Learning from the failure of the livery van program

Earlier this week, Taxi and Limousine Commission Chair David Yassky acknowledged that the Commission's plan to run vans on five abandoned local bus routes was failing, and took responsibility for that failure. I don't think it's quite dead yet, and I'll have another post soon on ways to save it, but for now I'd just like to give some reasons why it's failing.

First of all, please send this to every uninformed loudmouth who tries to tell you that they need to run the MTA like a business, man. There are some runs that can never make a profit without radical changes that are beyond the control of the MTA and most potential bus operators. There are also many differences between running a private business and running a public agency. These differences show in the case of the vans.

It's very admirable of Yassky to take the fall for this project, but he's a government guy who spent eight years in the City Council. I don't get the impression that this was his idea. I don't know if he has any business experience, but he's never been a big pusher of privatization. At least some responsibility should rest with the person who told him to do this but didn't give him any resources with the necessary business expertise. Maybe Bloomberg, maybe Goldsmith, maybe both.

So now here are some points to take away from this whole debacle:

Jitney service is qualitatively different from scheduled government bus service. It really seems as though Yassky's (and Bloomberg's) big mistake was thinking that the "dollar vans" are profitable because they're smaller and non-union, and would therefore be able to succeed where the MTA failed. Unfortunately for this program, that's only part of the story: they can be profitable when they operate in thick markets (to use the term introduced by Klein, Reja and Moore (PDF), but will not automatically be otherwise.

Admitting ignorance is the first step on the path to wisdom. Bloomberg, Goldsmith and Yassky have never run a jitney operation. Ricketts and Haqq have never run a transit service for middle-class white people. None of them seem to have read Klein, Reja and Moore, even though I found it by just googling around. Maybe they should have looked to people who had at least some experience or knowledge in those areas.

Consider the customer's perspective. I don't really see any evidence that anyone involved in running this pilot ever imagined what it would be like to be a former passenger of any of these bus routes. Your bus route gets cancelled, so you find other transportation. Three months later, the city gives some guy permission to run fifteen-passenger vans with non-working seatbelts on the route, but you can't use your Metrocard or get a free transfer. You figure you'll give it a try, so you show up at the bus stop one day. There is no schedule, and you can't find any information on the TLC website. Maybe you wait fifteen minutes, maybe an hour. The van never shows up. Nobody is there to explain anything to you. You call a number on the sign, and nobody answers the phone. You're late to work or class. How many times would you go back?

Transit is in competition. People have different ways to get there.

Thin markets need an anchor. If you've got enough competition, you will need some kind of anchor to keep people showing up at the bus stops. You can't do it half-assed.

Sometimes marketing can help. In thick markets, everyone knows about the transit service and the operators compete on the basis of value. In thin markets, knowledge is scarce and marketing becomes much more important.

Gaps in service can kill your business. Wouldn't it be bizarre if all the Q74 riders had simply stopped going to classes, if the Q79 and B39 riders had stopped shopping, for three months, just waiting for someone to come along and put up a small, cryptic sign? They didn't; they found other ways to get where they were going.

Take constructive comments seriously. The TLC has been completely defensive and unwilling to entertain reasonable suggestions. Isn't that the point of a pilot, to gather feedback?

Well, I'll have another round of suggestions coming up soon. Gotta keep the hope alive! Or something like that.