Wefurtherseeastrongcorrelationbetweenaveragesubsidypertripandtheoveralllevelofridershippervehiclehour.Thehigherthedensityonagivenroute,thebettertheperformance.Howevermanyagenciesalsodeliverserviceinareasthatlackdensity-theresultishighoperatingcostsonapertripbasis.Thiscanfurthercompoundtheproblemoflowridershipasagenciesareforcedtoofferlessfrequentorreliableser-viceinthoseareas.

Figure 5 The relationship between ridership and subsidies per trip

Source: National Transit Database - 2018 results

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The economics of fixed versus variable cost supply

Public transportation today operates primarily using a fixed cost structure across all its modes. This fixedcostbaseformanyagenciescanrepresent~80-85%ofthetotaloperatingbudget.Asaresult,duringadropinridership,agenciesbearthefullimpactofthereducedfarerevenueontheirbottomline-thisisoftencoupledwithareductioninfundingsourcesduringeconomicdownturns.

Foragenciesthatpartnerwithridesharingcompanies,theyonlysubsidizeandpayforthetripsactuallytaken.Thismakesridesharingavariablecostsupplyforagencies. If ridershipdropsthentheagency’soperatingbudgetdeclinesaccordinglywhilecostpertripremainsthesame.

Asagenciesseektobothlowercostsandbuildapublictransportationsystemthatismoreresilienttofluctu-ationsindemand,theyshouldconsiderincreasingtheshareofvariablecostsupplyintheiroverallmodemix.Weillustratetheconceptoffixedandvariablecoststructuresbelow.

Figure 6 The economics of fixed and variable cost supply as a function of ridership

Average cost per passenger trip

At these levels of ridership, cost per tripis lower using ridesharing

Break-even point of ridershipwhere cost per trip is equal

At these levels of ridership, cost per tripis higher using ridesharing

Cost per trip using ridesharing

Cost per trip using traditional modes (e.g. bus)

Passengers per vehicle hour

Thisvisualizationallowsagenciestoseehowtheaveragecostpertripchangesasafunctionofpassengersperhourforbothfixedandvariablecostsupply.

Forfixedcostsupplymodes,thelowertheridershipthehighertheaveragecostpertrip.However,forsubsi-dizedridesharingwithitspay-per-tripmodel,theaveragecostpertripisflatregardlessofdemandbecausetheagencypaysonlyafixedamountforatripofagivendistance.

Suchaframeworkallowsagenciestoquicklycomparetheirroutesrelativetothecostofridesharing(usinganaveragetripdistance).

ofcostpertripfromthe2018NationalTransitDa-tabase (NTD),wecouldcrudely infer that ride-sharingcouldprovideequivalentorbettertrans-portationaccessatalowercostpertripfor~0.4%to2%ofallbustrips.37

Across all of Uber’s demand response agency partnerships,theaveragetotalcostpertripduringQ3’20was~$19pertrip.Thesenumbersarebe-fore fare recovery that offset agency subsidiesandareforambulatorytripsonly(notwheelchairaccessiblevehicles).Lookingatthepertripcostdistributionfordemandresponseserviceacrossagencies in the US suggests that agencies could reducetheircostsiftheyshifted50%(orpoten-tiallymore)ofallambulatorydemandresponse/paratransittripstoridesharing.48

While this analysis, based on NTD data at theagency level, isacrudeanddirectionalapprox-imation,abettermethodology requiresanalysisattheroutelevelwhichwecalculatebelowalbeitonasmallersampleset.

6 Underourpublictransportationprograms,agencieshaveahighdegreeofflexibilityinsettingtheportionofthefarepaidbytherider.Thechosenfarestructuresvaryfromprogramtoprogram. 7WeimplicitlyassumethattheaveragetripdistancesonUber’sexistingprogramsaresimilartothoseintheNTDdatawhichmaynotbeaccurate.Inthenextanalysis,wetakeintoaccounttheactualaveragetripdistanceattherouteleveltocalculateamoreprecise estimate of the cost reduction per trip from shifting trips totheUbernetwork. 8 WeimplicitlyassumethattheaveragetripdistancesonUber’sexistingdemandresponseprogramsaresimilartothoseintheNTDdatawhichmaynotbeaccurate.Inthenextsection,wetakeintoaccounttheactualaveragetripdistanceattheagencylevelto calculate a more precise estimate of the cost reduction per tripfromshiftingambulatorytripstotheUbernetwork.

This section focuses on quantifying the ex-tent to which agencies can use ridesharing to supplement existing fixed route or paratran-sit networks - particularly in the most ineffi-cient parts of the network. Wefocusonidenti-fying routes where ridesharing can lower the cost pertripforagencies.Whilethisanalysisisframedaround potential replacement of inefficientroutes,wewouldliketopointoutthatthemajorityof our public transportation programs to date are notinfactaimedatroutereplacement.Thevastmajorityofourprogramshavebeendesignedtocomplementandextendthereachofthepublictransportationnetwork.Uber’spublictransporta-tionprogramstypicallyaddressfirstandlastmileconnectivitytotransithubs, latenightservice,ormicrotransit service in areas previously under-served by public transportation. Nevertheless,wehopethatyoufindthisanalysisusefulinordertobenchmarktheeconomicsofsubsidizedride-sharing service against other traditional modesand to quantify the cost reduction potential inselectpartsof thefixed routeanddemand re-sponsenetwork.

InQ3’2020,theaveragetotalcostpertripacrossUber’s public transportation programs was ~$14 per triponUberX.Forourpublic transportationprograms that utilized shared or pooled rides, the averagetotalcostwas~$11pertripinQ4’2019.15 These numbers are before taking into accountanyfarespaidbytherider.Therebytheaverageagency subsidy per trip is considerably lower thantheseamounts.26Lookingatthedistribution

5 Shared rides and rider matching has currently been suspended duetoCOVID-19.ThelastfullquarterwhenridermatchingwasoperationalwasQ42019andthedataisshownforthattimeperiod.

Estimating where ridesharing services can enable agencies to deliver equivalent or better transportation access at a lower cost per trip

A crude estimation at the aggregate agency level:

sharing

sharing

Source:NationalTransitDatabase-2018

Figure 9 The distribution of average agency trip costs in the US for bus and demand response

Analysis at the route level taking actual trip distance into account:

Basedonasampleofpubliclyavailablebusrouteperformancereports,wewereabletogetrouteleveldataonridershiplevels,costpertrip,andaveragetriplength.WethenestimatedthecostofservingthatsamelevelofdemandusingUberXorUberPoolbasedonactualUberpricing9 foreachindividualmarket.Thisallowedustoestimatewhichinefficientroutescouldbedeliveredbyridesharingatacostreductiontotheagency.

Ourchosensamplewasbasedontheavailabilityoftheseagency-publishedrouteperformancereports–werecognizethatthisisnotastatisticallyrepresentativesampleoftheUStransitmarket.Nevertheless,wethinktheresultsarehelpfultohighlightthepotentialcostreductionssomeagenciesmayexpect.

BelowweshowtheexpectedcostreductionspertripperrouteacrossthreeagenciesintheUnitedStates-atop5agency,atop15agency,andasmallsuburbanagency.Weranthisanalysisbasedonpre-COVIDridershiplevelsusingbothUberXandUberPoolpricinginthelocalmarket.PleasenotethatUberPoolisonlyavailableinselectmarketsandhasbeensuspendedeverywhereduringCOVID.1

9 OurUberpricingestimateswerebasedonactualUbertripsinthelocalmarketfortripsofdifferentdistances.Wealsoaccountedfortheimpactofsurgepricingtogetaccurateestimatesoftripcosts.

