Opinion

Felix Salmon

How roads could beat rail

Felix Salmon
Jan 24, 2013 17:24 UTC

The best conference panels, like the best blog posts, are the ones which change your mind. And while I haven’t done a U-turn on anything, after yesterday’s panel on smart cars I’m now thinking very differently about the relative merits of various ways of improving how we move around where we live and travel. While I’ve generally been a fan of just about any alternative to the automobile, now I’m not so sure: I think that smart car technology is improving impressively, to the point at which it could be the most promising solution, especially in developed parts of the world like California.

One reason is simply fiscal. Projects like the self-driving car, and the Sartre platooning project in Europe, move the costs of new technology onto companies (Google) and individuals (people buying smart cars). As such, while the total amount of money spent might well be enormous, the money doesn’t need to be spent up-front by any state or national government. That stands in stark contrast, of course, to rail projects, which cost billions of dollars up front; if they ever do pay for themselves, they do so only very slowly.

It makes perfect sense for dense urban areas to invest in subway systems, of course — as China is doing; India should follow suit. A pedestrian-friendly city with a great bike-path network and a fast subway system is basically any urbanist’s dream, both energy-efficient and reasonably low-tech. But between cities and suburbs, or between cities, you need other ways of getting around. And here there are real choices to be made, between rail and roads. Or rather, given that roads are necessary, do you build roads and railways, or can you solve all your problems with roads alone?

China of course is happily blasting new railways through the country as part of its massive national-infrastructure project. But the more developed a country becomes, the more expensive and time-consuming any new rail line will be. And if you’re looking out say 20 years, there’s a pretty strong case to be made that the kind of efficiency that we can get today only on rail lines will in future be available on roads as well — with significantly greater comfort and convenience for passengers.

Right now, technology is arguably making roads and cars more dangerous. Drivers are notoriously bad judges of their own driving ability, and they’re increasingly being distracted by devices — not just text messages, any more, but fully-fledged emails, social-media alerts, and even videos. What’s more, when car manufacturers roll out things like stay-in-lane technology, that just makes drivers feel even safer, so they feel as though they have some kind of permission to spend even more time on their phones, and less time paying attention to the highway. The results can be disastrous.

But once we make it all the way into a platoon, or in a self-driving car, then at that point we become significantly safer than even the safest human driver. While we’re very bad judges of our own driving ability, we’re actually incredibly good at intuiting how safe our driver is when we’re a passenger. And the experience of people in self-driving cars is that after no more than about 10 minutes, they relax, feel very safe, and are very happy letting the car take them where they want to go. They even relax so much, I’m told, that they lose the desire to speed — maybe because they know that they’re getting where they’re going, and in the meantime can lose themselves in their phones.

If and when self-driving cars really start taking off, it’s easy to see where the road leads. Firstly, they probably won’t be operated on the owner-occupier model that we use for cars today, where we have to leave our cars parked for 97% of their lives just so that we know they’re going to be available for us when we need them. Given driverless cars’ ability to come pick you up whenever you need one, it makes much more sense to just join a network of such things, giving you the same ability to drive your car when you’re at home, or in a far-flung city, or whenever you might normally take a taxi. And the consequence of that is much less need for parking (right now there are more than three parking spots for every car), and therefore the freeing up of lots of space currently given over to parking spots.

What’s more, the capacity of all that freed-up space will be much greater than the capacity of our current roads. Put enough platoons and self-driving cars onto the road, and it’s entirely conceivable that the number of vehicle-miles driven per hour, on any given stretch of road, could double from its current level, even without any increase in the speed limit. Then, take account of the fact that vehicle mileage will continue to improve. The result is that with existing dumb roads, we could wind up moving more people more miles for less total energy expenditure in cars — even when most of those cars continue to have just one person in them — than by forcing those people to cluster together and take huge, heavy trains instead.

This vision creates a dilemma, when we start facing choices about building rail lines or new suburbs. We’re not in a self-driving-car utopia yet, and the transportation problems we have are both real and solvable using rail. So do we use the tools we have, or do we wait and hope that future technology will solve our problems in a more efficient way?

And the question of building infrastructure applies to cars, too: do we just allow the auto industry to build ever more efficient gas-powered vehicles, which will eventually become self-driving, or do we spend billions of dollars building out an infrastructure capable of supporting and recharging electric cars wanting to travel substantial distances? Again, whatever solutions we put in now could end up being obsolete surprisingly quickly.

So while I’m convinced that now is an excellent time for the US to embark on a substantial round of infrastructure investment, I’m less convinced that we should be investing in rail in particular. A smart electricity grid, definitely. Improvements on existing bridges and tunnels, absolutely, including that new tunnel to New Jersey. But I’m less convinced about things like a high-speed rail link between San Francisco and LA. Especially so long as there aren’t any self-driving cars to pick up passengers when they arrive.

COMMENT

Mr. Salmon,

At the beginning of your essay, you said that “the best blog posts…are the ones which change your mind.”

Based upon that criterion, this piece is an abject failure.

To put it another way: if your view of our collective transport future, replete with its burgeoning suburbs, is accurate, I hope I’m dead before it arrives.

