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Lyft's new carpooling service is the beginning of the end for public buses


The smartphone-based taxi alternative Lyft has been getting some buzz this week for Lyft Line, a service that lets you save on your fare by splitting it with other customers. The company's biggest competitor, Uber, is rushing out a carpooling service of its own called UberPool.

In the short run, these services will be a way for yuppies to pay a little less for their taxi rides. But they're also starting to blur of the line between taxis and buses. In the long run, that line is likely to disappear altogether, as all conventional buses are replaced by smaller and nimbler just-in-time transportation options.

Lyft Line is a cross between a bus and a taxi

Right now, taxis and buses couldn't be more different from each other. Buses are huge, cheap, and run on fixed routes and on a fixed schedule. Taxis are small, expensive, and will take you exactly where you need to go, when you need to go there.

Lyft Line and UberPool occupy a middle space between buses and taxis. They're cheaper than a taxi but more expensive than a bus. They get your to your destination faster than a bus will but not as quickly as a dedicated taxi.

Until recently, there weren't many services in this "in between" category. If you were going to the airport, you could get a shared-ride van. And some urban areas had dollar vans. But these were limited services in niche markets.

There were two reasons for this. In a pre-smartphone era, just-in-time ride-sharing was too cumbersome to appeal to a mass audience. In addition, many cities have regulations that give government agencies monopolies over mass transit services.

Services like Lyft Line and UberPool are attacking both issues. The matching software identifies customers who happen to be moving in the same direction at the same time, getting the efficiencies of shared transportation without the inconveniences of a fixed route schedule. Meanwhile, Lyft and Uber have become experts at navigating around regulatory restrictions that once limited access to the transportation market.

And these services will only get better as more people start using them. The more customers there are in a particular area, the easier it will be to match customers who are riding in the same direction at the same time. That will allow further price cuts, and it will also encourage drivers to get larger vehicles so they can offer rides to more customers at once. We'll start to see ride-sharing options that look less like large taxis than like small buses.

Self-driving cars plus ride-sharing will make buses obsolete

This kind of ride-sharing could bring down the cost a lot, but probably not enough to completely replace city buses. But that will change once these shared vehicles start driving themselves.

A big chunk of an Uber or Lyft fare goes to pay the wages of the driver. Take the driver out of the equation, and there's a lot more room for fare cuts. Indeed, the main reason buses are so large in the first place is to spread the cost of the driver across many passengers. Many buses drive around almost empty most of the day, but that's cheaper than having a bunch of smaller vehicles that each has its own driver.

If vehicles can drive themselves, then it would make more sense — both from a rider-convenience perspective and an energy-efficiency perspective — to replace each large bus with several smaller vans. And with sophisticated route-planning technology, these vans wouldn't need to travel on fixed routes. Instead, they could build "routes" on the fly by aggregating passengers who want to travel in the same direction around the same time.

There's always going to be a tradeoff between speed and cost. The more people who get picked up and dropped off, the more delays there will be. But smartphone-powered, self-driving vans should be able to offer significantly more convenient service than a bus at lower cost. The traditional, lumbering bus will seem as obsolete as the steering wheel itself.