21

Figure 10 Identifying inefficient bus routes that could be supplemented by ridesharing across a sample of 3 agencies in the US

Source:Variouspubliclyavailableagencyrouteperformancereports,Uberanalysis

Figure 11Summary of potential cost reductions on the fixed route network from switching to ridesharing across our sample agencies 10

7%

26%18%

1% 2%

6%

15%

29%

16%

0.5%

4.4%2.1%

$8 $9 $10

2%

13%9%

0.1% 0.9% 0.8%

1%

26%20%

1.0% 0.5%0.0%

$13 $12 $14

Estimates based on UberPool pricing Estimates based on UberX pricing

Trips where UberPool is cheaperPercent of all bus trips

Trips where UberX is cheaperPercent of all bus trips

Routes where UberPool is cheaperPercent of all bus routes

Routes where UberX is cheaperPercent of all bus routes

Potential agency cost reductionsOn routes where Uber Pool is cheaper in percent

Potential agency cost reductionsOn routes where UberX is cheaper in percent

Potential agency cost reductions using Uber PoolAs percent of all route subsidies

Potential agency cost reductions using UberXAs percent of all route subsidies

Average cost per trip - Uber PoolUSDpertripbeforefarerecovery

Average cost per trip - UberXUSDpertripbeforefarerecovery

Top 5 Agency Top 15 Agency Suburban Agency

Top 5 Agency Top 15 Agency Suburban Agency

Top 5 Agency Top 15 Agency Suburban Agency

Top 5 Agency Top 15 Agency Suburban Agency

Top 5 Agency Top 15 Agency Suburban Agency

Top 5 Agency Top 15 Agency Suburban Agency

Top 5 Agency Top 15 Agency Suburban Agency Top 5 Agency Top 15 Agency Suburban Agency

Top 5 Agency Top 15 Agency Suburban Agency Top 5 Agency Top 15 Agency Suburban Agency

Source:AgencyRoutePerformanceReports,UberanalysisExcludestheincrementalcostofofferingon-demandwheelchairaccessiblevehicles(WAV)forwheelchairriders.

10

Source:AgencyRoutePerformanceReports,Uberanalysis

Basedonroute leveldataatthesethreeagenciesandpre-COVIDridershiplevels,weestimatedthatUberPoolwouldonlybeacheaperalternativefor~1-6%oftrips.11However,thesetripsrepresent~7-26%of the total bus routes from those agencies.Our analysis suggests that if these agencies shifted demand to Uber Pool, they could see cost reduc-tionsof~15-30%onthoseroutesassumingrider-shipremainedconstant.TheaveragetripcostusingUberPoolwasestimatedat~$8-10basedon thelocalUberPoolpricinginthatmarketandtheaver-agetripdistancesonthoseroutes.

GiventhatUberPoolisnotavailableinallmarkets112, performing the same analysis using UberX pricing, weestimatethatonly0.1%to1%oftripscouldbedeliveredatacost reduction for theagency.Thatrepresents~2%to13%ofroutes.Theaveragetripcost using UberX was estimated to be ~$12-14 basedonthelocalUberXpricinginthatmarketandtheaveragetripdistancesonthoseroutes.

This analysis shows that ridesharing service is notagoodoption and far tooexpensive for the vastmajority of trips where buses are perfectly well suit-ed.Examplecaseswhereridesharingisnotagoodsubstitute include:

• Onbus routeswith high ridership (i.e., roughlymorethan10passengersperhour)

• In dense city centers where lower capacity pas-sengervehiclescausecongestion

• For longer distance trips where the pricing ofridesharingwouldbeprohibitive.

However,ridesharing(ormicrotransit)iswellsuitedfor lowdemandareaswith relativelyshort tripdis-tanceswhereagencysubsidiespertriparehighest.

Our calculations only consider agency operating costs as reported in agencies’routeperformancereports.Theseoperatingcostsdonotincludetheannualizedcostsofvehicleacquisitionnorthecostsoftheinfrastructurerequiredtostoreandmaintainfixedfleets.Weexpectthatincludingthoseadditionalcostswouldmaketherelativevalueofridesharingevenmoreattractiveforagencies,bothintermsoftheproportionoftripsthatcanbeservedbyridesharingandtheexpected

savingsforpublictransportationagencies.

Please note that Uber Pool has been suspended globally at the time of writing duetopublicsafetyconcernsassociatedwiththeCOVID-19crisis.

Factoring in the incremental cost of on-demand wheelchair accessible vehicles on our fixed route cost analysis

Agencies that choose to replace inef-ficient bus routes with ridesharing ser-vicewillalsoneedtoofferanequivalenton-demand service for their riders whouse wheelchairs. Wheelchair accessiblevehicles(WAV)typicallyhavesignificantlyhigher cost per trip than UberX or Uber Pool - largely driven by sparse demandanda fixedcostmodelwhereagenciespaypersupplyhour.Theseaddedcostswould offset some of the cost reductions from switching from fixed-route or de-mandresponseservicetoridesharing.

In our cost modeling, we were not able to reliably estimate the incremental cost ofprovidingwheelchairaccessiblevehi-cles.Todothis,wewouldneedagenciestoprovideuswithdataonWAVdemandattheroutelevelwhichisnotavailableinthereportswecancurrentlyaccess.Nev-ertheless,ifweassumethat0.5%oftripsrequire wheelchair accessible vehiclesandthateachofthesetripscosts~$100,thecostreductionsweestimatedabovewouldbereducedbybetween10-40%amongour sample of 3 agencieswhenon-demand WAV service is integrated.Inotherwords, agenciesare still likely toreduce theiroveralloperatingcostswithridesharingservicesthatincludeintegrat-edon-demandWAVservice.

Agencies may also consider harnessing their demand response vehicles aspartoftheiron-demandofferingtofulfilthesetrips, rather than a third-partyWAVpro-vider,especiallyifthereisexistingcapaci-tyandacostadvantage.

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11

12

64%57%

69%

13%17%

48%42% 41%

26%

47%

81%74%

82%

54%

73%

Demand Response - estimated percentage cost reductions per trip for a sample of US public transportation agenciesbased on UberX pricing, applies only to ambulatory trips

Demand Response - estimated percentage cost reductions per trip for a sample of US public transportation agenciesbasedonUberPoolpricing(wherePoolisavailable),appliesonlytoambulatorytrips

Top10Agency

Top10Agency

Top10Agency

Top10Agency

Top10Agency

Top50Agency

Top50Agency

Top50Agency

Top300Agency

Top300Agency

SampleAverage

Top10Agency

Top10Agency

Top10Agency

Top10Agency

Top50Agency

Top50Agency

Top50Agency

Top300Agency

Top300Agency

SampleAverage

42%

Top10Agency

N.A. N.A. N.A. N.A. N.A. N.A.

Source:NationalTransitDatabase,Uberanalysis

Figure 12Estimated per trip cost reductions for ambulatory paratransit trips from switching to ridesharing

We also conducted a similar analysis for demand-response servicewhereweusedthe2018NationalTransitDatabasetocalculatethecostpertripandaveragetripdistanceacrossasampleof10randomlyse-lectedpublictransportationagenciesofdifferentsizes.WethencalculatedthecostpertripassumingtheagencyswitchedthosetripstoUberXorUberPool(whereUberPoolwasavailable).Pleasenotethatthesesavingsonlyapplytoambulatorytrips.Weassumedthatagencieswillmaintainafleetofwheelchairaccessi-blevanswhileonlyoffloadingselectambulatorytripstoridesharingproviders13.1

13UbercanalsoonboardagencyWAVvehiclesor3rdpartyWAVoperatorsontheUberplatformtoallowagenciestoofferanequivalenton-demandwheelchairaccessibleservicetoriders.

Asimpleaverageacrossoursampleshowsthatagenciescanexpect,onaverage,a~42%costreductionforambulatorytripsfromswitchingtripstoUberXand~73%costreductionsfromswitchingtoUberPool.How-ever,UberPoolwasnotavailableinmorethanhalfofthemarketsinoursample(andhasbeensuspendedgloballyatthetimeofwritingduetotheCOVID-19crisis).