Sincerely,
Garl B. Latham

Posted by gblatham | Report as abusive

The case of the $400 million bike lane

Felix Salmon
Mar 26, 2012 07:24 UTC

Everybody’s favorite transportation geek, Charles Komanoff, has a fascinating new paper out on the economics of New York’s new Tappan Zee Bridge. The old bridge is decrepit, and needs to be replaced — everybody agrees on that. And the replacement is now in the works, at a cost of $5.2 billion. But does it need to cost that much? Komanoff makes a strong case that it doesn’t.

I won’t try to summarize Komanoff’s paper here. Instead, I’ll just point to one fact which is buried there. The new bridge comes with a combined bike/pedestrian lane, 12 feet wide. And the cost of building that lane — the amount that the cost of the bridge would decrease if you simply built it without that lane — is an astonishing $400 million.

To put that number in perspective, Komanoff tells me it would cost roughly $40 million, in the same 2015 dollars, to build two bike/pedestrian lanes on the Verrazano Narrows bridge — lanes which would get vastly more traffic than the one lane on the new Tappan Zee.

As for the cost of the first three years of New York City’s ambitious bike program under transportation commissioner Janette Sadik-Khan, that was just $8.8 million, 80% of which was paid by the federal government.

In other words, for the $400 million which governor Andrew Cuomo is planning to spend on a white-elephant bike lane almost nobody is going to use, you could utterly transform the bicycling infrastructure for millions of New Yorkers in all five boroughs.

Oh, and I almost forgot — it looks as if the old Tappan Zee bridge is going to be converted into a bike/pedestrian walkway anyway, making such a facility on the new bridge even more superfluous.

But this is how big projects always work: it’s weirdly easier to raise billions for something huge than it is to add millions to an annual budget somewhere. “Gridlock” Sam Schwartz, for instance, in his clever new congestion-pricing plan, is proposing three new massive bike/pedestrian bridges: one from Jersey City and Hoboken, in New Jersey, would span the Hudson River and land just north of Chelsea Piers. A second would go from Long Island City and Hunter’s Point, in Queens, and would cross the East River to midtown Manhattan. And the third, and most ambitious, would start in Red Hook, in Brooklyn, head over to Governor’s Island, and then continue on to the Financial District.

These are utterly wonderful ideas. If beautiful new pedestrian bridges can be built by Santiago Calatrava in Venice or by Norman Foster in London, there’s no reason New York can’t follow suit. Still, it’s a bit depressing that we don’t seem to have the mechanisms to take the billions available for vanity projects, and use some small fraction of that money for things which would make a huge difference to the daily lives of millions of New Yorkers.

This phenomenon isn’t confined to government, of course: anybody working in a big corporation has seen some huge acquisition made, using money which was never available for smaller projects from existing teams which had much clearer benefits. And there are hundreds of museums around the world which never have money for important things like conservation, but which somehow manage to find enormous sums for glossy new starchitectural projects. Basically, people want to be able to see where their money is going, in the form of something large and grand and headline-grabbing. Even if there are much more sensible uses for it elsewhere.

COMMENT

What the lane looks like is only half the story?

Whether car drivers drive like steroid-charged idiots,
and whether bikers cycle like methamphetamine-charged teenagers and terrorize pedestrians — those are common realities why responsible cyclists avoid certain streets in cities.

I know a bike lane which abruptly ends half a block before a busy intersection, and where the pedestrian sidewalks narrow to half its size. The result: cyclists go up the sidewalk and literally terrorize pedestrians,
and the police turn a blind eye. As a result, some residents of that block have to resort to driving, instead of walking, even for just a few short blocks, to avoid getting run over by bikes! Now tell me, does that save gasoline, or the environment. Worse, how many more anxiety stricken residents have to talk to their doctors for medications or lack of exercise because they don’t feel safe enough to walk to the park!

Posted by Janeallen | Report as abusive

How the taxi-medallion bubble might burst

Felix Salmon
Jan 20, 2012 21:21 UTC

Remember the sharp rise in taxi medallion prices over the past few years? I thought that the price was pretty justifiable back then, in October, although I did have my concerns:

Any time you see a chart like the ones above, you have to worry that there’s a bubble. Plus, there’s political risk: the mayor can print new medallions, making the existing ones worth a little less (but not a lot less, given that the income from medallions is largely fixed).

Since then, however, two things have happened. First, New York City agreed to print 2,000 new medallions — that’s a very large increase. And secondly, Charles Komanoff — you remember him — has done the hard math of what this means for congestion and taxi incomes.

The first thing to understand is that while 2,000 cars might not seem very much in the context of a city which sees 800,000 cars per day, in fact it’s huge. Taxis spend 40 times as much time driving in congested areas as private cars do, so 2,000 medallions is the equivalent of 80,000 private cars. And when you impact the amount of traffic that much in an area which is already highly congested, the effects can be enormous:

traxi.tiff

The bottom line, here, is not just significantly more congestion, with travel speeds dropping on average from 9.5 mph to 8.4 mph. That inconveniences everybody, of course, not least the cab drivers themselves, who will take a whole extra minute, on average, to get to where their passenger wants to go. That decreases the number of fares they can pick up per day, and hurts their income.

