Earlier this year, CellPoint Mobile released a report called Challenges Facing Municipal, Regional and National Transit Agencies in the United States. Developed from a survey of 103 transit operators in the U.S., the report examines key challenges facing the ground transportation and mass transit market and suggests how operators can improve service, reduce costs, lift customer satisfaction and grow their bottom line.
The report identified the following challenges:
- Outdated, cumbersome procurement processes
- Buyer “silos” that make adopting new technology difficult
- Difficulty providing streamlined, mobile-centric ticketing and payment processes for their riders
- Mismatched spending and investment priorities across organizational departments and roles
- “As both ‘B-to-B’ organizations and market-driven businesses, mass transit operators grapple with a unique set of challenges,” said Toby Holmes, CellPoint Mobile’s VP of Growth for Ground and Sea Operations in the US. “But with ridership increasing across many regions and demographics, transit operators have an opportunity to create efficiencies and acquire new riders by introducing enhanced mobile capabilities and digital connectivity.”
Ridership isn’t increasing, though, except in very select areas, and that’s where the vicious circle begins. As transit agency budgets are curtailed, service declines. When service declines, ridership falls off. Ticket prices increase to try to make up the budget shortfall, and ridership declines even more. As ridership declines, it becomes more and more difficult to allot budget for new vehicles, routes, or drivers, because there’s no one to pay for it. And so it goes, to quote Kurt Vonnegut.
A 2019 Transit Center report, Who’s on Board 2019, found that the single biggest factor transit agencies could control that either builds or discourages ridership is the quality of the transit service. Reliable, frequent service in high demand corridors, connectivity, stop facilities, and cleanliness are all important factors for riders, and the more satisfied riders are, the more they use transit.
There are both demographic and economic factors at work in the transit usage decline equation, however. As the CellPoint Mobile report points out, younger commuters are conditioned by ridesharing services like Uber and Lyft and they expect a streamlined mobile experience, particularly for scheduling and payment options. “A typical mass transit journey, with legacy ticketing and payment systems, is a stark contrast. Only 30% of U.S. mass transit providers currently collect fares through a mobile app, only 39% have an app at all, and only 37% can accept alternative payment methods (APMs) like Apple Pay or Google Pay.”
But it’s not just that you can’t always pay for transit with your phone or even plan your trip in real time. During non-peak periods and if coupons are available (which they often are to frequent users), ridesharing services are much cheaper than taxis and often equivalent to bus fares. In terms of time savings, though, ridesharing services have an edge transit is unlikely to beat. In Los Angeles, ridership has declined as rents have increased and lower income residents are forced to move further and further into the suburbs. When their daily transit commute begins to approach the three-hour mark due to poor connections, people start driving, empowered by zero-interest loans on both new and used cars.
Other key findings of the CellPoint report highlighted the intersection of rider expectations and organizational challenges. They included:
- Operating costs: A perennial problem, more than a quarter (26%) of US mass transit operators say rising costs are their biggest challenge. This is highest, at 40%, among metro mass transit agencies.
- Catering to a mobile-centric population: Nearly a quarter (23%) of national operators and 24% of large transit agencies (1K-10K employees) say that implementing mobile technology is their single biggest challenge.
- Need to attract riders: Customer acquisition is the second-most common challenge in US transportation, cited by 23% national, 33% regional, and 17% of private operators.
- Disconnect within the organization: Only 17% of transit operators responsible for payment/ticketing cite rising costs as their biggest organizational challenge, versus 31% of those in IT, and 29% in project management.
- The procurement roadblock: About a third of U.S. operators say that they are unable to change the procurement process (31%) and that the process is too slow and lengthy (30%).
- Reducing costs and increasing rider satisfaction: Potential solutions to help municipal, regional and national transit operators re-think their revenue strategies include: prioritizing mobile apps to meet the demand for mobility-as-a-service (MaaS); integrating mobile channels into larger business objectives to reduce costs, acquire new riders and improve satisfaction among existing passengers; investing in technology to meet immediate, day-to-day challenges of taking transit, including transit apps, mobile ticketing, and streamlined payments.
Ridership in each of the U.S.’s largest transit markets (New York, Chicago, Los Angeles, D.C., San Francisco, Boston and Philadelphia) fell between 2016 and 2017. But there are bright spots to counter that trend. Seattle, Phoenix, and Houston all either expanded transit coverage and boosted service or underwent ambitious network overhauls, and Houston’s overhaul in particular has made a difference. Switching in 2015 from “a traditional hub-and-spoke design focused on downtown to a grid that apportioned equal service to other parts of the city . . . the system saw significant weekend ridership gains and quelled a trend of dramatic losses that included losing a fifth of its ridership over a little more than a decade.”