Saving Detroit's Public Transit By Privatizing It
When a city's transit agency gets into funding trouble, it's easy to call on the private sector to whip things into cost-efficient shape. Of course, actually running a private urban transit company — rather, running a successful one — is a lot tougher than it may seem.
While the private sector can cut transit costs on the order of 5 to 19 percent, the result is usually "less service and higher fares than socially optimal," transit scholar Todd Litman wrote early last year [PDF]. A recent case in point: a few weeks ago, just months after taking over the Long Island Bus from New York City's transit authority, the private company Veolia announced $7.2 million in service cuts.
That's not to say a private transit program is never worth the effort, and if there were ever a time and place for a bold attempt at transit reform, it's right now in Detroit.
The city's badly strapped bus system recently halted late-night service (between 1 and 4 a.m.) and even cut off some routes at 8 p.m. Those buses that do run rarely show up on schedule, and 20 to 50 percent never show at all, according to a recent report. In one horror story, riders waited three hours for a bus to arrive, only to find it too packed to board. Detroit riders, understandably, are furious.
Earlier this year Andy Didorosi, a young entrepreneur and lifetime Detroiter, decided he'd heard enough. In January he bought three buses and began to organize the Detroit Bus Company — a private transit operation he hopes can pick up where the city's bus system has left off. The company is completing its regulatory papers now and expects to start service in late April.
"The whole thing was born out of listening to all these solutions we had for Detroit's transit woes come and go," says the 25-year-old Didorosi. "You hear about these over and over and over again and your thought is: why doesn't someone just give it a shot?
The Detroit Bus Company is starting deliberately small. Its launch line will be a circulator route that loops through the neighborhoods of Corktown, Woodbridge, Midtown, Eastern Market, Greektown, via the downtown core. Didorosi plans to run the route with just a single bus at first and a limited schedule that reclaims many hours cut by the city: weeknights (6 p.m. to 3 a.m.) and all-day weekends.
A day's worth of access to the Detroit Bus Company circulator will cost riders about five dollars. In addition to cash the bus will accept credit cards on board — "the hardest part of getting on the bus is having $2 to get on the bus," says Didorosi — and the company will also offer monthly rider rates. The buses will be equipped with WiFi, he says, and riders will be able to track arrivals in real-time on any smartphone platform, so as not to find themselves waiting, say, for three hours.
Unless the other two buses are needed to support the circulator, Didorosi hopes to run them on two additional routes in time. One would be a spoke off the circulator, likely replacing some of the corridors cut by the city. Another could make a run to Detroit's metropolitan airport for about ten dollars — roughly the same cost as a single day's parking rate, and a fraction of a taxi fare from downtown.
The $5 circulator price is considerably costlier than rides on the city's DDOT buses ($1.50 one way) or the suburban-bound SMART buses ($2 one way). Didorosi stresses that the exact fare hasn't been finalized, but whatever it ends up being, rider won't pay a penny more than necessary to operate the system at cost, he says.
To supplement the transit routes, which Didorosi expects to drain money, the buses will also be used to run tours of downtown Detroit on their idle time. Didorosi has no illusions that the company will "turn me into an overnight billionaire." On the contrary, he says, the whole thing is simply a break-even "experiment in transit innovation."
"If people can't get anywhere, the city doesn't work," Didorosi says. "As Detroiters we're just frustrated as hell. This is my small effort to put something back together. Maybe we'll bring some innovation to the market and move forward as a city."