And at the same time, the number of people wanting to take a taxi is likely to go down, when traffic speeds fall, rather than up. If you have fewer people hailing a greater number of cabs, then it’s simple math that the number of fares per cab shift is likely to fall. According to Charles’s calculations, it will fall in total a good 19%.

If taxi fares stay constant, that means a 19% drop in taxi-fare income, per cab. Fares won’t rise enough to cover that fall. And of course the income for the driver is going to fall more than 19%, because the medallion owners are going to be very reluctant to drop the amount they charge the drivers per shift.

All of which implies to me that if there’s a medallion-price bubble, then the introduction of 2,000 new medallions is likely to prick that bubble. And conversely, if medallions keep on changing hands for a million dollars a pop even after those 2,000 new cars are on the road, then we can be pretty sure that there’s no bubble here at all.

COMMENT

@Komanoff,

Your explanation makes sense. Thank you for your detailed response!

Posted by OneOfTheSheep | Report as abusive

Uber and the cognitive zone of discomfort

Felix Salmon
Jan 3, 2012 15:30 UTC

If you spend a fair amount of time among privileged dot-com types, you’ll probably be familiar with Uber, a kind of luxury car service for the smartphone era. The idea is that you pull out your iPhone, punch a couple of buttons, and in a few minutes a swanky black car pulls up to drive you to your next destination. You get out, no tipping, and the cost of the fare is automatically charged to the credit card you have on file. Elegant!

You do pay for that convenience. An Uber cab costs significantly more than you’d pay for a taxicab, and I’ve met a lot of people who suffer from Uber sticker shock. I’m one of them, truth be told: after getting charged $43 for my first Uber cab ride, last month, I haven’t used it since. I probably will at some point, when the trip is shorter or when it’s raining or when I’m stuck in the middle of nowhere and there’s no easy way to get a cab. But if you start getting into the habit of using these cars on a regular basis, that habit can get expensive fast.

Uber doesn’t seem to have worked out how it wants to deal with the central question of cost. On the one hand, it’s positioning itself as “everyone’s private driver”: it basically stands in relation to the chauffeur-driven car as NetJets does to the private jet. And compared with the cost of hiring a full-time car and driver, Uber is certainly dirt cheap.

On the other hand, Uber doesn’t like being told that it’s out of reach for people without a lot of disposable income. When Marlooz, a soi-disant “poor freelancer”, said that Uber was “too expensive” for her, the company responded with a 1,750-word data-filled blog post explaining how, even though Uber costs twice as much as a cab, it’s still a good deal. Especially if you’re calling for a cab in San Francisco on a weekend evening, when most of the time the cab you called won’t even turn up.

But the fact is that Uber is too expensive for most people. Hell, taxis are too expensive for most people. Uber is a luxury service, and they charge accordingly. Cab rates aren’t entirely apples-to-apples, but they generally have three components: a fixed base fare, and then a rate for time and a rate for mileage. The meter works out whichever is the higher, and charges you that. And if you compare Uber’s rates to the taxi rates in San Francisco, New York, Boston, Chicago, and Washington, you can see that Uber is a lot more.

 

San Francisco Base fare Per hour Per mile
Uber $8.00 $75 $4.90
Taxi $3.50 $33 $2.75

 

New York Base fare Per hour Per mile
Uber $7.00 $57 $3.90
Taxi $3.00* $24 $2

 

Boston Base fare Per hour Per mile
Uber $7.00 $51 $4.00
Taxi $2.60 $28 $2.80

 

Chicago Base fare Per hour Per mile
Uber $7.00 $51 $3.50
Taxi $2.25 $19.80 $1.80

 

Washington Base fare Per hour Per mile
Uber $7.00 $45 $3.25
Taxi $3.25* $15 $1.50

*includes $0.50 in surcharges

The other thing which becomes clear when you look at these prices is that Uber raises its prices pretty much in lockstep with local taxi rates. The cheapest Uber cabs — the ones in Washington — are still significantly more expensive than the most expensive yellow cabs — the ones in San Francisco. But on an absolute basis, it’s easy to see why people in Washington feel happier grabbing an Uber to get home than people in San Francisco do. If you get stuck in traffic and it takes 30 minutes to get home, that’s $29.50 in Washington; in San Francisco, it would be $45.50.

On top of that, Uber has dynamic GPS-based pricing which automatically charges you on a per-mile basis whenever the car is going faster than 11mph, even if it’s only for a brief period of time. And then of course there’s the fancy surge pricing that we saw on New Year’s Eve, when people started getting charged exorbitant rates — Brenden Mulligan, for example, got charged $75 for a ride which took just 136 seconds, and Dan Whaley got charged $135 to go 12 blocks.

Uber loves to explain its surge pricing with fancy supply-and-demand curves, but you could call it a “rip off drunk people” strategy too. Mulligan has ideas about how Uber’s software could be improved: at the very least, it should display the current minimum fare prominently, rather than just the current multiplier.