Thecostreductionsfromincreasingtheridesharingmixindemand-responsearesubstantial.However,ourexperiencealsoshowsthatprovidingsuchaconvenienton-demandservicetoriderstendstoinduceaddi-tionaldemandfortravel.Whilethisiswonderful,asitallowsriderstomovemorefreelyandincreasestrans-portationaccessmoreevenlythroughoutcommunities,wethinkthattheabsolutecost-reductionsforagen-ciescouldbeatleastpartiallyoffsetbymoretrips.Agenciesshouldtakethisinduceddemandeffectintoaccountiftheyarelookingtopurelyloweroperatingcostsfromaridesharingprogram.

25

Addressing labor concerns from integrating ridesharing services in public transportation.

Inearlydraftsofourpaper,industrystakeholdersaskedaboutourperspectiveonthelaborchal-lengesassociatedwithshiftingselectservicestoridesharingnetworks.Weacknowledgethatthisisacomplexissuethatneedstobeconsideredcarefullyandonacasebycasebasis.

Asmobilitymanagers,publictransportationagenciesareindirectcontroloverhowandwhentointegrateridesharingservices.Someagenciesmaychoosetointegrateridesharingservicespri-marilytoexpandtheirnetworksbyofferingfirstor lastmileconnectivitytopublictransportationhubsoroffering ridesharing toareas thatdon’t haveexistingcoverage.Under sucha scenario,thereisnoimpactonjobs.Infact,thevastmajorityofUberTransit’sexistingpartnershipsfallunderthiscategory.

Otheragenciesmaychoosetosubstitute inefficientbusrouteswithridesharingormicrotransit.Agenciesmaychoosetoredeploythosevehicleassetsandoperatorstonewroutesortoexistingroutesto increasethefrequencyorcapacityalongdensetrunk lines.Underthisscenario,thereshouldagainbenoimpacttoexistingstaffinglevels.

Foragencies thatchoosenot to redeployaffectedvehicleassetsandoperators, theirpaceofhiringtofillnaturalattritionandretirementsmaybetemporarilysloweddown.Ifanagencydecidesthatridesharingservicesaretobeabeneficialpartoftheiroverallnetwork,theseservicescanalsobephasedinoverseveralyears.

Asmobilitymanagers,agenciesshouldfirstengageinanetworkplanningexercisewithallmodes,includingridesharinginmind.Thiswillprovideinsightsintotheoptimalmixofridesharingservicesandallowagencies tofirstquantify theestimated impacton jobswhichwilldiffer fromagencytoagency.Itishelpfultorememberthatourestimatessuggestthatonlyabout1-6%ofbustripscouldbeprovidedatalowercostwithridesharing-arelativelymodestshareofoveralltrips(seefigure11).Basedonsuchananalysis,agencyleaderswillhaveaclearersenseoftheiroperationalstaffingneedsfortheyearsahead.

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“Under most scenarios, we believe ridesharing will likely play an increasingly

important role within the public transportation mix in the next 3-5 years.”

27

Part 4 How Uber offers agencies new tools to operate more efficient, connected, and equitable mobility networks

About Uber Transit

Uber launched its first public transportation agency partnership in early 2015. That part-nershiphelpedseniorcitizensinGainesville,Flor-ida maintain their independence through free UberX rides to select destinations. Since then,our team and our impact in the communities we servehasgrownsubstantially.

Today, Uber Transit is a dedicated business unit that is exclusively focused on supporting public transportation agencies and riders. In early2019,we launchedpublictransportation intheUber app for the first time - offering ridersjourneyplanningand in-appticketing inDenver.In July 2020, we launched our first microtransitSaaS (Software-as-a-Service) partnership withMarinTransit inMarinCounty,California,markingthe first time Uber hasmade its software avail-able to power a public transportation agency’s

microtransitserviceusingtheirfleetsandagencyoperators.ThatmonthwealsoacquiredRoute-match,oneoftheleadingsoftwareproviderstopublictransportationagencies.TheninSeptem-ber2020,welaunched“UberandTransit”,anin-tegratedmultimodalexperiencewithintheUberappthatallows riders toplanandbookacom-plete journey on Uber and public transportation, usingUber for thefirstmile trip toconnectwithpublictransportation.Thisproductis liveinSyd-ney and Chicago with plans to scale further in 2021.Uberalsomadeaboldsustainabilitycom-mitment to become a zero-emission mobility platforminCanada,Europe,andtheUSby2030whileby2040, 100%of ridesgloballywillbe inzero-emission vehicles or completed throughmicromobilityandpublictransportation.

Uber Transit and Routematch empower agencies to become mobility managers by leveragingUber’snetworkandsoftwaretobuildthemostefficient,equitable,andaccessiblemobilitynetworks.WehelpagencieslowercoststhroughaccesstotheUbernetworkwithitsvariablecoststructure.AgenciescanuseUberXorUberPooltoquicklylaunchandeasilymanagehighlyconfigurableandinnovativeprogramstoanysegmentoftheircommunity.Wepromotepublictransportationdirectlyinourapptomillionsofus-ersthroughourjourneyplanner,in-appticketing,andmultimodalproducts.Oursoftwaresolutionspoweragencyfleetstoofferbothpre-plannedandon-demandtripswiththeabilitytoseamlesslyallocatecertaintripstotheUbernetworkifandwhendesiredbyourpartners.

As mobility managers, agencies have the opportunity to partner with Uber and Routematch to cre-ate the backbone for a mobility ecosystem. Thatmay lookdifferentateachagency,butallwith thecommonthemeofhowtouseresourcesasoptimallyaspossiblewhileimprovingridersatisfaction.Throughourcollectivetechnology,resources,andexperience,wecanhelppublictransportationagenciesbuildouttheir current and long-term software infrastructure for mobility management based on their changing com-munityneeds.

As of October 2020, the Uber Transit Team has more than 220 employees with thousands more engineers developing Uber’s core technologies that power our products.Withmorethan550publictransportationpartnersaroundtheworld,weserveagenciesofallsizesfromsmallruralagenciestosomeofthelargestagenciesintheworld.

Figure 13A brief history of Uber Transit

What equitable and accessible public transportation means to Uber

Accesstotransportationisafundamentalpartoflife.Withit,peopleareabletoharnesstheeconomicandsocialopportunities,amongothers,availabletothemwithintheircommunitytoleadthelivestheywishtopursue.Whentransportationoptionsarelimited,financial,health,andotherhardshipsarelikelytofollow.14

Givenitsimportance,oneofthemostcommonreasonscommunitieschoosetoprovidepublictrans-portationistoprovideaccesstothosewhodonothaveaccesstoaprivatevehicleorchoosenottouseone.Thisenablescommunitiestoreapmanybenefits,includingincreasingthesocialwelfareofitsresidentswhilereducingthenegativeexternalitiesoftheprivateautomobile.

Differentmembersofacommunity,however,mayhavedifferenttransportationneeds,andthisisthekeyifanagencyisseekingtoprovidetransportationservicethatismoreequitable.Forexample,whilefixed-routetransportationmaybeabletoservethevastmajorityofpublictransportationtrips,forasignificantnumberofpeople, this servicemaybe inaccessibledue tophysicalbarriers,economicbarriers,totaltraveltime,orneedfortraveloutsideofservicehoursorareas,amongotherreasons.

Withashifttowardsmobilitymanagement,andbyincorporatingavariablecostsupplyasappropriate,public transportationagenciescanhaveaccess tocosteffective, tailoredservicemodels thatcanmeetthesekindsofspecificneeds.Forexample,forpeoplewithdisabilitieswhoareunabletousethefixed-routenetwork,transitagenciescannowprovideamoreresponsiveandlowercostpertripservicebytappingintoaridesharingnetworkthatincludeswheelchairaccessiblevehicles.15

Forareaswheretripdensitymaynotcosteffectivelysupportafixed-routebusoradedicatedfleetdial-a-rideservice,transitagenciescanutilizetheridesharingnetworktoprovidehighlevelsofaccessatlowercostsperridetoareasoftheircommunitythatwouldotherwisebeunderservedbypublictransportation,allwhileredeployingsavedresourceselsewhereintheirsystem.16

Thesenewmodesmustthemselvesnotraisenewbarriersofaccesseither,includingtopeoplewhomaybeunbankedorwithoutaccesstoasmartphone.Uberisproudtobeabletooffersolutionsin-cludingcallcentersandcashfundedcardstoreducethesepotentialbarriers.