But this gets back to my disagreement with Jacob Goldstein and Matt Yglesias about the wisdom of deregulating taxi rates. They reckon that deregulated fares are a great idea, while I think they would be chaotically disastrous. And I think that the experience of Uber on New Year’s Eve — which has resulted in a significant number of refunds for unhappy customers — is important here. Uber’s customers are as savvy and sophisticated as cab passengers get, and Uber was genuinely trying hard to be transparent about pricing. After all, if surge pricing doesn’t reduce demand at peak times, it doesn’t really work. And it only reduces demand if people understand what they’re going to pay.

But Uber got a fair amount of bad press from its New Year’s experiment, and of course its fares 99.9% of the time — just like the fares of other deregulated companies like those in Stockholm — are set and fixed. That’s good business: Uber provides a valuable service by allowing people to know, when they’re out and about, that if they want to call an Uber cab, it will take them home for roughly twice the cost of a taxi.

If Uber pricing was continuously dynamic, prices might well come down during periods of light demand, especially in the early mornings. But our brains hate having to do dynamic cost/benefit calculations. Instead, we rely on simple heuristics: “I should always take the subway if I can”, “cabs in New York are cheap enough that I can take them when I want to”, “cabs in London always cost more than you think they will”, “I can afford Uber if it’s just a short ride”, that sort of thing. When we think about the costs and benefits of various different types of transportation, we don’t actually think in dollars, most of the time, just in terms of a vaguer cheap/expensive spectrum. Dynamic pricing like Uber’s New Year’s experiment takes us out of that comfort zone, and people hate being forced to re-think these things.

It’s nearly always a bad idea, then, for companies like Uber to implement variable pricing: it forces customers to think too much, and it invariably happens on nights when demand is high precisely because lots of customers are inebriated and therefore in no position to drive. Or overthink things.

But from the point of view of the passenger, Uber itself adds a whole new level of complexity to what used to be a relatively simple heuristic. Most of us understand pretty intuitively what the differences are, in terms of costs and benefits, between walking; taking public transport; and taking a cab. But then if you move to Stockholm, or if you start using Uber, things become much more complicated, since now you need to work out the tradeoffs between various different cab options. And those tradeoffs, as Bradley Voytek’s Uber blog post explains, get very complex very quickly, and involve things like whether you’re calling a cab or hailing it, your expected wait time, and the probability of a called cab turning up at all.

It takes a long time to turn all of that into an unthinking heuristic, and in the meantime Uber’s customers will always feel as though they’re ticking the “none of the above” box, rather than simply expanding the menu which is currently hard-wired into their decision-making apparatus. And that I think helps explain why many people remain uncomfortable with Uber, even if they’re exactly the kind of people who should love it.

Uber is a great idea in theory, and the mechanics of it tend to work well in practice. But Alex Rolfe has an important point: if Uber’s prices came down to the point at which they were vaguely the same as a taxi, then we could just lump Uber in with cabs as far as our mental heuristics are concerned. Because Uber’s prices are as high as they are, however, and because when they change they go up rather than down, customers react with snarky hostility.

Uber, in other words, is a car service for computers, who always do their sums every time they have to make a calculation. Humans don’t work that way. And the way that Uber is currently priced, it’s always going to find itself in a cognitive zone of discomfort as far as its passengers are concerned.

Update: Rocky Agrawal adds some very smart comments. A taster:

When people feel ripped off, they don’t want to hear about economic theory or the team of Ph.Ds you have developing optimal supply and demand mechanisms.

Most people have a sense of what is “fair”. Study after study has shown that people will make suboptimal economic decisions in the name of fairness. Product and pricing decisions have to take that into account…

I’m disappointed that Uber didn’t turn New Year’s Eve into a positive marketing opportunity. I would have strongly advocated subsidizing rides with some of the company’s $32 million in new funding (from Amazon CEO Jeff Bezos, Menlo Ventures and Goldman Sachs) to create a delightful customer experience. The company is young enough that it could benefit from positive customer feedback.

COMMENT

I think Uber should show the current Minimum Fare BEFORE the user confirms his/her pickup request… Then when the ride starts the user should see a running meter on his/her phone app to make the transaction fully transparent.

Posted by sisyphos | Report as abusive

Getting the unbanked on bikes

Felix Salmon
Dec 27, 2011 16:41 UTC

American Banker’s Andy Peters has a jolly story about how West Virginia’s United Bank is teaming up with Washington’s bike-sharing program, to help the formerly unbanked have access to this handy form of transportation.

To check out a bike from one of Capital Bikeshare’s 110 solar-powered stations, users must first swipe a debit card or credit card.

Such a system locks out plenty of low-income commuters who use Washington’s Metro trains and buses but lack a checking account or a credit card…

Bank on DC is offering a $25 discount on yearly Capital Bikeshare memberships to those who open an account at either United Bank, a unit of United Bankshares, or District Government Employees Federal Credit Union. A Capital Bikeshare annual membership normally runs $75.

“These are not necessarily high-balance accounts, but a lot of the customers are using their accounts very prudently,” says Craige L. Smith, the chief operating officer of United Bank’s Virginia division. “We think there is real value in establishing those relationships.”

The fact is, however, that there’s a lot not to like here, most of which is elided by Peters. This scheme is not going to get the unbanked onto Capital Bikeshare in any remotely significant numbers, for a lot of reasons.

Firstly, the $25 discount comes only on the most expensive form of membership — the annual membership which the poor and unbanked are least likely to be able to afford. If you want to help bring down the cost of accessing these bikes, then charging $50 just to get started is not a great way of doing that. In many cases, that’s $50 desperately needed for food or rent: buying bike access in eleven months’ time simply isn’t on the list of priorities, no matter how good a deal it might be.

Secondly, the unbanked tend to be unbanked for many, many reasons. Some are good, some are bad. But it’s ridiculous to imagine that getting a $25 discount on a bikeshare membership is going to be enough to persuade anybody to open a bank account. Millions of dollars have been spent on all manner of imaginative approaches towards trying to get the millions of Americans without bank accounts to open one. Few if any of those approaches actually work. This one won’t work either.

Thirdly — and this is key — opening a bank account isn’t enough to get you that $25 discount. A bank account will come with a debit card, and a debit card will get you a bike for either 24 hours or three days. But as the bikeshare website clearly says, “all Capital Bikeshare memberships require a credit card”. If you want to get that $25 discount, you’re going to need not only a bank account but also a credit card.*

At the same time, even if you don’t take advantage of the $25 discount, it’s still a bad idea for the newly-banked to rent a bike even for just one day, using their United Bank debit card. Capital Bikeshare spells this out quite explicitly:

When you join Capital Bikeshare with a 24-hour or 3-day membership, a preauthorization hold of $101 per bike is placed on your card account. This is a not a charge against your account. It serves as a security deposit and will be returned to you when the hold expires. Holds may last up to 10 days, depending on the credit card company. We recommend using a credit card and not a debit or check card when becoming a 24-hour or 3-day member. Using a debit card may result in overdrafts if you don’t have sufficient funds in your account to cover the hold.

It’s easy to imagine someone opening their first-ever bank account with United Bank, using their debit card to pay $7 for one day’s biking, and then immediately getting hit by some whopping overdraft fee because of that $101 hold.

Then again, the possible charges if you rent a bike with your credit card are substantially higher. This is hidden away in the small print when you sign up for a membership:

If Member maintains possession of the Capital Bikeshare bicycle beyond the Permitted Period of Continuous Use, then the Capital Bikeshare bicycle is deemed lost or stolen, Member’s credit card will be charged a fee of $1,000, and a police report may be filed with local authorities.

(The Permitted Period of Continuous Use, incidentally, is 24 hours.)

In order to get that $25 discount, then, an unbanked person in Washington has to first open a bank account; secondly get a credit card; and thirdly sign a contract under which they agree to pay $1,000 should their bike be lost or stolen or taken out for more than 24 hours. It’s not even clear that United Bank is promising to give a credit card to anybody who opens up a bank account under this scheme, but assume that they do: then they’re immediately putting the newly-banked individual into $50 of debt, with no real idea as to whether or when that debt will get paid off. Add in late fees and the like, and the $25 savings starts looking even less desirable.

Jim Surowiecki has a column on layaway this week; United Bank should take a leaf out of that book and offer their customers the opportunity to pay the $50 membership fee at a rate of say $4.25 per month, plus whatever usage fees are run up on the Bikeshare program.

Who, under that kind of continuous-layaway scheme, would take on the responsibility of paying $1,000 if a bike were to be lost or stolen? Bank on DC is the obvious organization to do such a thing. They should post a $10,000 bond to cover the first ten times this happens, see whether the scheme is any kind of success, and then take it from there. If there are lots of stolen bikes and the $10,000 disappears quickly, then the scheme would be an interesting failure — but organizations trying new ideas should be open to failure. And there’s a good chance that the $10,000 would not be touched at all.

What’s really needed, in other words, to get the unbanked onto bikeshare schemes is not bank accounts at all — it’s a way of finding institutions which will accept the responsibility of paying $1,000 should the bike be lost or stolen. If you do that, then memberships can be given out to individuals without bank accounts at all, and they can use any old prepaid card to pay the modest usage fees they run up, without worrying about the $101 hold.

Which institutions would do such a thing? Well, there are a lot of non-profit organizations which work with the poor and try to get them mobility — they’re a good place to start. But there’s another set of institutions which might be interested as well: churches, of which there are very many in the DC area. Churches know their flocks, after all, and might well be interested in giving out memberships to those who need them, and taking on a contingent liability in the process. All you’d need is a single credit card belonging to the church, which could then deal in its own way with any congregant who ran up that $1,000 charge.

The Capital Bikeshare scheme has been built in a very cautious manner, carefully constructed so that everybody with a membership needs to have a credit card associated with that membership. That in turn allows Capital Bikeshare to be sure that it can collect $1,000 every time a member loses their bike for whatever reason. This system was set up ex ante, with no indication of how often such a fine would turn out to be necessary — and it has essentially excluded the unbanked from Bikeshare.

I would much have preferred to see an optimistic scheme at first, with the restrictions coming in later if the cost of lost or stolen bikes turned out to be substantial. But even now it’s possible to imagine ways around these problems, if some well-intentioned group has faith in its members and in the Bikeshare scheme. The Bank on DC promotion, however, is not such a way.