Whileitisthechoiceofeachpublictransportationagencytodeterminehowtobestservetheircon-stituents,webelievethattheconceptsofmobilitymanagement,variablecostsupply,andtheotheraspectsofthispapercanhelpempoweragenciestooffermoreequitabletransportationserviceintheircommunities.

14ForaspecificoverviewofhowthelackofpublictransportationisamajorhurdleformanyAmericans,seehere.15SeehowtheMBTAinBostonofferson-demandparatransitservicehere.16DARTinDallasisusingtheridesharingnetworktoofferservicetocustomers,seehere.

Sidebar

Uber’sglobalplatformbringsuniquecapabilitiestoourpublictransportationpartners.

With over 110M monthly active users,171 Uber is a demand generator for public transportation -allowingusers toplan,book,andpay for theirjourneyswithouthavingtodownloadanewapp.

By offering access to our network of close to 5M17 drivers, we are a technology service provider topublic transportationagencies.Wedo this by adding access to a new type of ser-vice,ridesharing,tothepublictransportationmixthatishighlyflexibleandhasavariable(pay-per-trip)coststructure.Agenciescancustomizefarestructures for riders and implement cost controls tonotexceedtheirsetbudgets.

Our market leading technology is now avail-able to public transportation partners for the first time. From July 2020, agencies have ac-cess to Uber’s proprietary demand prediction, dispatching, matching, pricing, routing, and pay-mentstechnologiestopowertheirownvehiclesanddrivers. This allows them todeliver a highlyefficient pre-planned and on-demand serviceforparatransitormicrotransit.

Uber’s presence in 69 countries and 10,000+ cities means that almost any agency around the worldcanaccessourproductsandservices.Re-gional on-the-ground operations teams support agency partners and accelerate program launch-es.

117Monthlyactiveplatformconsumers(MAPCs)asatQ42019.

Our global scale provides significant opera-tional cost and efficiency advantages. Uber knowshowtopowermovementatthetouchofa button.We bring our product andmarketingexperiencetoprovideuserswithasafe,intuitive,andcontinuouslyimprovingexperience.

Our dedicated Uber Transit team of over 220 (and growing) employees are solely focused on serving public transportation. Wearebuild-ingproductsandservicesthatallowagenciestooperatethemostefficient,connected,equitable,andaccessiblemobilitynetworks.

Our customers chose us because of our dis-tinctive capabilities thatprovidemultiplecon-current benefits to their operations - increasedridership, lower cost, and market leading tech-nologyallwhileextendingthereachofthepublictransportation network and improving the cus-tomerexperience.

Our value proposition to public transportation agencies

Figure 15Why public transportation agencies use Uber products

Increased ridership

Lowercosts

Marketleading technology

Extended reach oftransit

Improvedcustomerexperience

Figure 14What the Uber platform offers public transportation agencies

110M +monthly

active users

5M + drivers

Tech & products

powering 7B trips per year

Global footprint of

10,000+ cities

Team of 220+serving

550+ transitagencies

Our customers chose us because of our distinctive capabilitiesthatprovidemultipleconcurrentben-efitstotheiroperations-increasedridership,lowercost,andmarketleadingtechnologyallwhileextendingthereachofthepublictransportationnetworkandimprovingthecustomerexperience.

Driving a green recovery through our sustainability commitments

Investinginpublictransportationisakeypartofoursustainabilitycommitmenttobecomea100%zeroemissionplatformgloballyby2040anddriveagreenrecovery from the global pandemic.We’redoingsotodecarbonizeourplatformviapublictransportation,micromo-bility,alongwithelectricvehicles,anddoourpart toexpeditetheglobal transitiontocleanenergy.

AscommunitiesrecoverfromCOVID-19andpeoplestartmovingagain,Uberwillcontinuetopartnerwithpublictransporttoavoidthereturntotrafficgridlockandpollution,aswellashelphundredsofthousandsofdriversontheplatformtransitiontoelectricvehicles.

Astheworldcontinuestochange,manypublictransportationagenciesshareourperspectiveandareseekingoutinnovativesolutionssothattheycancomeoutofCovidbetterandgreen-erthanbefore.

That’swhywe’veexpandedJourneyPlanning-whichletsriderschoosetheirdestinationandseepricingoptions,real-timeschedules,andwalkingdirectionstoandfrompublictranspor-tationstations-to40+totalcitiesaroundtheworld,andbroughtin-appticketingto10+citiesaswell.

Mostrecently,weexpanded multimodal trip options offering integrated journeys across Uber andTransittoMexicoCityandLondonbeyondSydneyandChicago.Riderscantapthisoptionandplantheirentirejourney,combiningUberXwithwalkingdirectionsandcitybus,subway,ortrainconnections.Poweredthroughreal-timetransitinformationandUber’son-demandmo-bilitynetwork,it’sthelatestwaywe’repartneringwithpublictransportationtocreatesolutionstocongestionandreduceeverydayuseofpersonalcars.

Theworldisatacriticaljuncture,andweallhavearoletoplay.Uberisaiminghigh,andourgoalistobuildthemostefficient,decarbonized,andmultimodalplatformintheworldformobility.

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33

Our product ecosystemOur products fall under under three broad categories:

“Uber Rides for Transit” provides agencies with the tools they need to use Uber’s ride-sharing platform as one of their core modes. Agencies can create highly-customized pro-gramsleveragingUberX,UberPool,oranyotherUberproduct.Agenciescandefinepricingstruc-tures,subsidylevels,serviceareas,hoursofoper-ation, budget controls, and set population-spe-cificparametersforeachprogramtotargetonlyspecific communities. Agencies pay per triptaken using Uber’s regular pricing in each localmarket-theagencysetsthesubsidylevel,whichis highly flexible based on each agency’s pref-erence. Typical use-cases include first and lastmileprograms,paratransit,off-peak,microtransit,andbus routesupplementprograms.AgenciescanusetheUbernetworktoextendthereachofpublic transportation, particularly in low-demand areaswheretypicalbusrouteserviceiscost-pro-hibitivetorun.

Uber’s Transit Software Solutions power agency fleets, particularly for paratransit and microtransit applications. This software en-ablesbothpre-plannedandon-demandprovi-sionof trips.Ouron-demandservice isbuiltontopofUberPooltechnologywithmarketleadingmatching, routing, pricing, and payment tech-nology,deliveredviaUber’sdriverapp,riderappand agency dashboards. Riders can book theirtrips through the Uber app or a call center, which speedsmarketadoptionasmanyusersalreadyhavetheUberappdownloadedontheirphones.

Ourpre-plannedserviceispoweredbyRoutem-atch’sleadingscheduling,routing,fleetmanage-ment and rider eligibility management technolo-gy.Overthelast20+years,Routematchhasbuiltfunctionality tomeet themanyagency-specificrequirementsforparatransitprograms.Bothpre-plannedandon-demandservicesaredesignedtoworkinparallel, it isnotoneortheother.Oneof the main differentiators for our software is the ability to seamlessly allocate certain trips to Uber’s

variable-costandhighly-flexiblenetwork.Thisal-lows agencies to lower cost, reduce wait times, flexcapacityduringperiodsofhighdemandandalso tosize their fleets foroptimalefficiencybyrelyingontheUbernetworkfor“peakshaving”18.1

Uber’s MaaS (Mobility-as-a-Service) Solu-tions allow users to plan, book, pay for, and navigate any trip on public transportation directly from their phone. Our journey planner promotespublictransportationintheUberapp.Using real time transit data, our app recommends itinerariestogetfromAtoBonpublictransportincluding multi-modal trips that use Uber for the firstand/orlastmiletoorfromapublictranspor-tation station. In select markets, riders can alsopurchaseandredeemticketswithoutneedingtobuy ticketsatvendingmachinesor topuptheirsmartcard.AswescaleourMaaSofferingsglob-ally,ourgoalistoofferridersthefullsuiteoftraveloptions, including public transportation, to get to theirdestinations.