*Update: It seems that the website is wrong about this: you can use a debit card to pay for a 30-day or 1-year membership, and when you do so no hold is put on your account. On top of that, Bank on DC also has a scheme to help defray the $1,000 cost if your bike is lost or stolen. More details as I get them!

Update 2: Details, from Bikeshare:

  • You can pay for 30-day and annual membership with a debit card.
  • There is no hold on an individual’s account if they purchase a 30-day or annual membership with a debit card. The reason for this is that Bikeshare has contact information (name, address, etc.) when an individual signs up online for one of these types of memberships — but not for 24-hour or 3-day members.
  • If the bike is stolen and no police report is filed, Bikeshare would charge the debit card $1,000. If the individual who is responsible for the bike does not have $1,000 in their account, Bikeshare would charge the amount available in the account and work with the financial institution to ensure no subsequent charges can be made to the account until there is a full reimbursement for the cost of the bike.
  • Approximately 85 percent of annual members do not incur any usage fees when riding. The average usage fee the other 15 percent incur is between $6-$7 per individual per month.
COMMENT

Bikeing and banking are two things which should both be expanded due to their obvious social merit.

Biking reduces congestion and pollution, and boosts health.

Banking increases access to capital and is a much better system of facalitating commerce than cash, coins, pawn shops, payday lenders, or loan sharks.

The issue I have with the unbanked or underbanked is that without direct goverment intervention there is no business model underwhich they can be profitably served by a bank.

All current evidence asside, banking is an inherantly profitable business. My community savings bank would not be much worse off if we were forced to open free debit card accounts or e-statement savings accounts for anyone who applied. Like all banks we depend on the implicit subsidy of FDIC insurance. Opening a few thousand unprofitable accounts seems like a fair tradeoff for that ongoing privelage.

Posted by y2kurtus | Report as abusive

Did wifi cause a rise in bus ridership?

Felix Salmon
Dec 26, 2011 16:49 UTC

bus1.tiff

What’s behind the rise in bus travel in recent years? It certainly seems very impressive, according to the latest research from DePaul University.

Here’s how Bloomberg’s Jeff Plungis characterizes it:

Megabus.com and BoltBus led U.S. curbside bus companies that boosted trips by 32 percent this year as travelers opted to leave their cars behind and surf the Internet while traveling.

And here’s Matt Yglesias, with a slightly different take:

Like Duncan Black, I’m far from certain that the right way to understand this is actually as intercity bus trips substituting for intercity car rides. The way I would primarily interpret it is as these services leading to additional trips that wouldn’t otherwise have been taken. Instead of riding Amtrak to New York once a year, you ride the bus three times instead.

If you look at the data, Yglesias seems closer to the mark than Plungis. Could the massive 30% rise in curbside bus ridership be accounted for by the 1% fall in private autos? Possibly. But it’s more likely that something else is going on.

bus2.tiff

Both Plungis and Yglesias, I think, miss the elephant in the room, and the obvious reason why the DePaul measurements for bus ridership have been growing at such a startling rate. Here’s how the paper puts it:

The analysis we provide also excludes all “Chinatown operators,” which have significant different qualities than mainstream operators. As a general rule, those carriers listed on the GotoBus.com web site are considered for purposes of our study to be Chinatown operators. Many of these carriers do not invest in a brand identifiable by the paint scheme or insignia on their buses.

Indeed, DePaul specifically excluded the dramatic growth of California’s USAsia Bus Lines, just because they determined that it counted as a Chinatown operator.

The obvious theory, then, is that big operators like Megabus and Bolt Bus saw the huge success of the Chintaown bus market and saw an opportunity there. They brought in branding and professional marketing and wifi and much higher safety standards, and succeeded in taking a huge amount of market share from the Chinatown operators who were never part of the DePaul survey in the first place.

That theory is borne out by my own anecdotal experience: when my friends took the bus from New York to DC or Boston ten years ago, it was normally a Chinatown bus. Today, it’s more likely to be a Bolt Bus, or even a higher-end product like the Limoliner.

In other words, the DePaul data is consistent with total bus ridership actually staying constant, with the recognized curbside buses simply taking ridership share from unrecognized Chinatown operators. In reality, I suspect that bus ridership is growing. Just not nearly as fast as the DePaul paper would have you believe.

As for the much-vaunted wifi on these buses, it’s basically the same as the wifi on Amtrak, or from Gogo in-flight: in a word, crap. If you’re working on a laptop and can download emails or web pages in the background while reading or writing something else, then it’s fine. But it’s pretty much useless for people on iPads, where the lack of multitasking means you can’t read one thing and download something else at the same time.

It seems to me that the travel industry in general has done a very bad job of adjusting to the fact that most wifi-enabled devices these days are not laptops. I even stayed at one pretty high-end hotel in England, recently, which thought that providing an ethernet cable was a perfectly good alternative to providing wifi, and which didn’t have any kind of Airport Express devices or similar that it could lend out to guests who didn’t have ethernet ports on their computers or tablets.