18 PeakshavingistheabilitytooffloadtripstotheUbernetworkwhenagencyvehiclescannotmeetthelevelofdemandorthewaittimesfortherideraretoolong.

Figure 16Uber Transit product ecosystem

Ridesfor Transit

TransitSoftware Solutions

MaaSSolutions

While our products can be deployed individually, they work best as a holistic and integrated offering. Forexample,agenciescanuseour“UberRidesforTransit”producttooffersubsidizedfirst/lastmilecon-nections to public transportation stations which are directly integrated with our multimodal product in our UberMaaSSolutions-thiswayriderscantakethe“completejourney”allviaasingleapp.Consumerswillalsobeabletosee,book,andpayfortheirdemand-responseormicrotransittripsdirectlyfromwithintheUberappviaourMaaSoffering.Iftheriderneedstogooutsidethemicrotransitgeofence,theywillbepresentedwithotheroptionssotheydon’tneedtoswitchapps.Riderswillbeabletorequestbothpre-scheduledandon-demandtrips-andtheycandothisthroughourapporbycallingintoacallcenter.Weareworkingtobringthesetypesofadvancedintegrationsandproductexperiencestomarketin2021andareveryexcitedabouttheopportunitiestheywillunlockforbothridersandagencies.

Agencies also get access to trip level and aggregate data as well as dashboards for their subsidized Uber programs. Thisdatahelpsagenciesfulfillreportingrequirements,audittripleveldataagainstinvoicesreceived,aswellgaininsightsintohowtheprogramisperforming.Theseinsightsenableagenciestomea-suretheprogram’sperformanceagainsttheirgoalswhileinformingfutureserviceplanningefforts.Thelevelofdatasharedwithagenciesiscarefullyreviewedtoprotectrideranddriverprivacy.

By combining Uber’s unique capabilities, we offer agencies a holistic, differentiated, and integrated mobility ecosystem. Ridersgetaccesstoallmodesofpublictransportationtoplan,book,andpayfortheirjourneys.Agencies,meanwhile,getanintegratedmobilityecosystemfortheirparatransit,microtransit,andridesharingprograms.Thishighlyintegratedsystemoffersroutinganddispatchingofbothpre-plannedandon-demandtripsacrossagencyownedandoperatedfleets,3rdpartyfleets,aswellasvehiclesavailablethroughtheUberPlatform.

35

Figure 17Our integrated offering is merging all public transportation options in one seamless experience for both riders and agencies

Allocate trips to the Uber network or 3rd party

providers

Improved options

Figure18Uber Transit’s holistic integrated offering for public transportation agencies

& 3rd parties

Uber Transit can offer public transportation agencies a unique set of strategically important ca-pabilities all within a rapidly unifying product suite. Byofferingaholistic integratedoffering,publictransportationagenciescanoperatemoreconnected,efficient,equitable,andresilientmobilitynetworks.Inthenextsection,weexpandonhowUber’suniquecapabilitiesunlockdifferentiatedprogramstocom-plementpublictransportationnetworksandpowerparatransitandmicrotransitapplications-allfromthesameproductsuiteanddeliveredtousersthroughtheUberapp.

37

& 3rd parties

Part 5 How Uber Transit’s products and services workOur approach to complementing public transportation

Applying conventional fixed-route service to ar-eas with low density is challenging. Whilebusser-viceishighlyefficientonmajorcorridors,inlow-den-sityareasbusesstruggleandincurahighcostpertrip.The result is that agencies are forced to reduce the frequencyofbusestokeepcosts incheck.This lowfrequency compounds the low ridership problemevenfurtherbymakingtheservicelessconvenientforriders.Thosethatcanaffordpersonalvehicleswillusethem instead of waiting for a bus that might come in 30or60minutes.Thosethatcan’taffordcarsareleftwithasuboptimalservicethatlimitstheirmobilityandaccesstoeconomicopportunities.

“Uber Rides for Transit” gives agencies the tools to maintain public transportation access by ex-tending ridesharing service in low density areas, therebyprovidingfirst/lastmileconnectionstomoreefficientfixedroutetransitservice,openingnewmo-bilityzonesthatwerepreviouslyoutofreachforagen-cybudgets,orevenreplacing inefficientbusroutes.Under this model, agencies tap into a more afford-able servicemode while increasing the equity andaccessibility of their public transportation networks.Agencies set fare structures for riders and can imple-ment cost control measures to ensure they stay within theirbudgets.Agenciescanreducetheircostpertriprelativetofixedrouteservice,avoidcapitalinvestmentin new buses, reduce wait times, and increase rider-shipatstationsthroughfirst/lastmileconnections.Re-silienceofthenetworkimprovesasagenciesonlypayfortripstaken,whichbufferstheirbudgetsfromsud-dendropsinridershipaswehaveexperiencedduringCOVID.FlexibilityrisesasUber’ssupplycaneasilyflextomeetpeaksorvalleysindemand.Asridershipinagivenprogramgrows,agenciescaneasilyreplacethevariablecostUberRidesforTransitservicewithami-crotransitserviceutilizingagencyvehiclesandopera-torsifandwhenitmakessense.

Uber MaaS Solutions promote riding public trans-portation directly in the Uber app, driving increased demand. Consumers access real-time public transpor-tation data and plan their complete journeys including transfers all within the Uber app. Riders can purchaseticketsin-appinanincreasingnumberofmarkets.Theycan also plan and pay for multimodal journeys, which may includeUberservice for thefirstor lastmilecon-nection. This full digital MaaS experience is finding astrong product-market-fit as consumers opt for theconvenienceofa singleapp thatcanmeetallof theirtransportationneeds.

Meanwhile,agenciesgetthebenefitsofhavingalltheirmodes in theUber app,whichdrives increased rider-shipandapositiveproductexperience.AgenciescanevenusetheUberappinsteadofinvestingintheirownwhite-label apps if they so choose. This removes thecommon struggle for agency apps to scale consumer adoptionandthefundingrequiredtomaintainandsup-porttheirownwhitelabelapps.

Agencies can combine Uber Rides for Transit with our MaaS Solutions to deliver a more complete and seamless public transportation experience. Thiscould take the form of subsidized Uber trips (UberXor Uber Pool) for first/last mile connections to publictransportation stations. Such a seamless experiencecan spur some riders to leave theirprivate vehicles athome, or downsize from two cars in their household toone.Agenciescan furtherelect touseUberGreenvehicleswhere available, our electric and hybrid fleet,thathavetheaddedbenefitofreducingemissions.Aswe will describe below, paratransit and microtransit ser-vicescanalsobeintegratedintotheUberapp,offeringcustomers theability toaccessallmodesavailableonpublictransportation.Inthefuture,weexpectmoreusecasesandprogramsthatwewillco-developwithagen-cies.Thesenewprogramswillbepossiblebycombin-ingourmodularproductsandexperiencesinnewandinnovativeways.

Uber Transit’s different offerings in terms of agency outcomes (directional)

Tomakeiteasierforreaderstounderstandhowourproductswork,wehavecreatedaseriesofvisualrepresentationsthateachprovide:

Use case: abriefdescriptionofhoweachimplementationworks;Product: thenameoftheUberproductfamilythatpowerseachservice; UR4T: UberRidesforTransit MaaS:UberMobilityasaService(MaaS)Solutions UTSS: Uber Transit Software Solutions

Supply: aimstodistinguishbetweenthetypeofvehiclethatisprovidingtheactualtriptotherider-bethatthroughagencyfleets,3rdpartyfleets,taxis,ortheUbernetwork;

Distribution: referstohowridersaccesstheservice-suchasthroughanagencyapp,acallcenter,orthroughtheUberapp.