So far, no one’s really cracked the problem of the mobile web — we’re still in a world where connecting to the internet when on the move is far too difficult, and needs to be configured (and often paid for) on a device-by-device basis. Companies like Lightsquared want to change that, but for the time being they’re vaporware, and I’m not holding my breath for them to arrive. Which means that for the time being it’s a bit of a stretch to say — as Plungis, for one, does — that the mobile web is actually changing the way we travel from city to city.

COMMENT

Your title is misleading: it’s not the wifi, it’s the new fish jumping into the chinatown bus pond. 10 years ago, Chinatown buses were awesome deals compared to greyhound, but lots of people either didn’t know about them or were culturally uncomfortable with buses that seemed to be for a particular demographic (chinese people or poor people). Now greyhound’s fares are much reduced and the new buses offer cultural acceptability. Wifi is window dressing.

Posted by colburn | Report as abusive

Market failure of the day, Connecticut commuter department

Felix Salmon
Oct 25, 2011 04:40 UTC

Shelly Banjo’s article about the multi-year waiting lists for parking spots at Connecticut train stations is going somewhat viral, for good reason:

The waiting list for a Fairfield Parking Authority permit has 4,200 people and stretches past six years…

“It’s like season tickets to the Giants—even when you’re dead they get passed down to your children,” said Jim Cameron, head of the Connecticut Rail Commuter Council…

Connecticut’s parking crunch is, in large part, a problem of supply and demand: More than 60,000 commuters head toward Manhattan on Metro-North’s New Haven train line on weekdays, but transportation officials say stations have public parking for nearly 20,000…

John Eck, a former television executive from Fairfield, kept his permit after he left his job last spring—”just in case” he needed to start commuting again.

“You hear horror stories of people missing the renewal deadline and losing the permit in other towns,” Mr. Eck said. “I wouldn’t give it up for anything.”

Eugene Colonese, the transportation department’s rail administrator, said the task force “came to a certain point and well, stopped its work for a little while.”

He said the department is still “looking for the best way to get commuters to stations, a balance we think will be between building more transit-oriented development, looking at shuttles and other public transportation, as well as parking improvements.”

The parking lot at Fairfield train station is big enough for 1,053 cars; the station sees 2,942 people, on average, ride in to NYC, and the waiting list now has 4,278 names on it. These are all big numbers. The price for a spot, however, is low: just $340 per year. Obviously, that’s well below market, and causing all manner of problems. But there’s another number that’s lower still:

We recently spoke to Director of the Fairfield Parking Authority, Cynthia Placko…

Placko told us there isn’t room for many more than the 24 bike lockers that are already there, and those are totally filled.

My guess is that it really isn’t all that hard to take the space given over to 1,053 parking spots and use it effectively to house transportation for 2,942 people. Unless, that is, those people are all taking up the space of some enormous SUV.

In a place like Fairfield, it’s hard to raise the price of parking so much that you start to incentivize car-sharing directly. So here’s my proposal: rip out a bunch of car spaces, and replace them with covered, secure parking for bicycles and scooters. Maybe motorbikes, too. Surely that’s an obviously better way of getting commuters to stations than giving them each a couple of hundred square feet of massively underpriced prime Connecticut real estate, and then acting shocked when they flock to the opportunity.

Update: Fairfield could even buy back parking slots for more than they were sold for, and convert them to two-wheeled parking. Continue to do that until there’s one empty two-wheeled parking space. And then auction off the rest to the highest bidders.

COMMENT

A parking garage is about $4M to build. That’s only $1k per person in the queue.

Posted by mattmc | Report as abusive

Bag-check datapoint of the day, AA edition

Felix Salmon
Oct 17, 2011 20:48 UTC

In March 2010, I had the bright idea — stolen shamelessly from Eric Joiner — that airlines might charge a negative bag-check fee.

A lot of people, of course, simply hate the idea of risking their bags being lost, and/or of milling around at a baggage carousel waiting for their bags to arrive. But many others would love the idea of getting paid, in dollars or in frequent-flyer miles, for checking their bags…

Passengers would get on and off planes more quickly, the airlines would make more money, and everybody would be happier.

My commenters were unimpressed. Wouldn’t this just encourage people to pack more and therefore add more weight to the plane? Wouldn’t it even — at the margin — encourage people to check empty cardboard boxes, and not even bother picking them up at the other end?

But lo — look what American Airlines has just announced!

Through November 22, 2011, American Airlines will offer AAdvantage® elite status members the opportunity to earn a minimum of 500 AAdvantage bonus miles for checking bags on flights departing Boston Logan International Airport (BOS).

Earning the bonus miles is easy – simply visit a BOS Self-Service Check-In machine on the day of your departure and follow the normal steps to check-in with bags. Check at least one bag under your own name to earn the bonus miles, which will automatically post to your AAdvantage account five business days after you have completed the travel associated with your itinerary. As a reminder, all AAdvantage elite status members are entitled to check two bags free of charge (within current size and weight limits) in addition to earning the bonus miles with this special offer.

By confining the offer to elite status members — you need to be gold or platinum — AA has presumably minimized the number of people who will try to check empty cardboard boxes, or pack more than they need. But this does seem to confirm that AA has begun to realize that its current incentives are misaligned: it’s got far too many business travelers wheeling on luggage which is carefully designed to go right up to the limit of the carry-on rules. As a result, it takes far too much time to get people on and off planes, whose luggage bins are permanently overstuffed. And flyers unhappily schlep heavy bags all over airports across the country.