Weuseaqualitative1to5ratingscalethatattemptstoillustratetherelativeagencyoutcomesaswecompareoneproductapproachtoanother.Wespecificallyfocuson9agencyoutcomes:

• ↑ Ridership:quantifieswhethertheproductcanbeexpectedtoincreasedemandfortheservice.• • ↓ Cost /trip: quantifiesthepotentialreductionincostpertriprelativetoothermodescurrentlyincommon

use(e.g.,ridesharingcostpertriprelativetobuscostpertrip).• • ↓ Capex: quantifiesthepotentialreductionincapitalassets(e.g.,vehicles)thatagenciesneedtofundinorder

todeliveranequivalentnumberoftrips.• • ↑ Equity / accessibility:quantifiestheabilityoftheservic• etoexpandontheequityoraccessibilityofpublictransportation.Inthisinstance,wecorrelateastrongequity

andaccessibilityscorewithalowercostpertripwhichallowsagenciestoextendorimproveservicethathastraditionallybeencostprohibitivetodeliverusingtraditionalmodes.

• • ↓ Wait time:quantifiesthepotentialreductioninriderwaittimes.• • ↑ Experience:quantifiesthepotentialimprovementincustomerexperience,withastrongemphasis• ondigitization.• • ↑ Resilience:definedasacoststructurethatdecreaseswhendemanddrops,therebybufferingagency• budgetsfortheparticularservice.• • ↑ Flexibility: definedashavingflexiblesupply thatcan increaseordecrease tomeetpeaksand throughs

throughoutthedayaswellastheabilitytoeasilyandquicklyalterserviceareas(i.e.,changemicrotransitservicedesign,expandthegeofence,etc).

High scores ratings highlight the primary reasons public transportation agencies should pursue one implementa-tionapproachoverothers.

Ourobjectivewiththeseillustrationsisnottomakeabsolutevaluejudgementswhetheronetypeofserviceisgoodorbad.Wemerelyattempttoillustratetherelativedifferencesinoutcomesthatagenciescanexpectbychoosingtoimplementonetypeofproductconfigurationorserviceovertheother.Wedefertoeachagencytodeterminewhichtypeofserviceorconfigurationisoptimalforthembasedontheirownneedsandrequirementswhichmayvaryfromagencytoagency.

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Figure 19Uber Rides for Transit and MaaS Solutions - Our approach to complement public transportation

Our approach to paratransit

For people with disabilities unable to use a fixed-route public transportation system, public transporta-tionagenciesarerequiredbyfederal lawtoprovideAmericanswithDisabilitiesAct(ADA)complementa-ryparatransitservicethatisgovernedbyspecificre-quirements.Theserequirements,alongwith fundingconstraintsthathave limitedtheabilityofmostpub-lictransportationagenciesto invest insignificant im-provements,haveledtoaparatransitsystemthathasleftriderswantingamoredynamicservice,andagen-ciesgrapplingwithsoaringcosts.

Ridersmusttypicallyrequestatrip24hoursormoreinadvanceviaacallcenterorwebportal.Scheduledpick-upordrop-offwindowscanbeaswideas30minutes.Theseparametersallowforcomplexsched-uling software to run a nightly batch allocation mod-el tomatch riderswithvehicles in themostefficientmanner.Theresultisarelativelyrigidsystemthatlimitsthe usefulness for riders, while for agencies often re-quiredispatcherstointervenemanuallyshouldriderscanceltripsorifoperationalissuesarise.Perhapsthebiggest pain point for agencies though is the high costofservicewhich,accordingtotheNationalTran-sitDatabase,onaverageaccountsfor2%oftripsbut15%of the overall operating subsidies. Themedianagency’ssubsidyis$30pertrip-thoughthisisoftenmuchhigherinmajorcities. Routematch’s core Demand Response software powers more than 500 demand-response fleets - from small rural agencies all the way up to some of thelargestagenciesintheUSwithfleetsofover600vehicles.Routematch isoneof the largestplayers inparatransit scheduling and dispatching with its lead-ingscheduling,routing,fleetmanagementandridereligibilitymanagementtechnology.Itslatestsoftwarereleasesarepowering someof themost advancedparatransitdeploymentswithahighlyefficientsched-ulingengine.

Under a “Riders’ Choice” model, Uber is helping some of the largest agencies lower the cost of their paratransit programs. The “Riders Choice”model allows eligible riders to use ridesharing ser-vices or taxis in addition to the conventional ADAparatransit service. This model leverages our “UberRides for Transit” platform and offers riders bothon-demand and pre-scheduled trips on the Uber network(insteadofwithagencyvehicles).Uberisalsoable to onboard 3rd party transport operators with

dedicated wheel-chair accessible vehicles (Uber-WAV)where available. Ridersbook trips in real-timeor inadvancedirectlyviatheUberapporthroughacallcenter.Agenciesandridershaveseennumerousbenefitsfromthismodel,mostnotablysignificantpertripcost reductionswhile improvingmobility for rid-ers.Giventheincreasingdemandforparatransitintheyears ahead as more baby boomers retire, it is hard to imagine that ridesharing will not play an increasingly important role in paratransit to help agencies reduce pertripcostswhileimprovingthemobilityexperienceforriders.

The latest iteration of the Routematch software is an integrated mobility platform that can combine both pre-scheduled and on-demand trips from multiple providers. This open platform can onboard multiple ridesharing platforms and transportation pro-viders including agency fleets, 3rd party operators,and taxis. Agencies are able to set parameters thatdeterminewhichtripstoallocatetowhichproviders,at which times, and in which quantities or percent-ages.Havingmultipleproviders including fixedcostandvariablecostsupplywillmake for themosteffi-cient, flexible, and resilient paratransit networkwhileofferingevengreaterequityandaccessibility toourcommunitiesatthelowestcost.Thisnextgenerationparatransitoperatingsystemiscurrentlyliveatselectcustomersandwillbedevelopedevenfurtherin2021andbeyond.

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Figure 20Our approach to help agencies reduce costs and improve service in paratransit

Our approach to microtransit

Microtransit is a form of on-demand service,similar to ridesharing, thatoffers flexible routingandschedulingofvehicles.Microtransitvehiclesrange from large SUVs to shuttle buses with a typical capacity of 10-15 passengers. Micro-transit typically operates on a small scale within a geofenced area. The fleet size is often fixed,typicallywitharound10-15vehicles(butthiscanbe higher or lower). To date, most microtrans-it programs have launched as temporary pilots,andhaveexperiencedvaryinglevelsofsuccess.This new mode is gaining popularity and growing rapidly.

Under the conventional model of microtran-sit, agencies purchase agency-branded vans and pay to use 3rd party software to power the service. This software typically comprises a Rider App, Driver app and Agency dashboard.Whiledriversareoftenagency-employed,agen-cies can also outsource the full microtransit ser-vicetoan integrated3rdpartyoperatortopro-videthesoftwareandoperatetheservice.Underthisconventionalmodel, riderseitherbooktripswithawhitelabelappthattheyhavetodownload,orthroughacallcenter.Agenciestypicallypayamonthly licensing fee for the software in addition toafixedratepervehiclesupplyhour.Thismodeloffersridersconvenience,withauserexperienceclosertoridesharingthantofixed-routeservice.Theflexibleandon-demandroutingandsched-ulingofvehiclesmakesitacompellingalternativetofixedrouteserviceinlowridershipareas.

Whilemicrotransitisbecomingincreasinglypop-ular and exhibiting high growth, it has not yetreached a critical mass of broad agency deploy-ments, large service areas, nor large fleet sizesforthemajorityofdeploymentstodate.Thoughthere are signs we are heading toward greater scale and adoption of microtransit, our internal research suggests there are several structuralchallengesthatmaypersistwiththeconventionalmicrotransitmodel.

Rideradoptiontakesa longtime-gettingcon-sumers to download and use a new app is often

challenging. Small service areas further com-pound low ridership on microtransit. They nar-rowly restrict its usefulness to few origins and destinationswhilesmallfleetspush-upwaittimesor reduceoverallvehicleavailabilityduringpeaktimes. Having low ridership under a fixed-costmodelmeans that the agencybears the full fi-nancialriskoflowutilization,leadingtohighcostsformicrotransittrips.Subsidiesof$10to$30pertrip are not uncommon in many US microtransit pilot programs, limiting the scalability of this new servicemode.