I have no idea whether AA’s experiment will catch on — for the time being it’s only at one airport, and it’s only lasting a few weeks. And AA is in pretty desperate straits right now — it’s probably willing to try things it wouldn’t normally consider. But this is a big conceptual leap from AA’s current policy of charging extra for checked bags and therefore giving people an incentive not to check. If it’s a success, dare we hope that those bag-check fees might start going away?

(via the indispensable Joe Brancatelli)

COMMENT

Just get an AA credit card or lite status with oneworld to offset bag charges. Really easy! Torsten @ http://www.mightytravels.com

Posted by MightyTravels | Report as abusive

New Jersey’s stupid parking-privatization plan

Felix Salmon
Dec 13, 2010 01:48 UTC

In cases like that of the Chicago parking meters, I have a certain amount of sympathy for the privatization argument. But New Jersey Transit parking spaces aren’t Chicago parking meters, and so I’m entirely in agreement with Yonah Freemark that privatizing NJ Transit’s parking lots is a very bad idea.

Frankly, all you need to know about the plan in order to hate it is its name — it’s called the System Parking Amenity and Capacity Enhancement Strategy. But there are three more substantive reasons to dislike it.

Firstly, press coverage of the scheme has revealed nothing about the state’s willingness to cap or guide the amount charged for parking in these lots. Indeed, the official RFQ states that “it is currently contemplated that this transaction will include an opportunity to adjust parking rates in accordance with market demand” — and the stated aim of the privatization is to raise as much money as possible. As a result, the successful bidder is likely to give themselves a lot of freedom to hike parking rates in the future.

The problem is that right now no one knows what the revenue-maximizing market rates might be. If New Jersey thinks that a revenue-maximizing strategy is the way to go, it should try to implement such a strategy itself first, just to get an idea of how much revenue it could generate that way. Otherwise, there’s a serious risk that it will sell of the lots for a fraction of their actual worth.

Secondly, the plan comes on the heels of the price of rail tickets being hiked by 25% in May. If the cost of traveling by train and the price of parking at train stations both rise substantially, it’s pretty obvious what’s going to happen to the number of people taking mass transit as opposed to simply driving to their final destination. While the headline revenues from the privatization contract might look attractive, no one seems to be thinking about the hidden costs to both the state and its citizens in terms of extra congestion.

New Jersey Future’s Jay Corbalis makes this point another way, saying that privatizing NJ Transit’s parking lots only makes sense in the context of broader congestion pricing, where the cost of the driving-only alternative rises commensurately:

“By privatizing parking facilities, this proposal will have the effect of further raising costs for many NJ Transit riders,” Corbalis said. “If New Jersey wants to move toward a user fee-based system to pay for transportation, it should apply the same approach to roads and bridges as it does for mass transit.”

Finally, there’s the likelihood that the best and highest value for all that land currently being given over to parking spaces is probably not parking at all. Instead, it’s new residential and commercial development, centered on the transit services already there. (See San Francisco for an example of this in work.) The term of art for this is transit-oriented development, or TOD, and the RFQ is well aware of it:

Many of NJ TRANSIT’s parking facilities are key properties that have the potential for TOD and certain Concession Assets are currently under active consideration for TOD. Consequently, Prospective Proposers are advised that NJ TRANSIT is strongly interested in ensuring that TOD opportunities are not negatively impacted by the award of this Concession. To that end, Prospective Proposers will be encouraged in the RFP stage to submit TOD proposals as an option in their responses…

The selection of a Concessionaire will be based entirely on the proposals for the Concession Assets submitted pursuant to the RFP; however if the selected Concessionaire has submitted a TOD proposal that is deemed advantageous to NJ TRANSIT, NJ TRANSIT may, but shall not be obligated to, negotiate an independent and exclusive development agreement with the Concessionaire.

If NJ Transit will pick the winning bidder entirely on the basis of what they want to do in terms of parking, then it’s almost certainly not going to pick someone who’s ideally qualified to build new development on those parking spaces. More to the point, if NJ Transit does not negotiate an independent development agreement with the concessionaire, then the chances are that the land will simply remain a parking lot for decades to come, since the concessionaire at that point has the right and indeed the obligation to continue to run that land in exactly that manner. While it’s possible that NJ Transit might be able to team up with a third-party developer to buy out the concessionaire’s parking rights, that’s a very expensive and complicated way of doing things.

Writes Stephen Smith:

Rather than taking on entrenched suburban interests, we’re just adding another layer of government dependents, this time of the monied corporate variety (bidders include KKR, Morgan Stanley, Carlyle, and JP Morgan). The land on which transit parking lots sit is uniquely positioned to be converted into dense development, and the only thing worse than sitting on the land would be for the agencies to sign away their rights to change that within the foreseeable future.

None of this is particularly surprising, coming from the government of tunnel-killer Chris Christie. But it’s very depressing, all the same.

COMMENT

can someone tell me how to get the little avatars to appear in my comments section? thanks!

Posted by register124 | Report as abusive
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