However, we believe that microtransit has thepotential to capture a much larger share of the public transportation supply if the conventionalmodelcanbeadaptedandtweaked.

Uber is now offering its Microtransit software platform to power public transportation ser-vice with agency vehicles and drivers. Agen-cies get access to Uber’s proprietary demand prediction, dispatching, matching, pricing, rout-ing, and payments technologies. Riders booktripsthroughtheUberapp.Byaccessingmicro-transitservicedirectlythroughtheUberapp,rid-ersdon’tneedtodownloadanewapp.This in-creasesmicrotransit’s discoverability and usage,which may translate into higher ridership and a lowercostpertrip.Whilethisaloneiscompellingto agencies, webelieve that Uber can offer farmorebenefitstoagenciesthatareopentoalter-nativemicrotransitapproaches.

An affordable alternative approach for ex-perimenting with microtransit is to simply launch a microtransit program using the Uber network. Agencies create highly-configurablemicrotransit programs using Uber Pool 19,1setting similarserviceareasandparameterstoconven-tionalmicrotransitprograms. Insteadofdedicat-ed agency-branded vans, they use vehicles on

1

19At the time of writing this report, Uber Pool has been suspend-edduetopublicsafetyconcernsassociatedwithCOVID-19.Thismodel would only apply when Uber Pool is running again and publichealthguidelinesallowforsharedtripstoresume.

43

theUbernetworkwhichmostcommonlyhaveacapacityof4-seats.The4-passengercapacityisnotasignificantdisadvantage;manymicrotrans-itdeploymentstodaterarelyoperateefficientlywhenconfiguredbeyond4-personmatching inapoint-to-pointorevenblock-to-blockservice.In other words, the excess capacity in a 10-15passenger van typical ofmicrotransit programsmayremainunutilizedmostofthetime.

Although this model does not include agen-cy-brandedvans,itcomeswithseveraladvantag-es.Forstarters, theseprogramscanberampedupfaster,withveryshortleadtimesofweeksin-steadofmonths.Asagenciesbravely fought tokeeptheircommunitiesmovingthroughCOVID,many worked with Uber to launch programs inaslittleas48hours.Withtheseprograms,agen-ciesdon’tneedtoinvestinbrandedvehiclesnorhire andmanage newdrivers. Abig advantageofusingtheUbernetworkformicrotransitisthatagenciesonlypayfortripstaken,whichisespe-cially helpful during a program’s initial ramp-up.Agenciescansmartlymitigatethefinancialriskoflowridershipwhilevalidatingandunderstandingthelevelofridership.Usingthetrip-leveldatathatUber shares with agencies for transit programs, agencies can build models and run simulations thatmoreaccuratelysizethefleettheywillneedto launch a successful microtransit program when consistentridershipjustifiestheinvestment.

Using the Uber platform for microtransit pro-vides more flexibility to the peaks and valleysofdemand than a conventional fixed-size fleet.This offers riders greater certainty around wait timesandavailability -acommonlycitedprob-lem in microtransit deployments. Over time, asagenciesbecomecomfortablewiththeviabilityofmicrotransit,theycanseamlesslyinvestinandoperatetheirownfleetsinparallelwiththeUbernetwork,whichbringsustothethirdandmostef-ficientmodelofmicrotransit.

The “hybrid” model seamlessly combines agency fleets with ridesharing vehicles to offer the most efficient microtransit service possible. The hybrid model offers the best of both worlds - the accessibility and recognition of agency-branded vans with the efficiency

andflexibilityofridesharingwith itsvariablecostmodel.Withasolidunderstandingofunderlyingdemand patterns and ridership, agencies can right-sizetheirfleetstofindtherightbalanceofavailabilityandefficiency(seefigure22).

Forexample,oneapproachistodeliberatelyun-dersize the agency-owned fleet. Agencies candeployasmallerfleettomaximizeutilization,re-sultinginthelowestcostpertrip.Thisapproachisonlyviableifagenciescanintegrateridesharingserviceswhendemandexceeds supplyorwaittimesaretoolong-alsoknownas“peakshaving”.This hybrid model lowers cost per trip, reduces thecapital investmentrequiredforthefleet,of-fersgreaterresilience,andimprovesflexibilitytodealwithfluctuationsinridership.

Westronglybelievethatthismodelhasthepo-tentialtoacceleratethetransitiontowardconve-nient and sustainable microtransit in more com-munitiesandatgreaterscale.

Figure 21How Uber can provide a new and differentiated microtransit service

used by 110M+ monthly active users

Trips provided by flexible Uber network (variable cost for agency)

Size of agencydedicated fleet

Dedicated supply(fixed cost for agency)

Demand

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Demand

Size of agencydedicated fleet

Long wait times, unable to meet demand

Fleet underutilized during low peak times, driving high costs for agencies

Figure 22Why the hybrid microtransit model is a game changer for efficiency and flexibility

Trips provided by flexible Uber network (variable cost for agency)

Size of agencydedicated fleet

Dedicated supply(fixed cost for agency)

Demand

Conventional microtransit approach to fleet-sizing

Hybrid microtransit approach to fleet-sizing

Part 6 Conclusion:Towards a new model of public transportation

The public transportation industry is facing one of its most challenging periods in recent history. There is enormous pressure to maintain service, equity, and access without additionalfunding in this low-ridership environment. AndwhileCOVIDhasmadethecurrentenvironmentmore challenging to operate in, it has merely ac-celerated the pre-COVID need that public trans-portation,likeeveryothersectorinoureconomy,mustinnovateonitsservicedeliverymodelinor-dertotakeadvantageofnewtechnologies.

Overall, integrating ridesharing with public transportation is about complementing and connecting a city’s mobility network. Whenintegratedstrategically, intherightmodemixtotherightpartsofthenetwork,ridesharingisavitalcomponentofthemobilitymanager’stoolboxtoimproveequityandaccess,lowercosts,increaseresilience,andexpandflexibilitythanconvention-almodescanachieveontheirown.

As mobility managers, agencies are in charge of deploying new technologies and services. Agenciesdetermine theoptimalmixofon-de-mand services across their different services,whether fixed route, paratransit, microtransit orothers. An iterative and analytical approach isrequiredas theoptimalmixundoubtedly variesbetweencitiesandservicetypes.Oureconom-

ic analysis, based on pre-COVID ridership, sug-geststhatridesharingcoulddeliveraround1-6%of bus trips at a cost reduction for agencies - a relatively low share of trips. For paratransit, theoptimalmixof ridesharing ismuchhighergiventhat most paratransit trips are ambulatory and the per-tripcost reduction issubstantial.Formicro-transit services, the optimalmix of agency andridesharing vehicles is yet to be determined,howeverwebelieveitwillbeclosertoparatransitthantofixedroutelevels.Overtime,asmicrotran-sit ridership increases and agencies operational expertiseatdemandprediction,andfleetsizingimproves, microtransit’s efficiency will improve.Weexpectthisefficiencytoreducetheoptimalshare of ridesharing trips in microtransit programs overtime.

Uber and Routematch have built the tools, technologies, and services that can help agencies today. Our product families - Uber RidesforTransit,UberTransitSoftwareSolutions,andUberMaaSSolutions-bringtogetherauni-fied product suite that can help cities operatemoreconnected,efficient,equitable,andacces-siblepublic transportationnetworks.Asmobilitymanagers, agencies will experiment with, pilot,andscalenewtechnologieswithintheirnetworks.Somewillbebolderandmovefasterthanothers,and we stand ready to assist agencies across this

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range - from small pilots to broad redesigns of entirepublictransportationsystems.

While the concept of an equitable, efficient, and connected public transportation system is relatively clear, getting there is not going to be easy. Regionalagencieswillneedtocol-laborate on an unprecedented scale to jointly plan, connect, and fund their respective publictransportationservicestomeettheholisticmo-bility needs of their riders which are not bound by mode. Digitizing their operations and riderexperiences inacustomercentricway isanoth-erhugelyimportantareaoffocustomakepublictransportationmoreconvenient andaccessible.Thepolicy environment too needs to adapt toeasethistransition-forexample,measuringthesuccess of specialized programs such as para-transit through the lens of increased mobility and accessibility, rather than minimizing costs to meet a regulatory requirement, will put riders at thecenter and spur the adoption of on-demand op-tions.Agencieswillhavetomanagecomplicatedlabor issuesandupskill or re-skill somepartsoftheirworkforce.Thiswillinevitablyrequireacare-fullycraftedpeoplestrategydevelopedinclosecollaboration with the labor force and unions.Lastly, this transformation needs to be funded atatimeofhugefiscalconstraints.Newfundingsources from the state and federal levelwill beneeded togiveagenciesmoreflexibility toex-periment with and then rapidly scale up success-fulinnovations.Agencieswillneedtofindcreativeways to secure funds with strong support from theirrespectiveconstituents.

Agency leaders need a clear vision and a strong communications plan if they are to overcome these challenges. Agencies need this to energize their workforce, communities,and other stakeholders as well as to build theircase for additional funding sourceswith voters.Havingastrongvisioncoupledwithaclearlyde-fined strategy and tactical plan for how to getthere will be essential to sustain what will be a multi-yeartransformationeffort.

At Uber, we are unwaveringly optimistic about the future for public transportation. Ridership will return, albeit slowly. Whileitmaynotrecov-ertopre-COVIDlevelsforseveralyears,thelongterm need for public transportation is certain.Citieswillbouncebackandpublictransportationwillremainthevitalbackbonetomoveourcom-munities. We are at a crossroads today wherepublictransportationdesperatelyneedsinnova-tivenewideas,technologies,coststructures,andsupplymodestomakethemobilitysystemmorefinanciallysustainableandbetterforall.UberandRoutematch stand ready to use our technolo-gy, resources, andexperience to support citiesand agencies on this joint journey towards a new modelofpublictransportation.

AppendixHow COVID-19 is impacting the cost-optimal mix of ridesharing

We know that public transportation ridership isdownconsiderablyduetoCOVID-19.Thisisput-ting tremendous strain on agencies’ operating budgets. Comparing National Transit Databaseridership data from August 2020 to the sametimeperiodlastyearshowsthatridershiponfixedroute and demand response service is down53%and54%respectivelyonaverage.Theresultof this decline is considerably higher subsidies per trip today than a year ago for most agencies.

At one large agency in the US, ridership on their busnetworkwasdown67%inthespringof2020comparedto2019.Asaresult,theaveragecostpertripincreasedfrom$3.88to$10.27,analmost3X increase. Formany bus routes on their net-work, theaveragecostpertripwasevenhigherasshownbelow.

Using agency-published performance data at the route level, we calculated the equivalenttrip cost using UberX and estimated the poten-tial cost reductions per trip to the agency1.20Wemadesuretoadjustthepricingbasedontheav-erage trip distance per route and UberX’s actual pricinginthelocalmarket.

Pre-COVID, we estimated that UberX would be cheaperthanrunningthebuson~13%ofroutesrepresenting~1%ofallbustrips.DuringCOVID,facing a ~67% reduction in ridership, we esti-matethat73%ofroutesand23%oftripscouldbe performed by UberX at a cost reduction for the agency. The estimated cost reductions for

20 Please note that we are not showing the results on Uber Pool as Uber Pool was suspended for public health reasons during the COVIDcrisisandatthetimeofwriting.

theagencywereinthe25-30%rangeonthoseroutes2.21

Tobeclear,wearenotadvocating foradrasticredesignofthebusnetworkinfavorofrideshar-ing.Ridershiplevelsaregraduallyincreasingandwillcontinuetoincreaseasoureconomiesrecov-erandavaccineforCOVID-19becomeswidelyavailable.Butthepost-COVIDnewnormalrider-ship could be at 80-90% of pre-COVID levelsdue to structural changes in unemployment, pas-sengerpreferences,andcontinuingwork-from-home arrangements. Thismeans that agenciesneedtore-evaluatetheircoststructures,capac-ityplanning,andnetworkdesign.Theyhavetheflexibility to temporarily substitute under-per-forming routes with ridesharing partnerships.Then, when demand recovers, agencies canswitch thoseback to fixed-routeormicrotrans-it service using agency vehicles and operators.Undermostscenarios,webelieveridesharingwilllikelyplayanincreasinglyimportantrolewithinthepublictransportationmixinthenext3-5years.

21 Thisanalysisdoesnotfactorintheincrementalcostofprovid-ingon-demandwheel-chairaccessibleservice.However,ifweassumethat0.5%oftripsrequirewheelchairaccessiblevehicles(WAV)andthateachWAVtripcosts~$100,weestimatedthatthiswouldreducethecostsavingsfortheagencybyonly10-15%.

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Figure 23 How COVID-19 has reduced bus and paratransit ridership across agencies in the US

Ø Ø

Percent decline in bus ridership by agency in the United StatesBetween August 2019 and August 2020n = 440 agencies

Percent decline in demand response ridership by agency in United StatesBetween August 2019 and August 2020n = 463 agencies

60%

40%

20%

0%

-20%

-40%

-60%

-80%

-100%

60%

40%

20%

0%

-20%

-40%

-60%

-80%

-100%

-53% -54%

Source:NationalTransitDatabase-Aug2020ridershipreport

Figure 24How COVID-19 has impacted cost per trip and the potential cost reductions from shifting to ridesharing

$90$80$70$60$50$40$30$20$10

0

Spring 2019 (pre-COVID)Average cost per bus trip by routeUSD per trip (1 dot = 1 bus route, n=90)

Late Spring 2020 (during COVID)Average cost per bus trip by routeUSD per trip (1 dot = 1 bus route, n=90)

Average cost reductions per tripwith UberX by routeUSD per trip (1 dot = 1 bus route, n=90)

Average cost reductions per tripwith UberX by routeUSD per trip (1 dot = 1 bus route, n=90)

Passengers per vehicle - hour Passengers per vehicle - hour

Passengers per vehicle - hour Passengers per vehicle - hour

0 20 40 60 80 100 120 140

$90$80$70$60$50$40$30$20$10

00 20 40 60 80 100 120 140

$100

$80

$60

$40

$20

$0

-20

$100

$80

$60

$40

$20

$0

-200 20 40 60 80 100 120 140 0 20 40 60 80 100 120 140

Source: Publicly available public transportation agency route performance report (Spring 2020), Uber analysis

51Source: Public transportation agency’s route performance report (Spring 2020), Uber analysis

Figure 25Summary of potential cost reductions for agencies before and during COVID

13%

73%

1%23%

26% 30%

1%10%

$12 $11

Estimates based on UberX Pricing

Trips where UberX is cheaper Percent of bus trips

Routes where UberX is cheaper Percent of all bus routes (n=90)

Potential agency cost reductionson routes where UberX is cheaper in percent

Potential agency cost reductionsAs percent for routes subsidies

Average cost per trip - UberXUSD per trip before fare recovery

Spring 2019 Spring 2020

Spring 2019 Spring 2020

Spring 2019 Spring 2020

Spring 2020Spring 2019

Spring 2019 Spring 2020

About the AuthorsIvan Mihov is the Head of Strategy and Planning for Uber Transit, Chris Pangilinan is a Senior Public Policy ManagerfocusedonPublicTransit,andDavid Reich is theHeadofUberTransit.

Theauthorswouldliketothank:Dmitriy Vanchugov, Pepper Harward, Daisy Wall, and Jackson Lester as well as several Uber Tran-sitclients,public transportationexperts, and industrythought leadersfortheirfeedbackandcontributionstothispaper.

How to contact Uber TransitFormoreinformationortogetintouchwiththeUberTransitteam,pleasevisitwww.uber.com/us/en/transit/ or email us at contact-transit@uber.com.YoumayalsoreachUberTransitbyphoneon+1(404)6640166.