Ridesharing: The Road Ahead
Priyank Bhatia

Abstract

Transportation in New York State is responsible for one-fourth of the state’s fossil
fuel use, and thirty percent of greenhouse gas emissions.[1] This paper advocates
ridesharing in New York State and accumulates its benefits, perspectives from
stakeholders, challenges ahead, recommendations and future research areas in the field of
ridesharing. The whitepaper presented here is the output of in-person interviews with
executives of ridesharing companies like Bandwagon and Uber, government
functionaries like NYSERDA (New York State Energy Research & Development
Authority), Large employers like American Express and Barclays, and supported by
extensive secondary research.

About NYSERDA

NYSERDA offers information and analysis, programs, technical expertise, and

funding aimed at helping New Yorkers increase energy efficiency, save money, use
renewable energy, and reduce their reliance on fossil fuels. NYSERDA collaborates with
businesses, industry, the federal government, academia, the environmental community,
public interest groups, and energy market participants to reduce energy consumption and
greenhouse gas emissions. [2]

About Department of Transportation New York

The New York State Department of Transportation (NYSDOT or DOT) is the

department of the government of New York City responsible for the management of
much of New York City's transportation infrastructure. The Department of
Transportation's responsibilities include day-to-day maintenance of the city's streets,
highways, bridges and sidewalks. [3]
1. Overview

In 2013, there were more than 180 million taxi trips taken in New York City that
began or ended in Manhattan, traveling inside 18,586 registered cabs. New Yorkers on
the Upper West Side took thousands of seemingly walkable, short taxi rides just a few
blocks up Broadway. Taken in the aggregate, all of these numbers raise an important
question "Are people from the same place going to the same destination at the same
time?"[4]

Nearly 80 percent of all New York City taxi trips could have been shared. This
kind of cab sharing does happen on a huge scale, as say, strangers walk off a plane
together or strike up a conversation at a cab stand. And ridesharing is now much more
common using private cars, through apps like Uber or Lyft. But what would happen if we
combined those two ideas, if we could optimize the entire taxi network in New York as if
it were a single, integrated, all-seeing system? [4]

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 Figure 1
If we assume that each trip carries one person (the data doesn't specify this), and
that two trips can reasonably be combined in the back seat of one cab, that means a
totally optimized taxi network in New York would produce 40 percent fewer trips, a
similar drop in emissions, and far less traffic. That's 40 percent of all those trips that
would just never need to be made. Those 40 percent savings are based on a lot of
assumptions, including the idea that 100 percent of taxi riders would be willing to share.
[5]
There are lot of psychological barriers in achieving this target. But in a city like New
York, if even 10 percent of cab riders were willing to participate in such a system, they
would still constitute a critical mass that could make a difference. This might not be true
in less populous, cab-dependent cities. But New York makes for a great illustration. In
order to achieve this, one needs to probably implement a central dispatching system,
which is operated by companies like Bandwagon. A consumer facing mobile app could
act a portal into the system. However in this theoretical system, cab driver would be able
to make much more money and it would still be cheaper for riders willing to share the
drive. If city is able to balance the interests of drivers and riders, there would be much
less traffic congestion and a reduction in carbon emissions. [5]

Bandwagon: Revolutionizing Ridesharing Concept

Bandwagon, a new ridesharing service launched at LaGuardia Airport, New York
in July (Figure2), fills idle capacity in taxis by getting passengers who have
complementary destinations into the same cab. Drivers make a better fare, passengers pay
less for the same distance they would travel alone, and the idea, if it catches on, will
likely amount to huge environmental advantages over time. Last week I had a chance to
ask David Mahfouda, CEO Bandwagon, a few questions about what inspired him to
launch Bandwagon, the challenges and surprises he has encountered during Bandwagon’s
initial phase. One of the excerpts from his interview was:

“Rather than create an entirely new taxi system, we could simply make the
existing system more efficient and more social.”

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 Figure2: HOP Lane at La Guardia Airport,New York
The service also provides an answer to questions of space and mobility, which are highly
intertwined in the New York.

“If we can make the car more social, my hope is that we can make our
public spaces and cities more social as well.”

Using Bandwagon to leave the airport, you would first need to get into a taxi line
called the HOP lane, or high-occupancy passenger lane, which gives priority to people
who are willing to reduce wait times for everyone else by sharing their ride. If you didn’t
already have the Bandwagon app, you would download it and register your destination
address, or, if you didn’t have a smartphone, you would give your destination address to
the line manager. There is a board near the HOP lane where passengers can see every
destination registered in the Bandwagon system. When the manager/mobile app finds you
a match—someone with a complementary destination—name will appear next to the
other passenger’s name on the board. At that point you would move to the front of the
line where one would meet the other passenger and get into a taxi together. Right now
faring is very informal—you split the fare as you would with a friend, the first passenger
paying cash to the passenger who closes the tab with credit—but the Bandwagon Team
working with the TLC (Taxi and Limousine Commission) New York to formalize the

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faring process. That way each passenger will be able to pay the driver directly for his or
her portion of the ride. This improvement will be great for taxi drivers too, because the
individual fares will be slightly higher than half.

“We think the drivers should be rewarded for reducing wait times for
passengers and doing something good for the city and environment.”

The more important and forward-thinking question to bandwagon team is about

how to use existing physical resources and systems more effectively. In order to do that
on the road, you need to use vehicles at capacity. Bandwagon is working with the
industry to put multiple passengers in legal taxi and car services. It not only brings the
price of these services down, but also increases the availability of these services. Plus, it’s
better for the environment. Instead of putting additional taxi drivers on the road, it is
allowing existing resources to be more effective at serving the city.[6]

“With Bandwagon we’re opening up the market to more people, and, in

doing so, we’re making the system more efficient. We’ve made a conscious
effort to bring all the parties together around this new practice because we
think it will be beneficial for everybody.”

Bandwagon has just put together a proposal for NYSERDA about what the implications
would be for fuel and carbon emissions over the next ten years, and the savings are really
significant. During that time, HOP lanes would decrease the number of taxis arriving,
leaving, and waiting at LaGuardia, and savings would include:

• 81,400,000 vehicle miles

• 35,800 metric tons of greenhouse gas emissions
• 4,000,000 gallons of gasoline
• $199,000,000 in passenger costs
• $99,500,000 additional fare for drivers
• 229,000 hours of passengers’ time
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Priyank  Bhatia    
2.The ‘Rideshare Challenge’ from Multiple Perspectives

Figure 3

The ‘Rideshare Challenge’ from Stakeholder Perspectives

A variety of challenges hampering greater rideshare participation have been

identified. This section will present the ‘rideshare challenge’ from variety of
perspectives.

2.1 Ridesharing’s Economic Barriers

The economic challenges associated with ridesharing can be broken into two
distinct categories; the economic barriers associated with ridesharing specifically, and the
favorable economics of single-occupant, private vehicle travel. The poor economics of
ridesharing will be discussed first.

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2.1.1Economic Distortions Discourage Participation: Although perhaps better
characterized as the ‘favorable economics of all other modes’, subsidies for employer-
paid parking, transit, vanpooling and most recently cycling has created a distinct
disincentive to share rides. While the federal government and Department Of
Transportation has largely been responsible for creating these economic distortions and
has shown no interest in eliminating them, many employers and employees benefit from
the subsidies, making them even more difficult to eliminate.[7] If employees were forced
to pay full-cost for their parking or transit, those expenses would be paid using after-tax
dollars, thereby reducing disposable income. Given that these economic distortions are
not likely to be eliminated, similar tax treatment for those that choose to carpool would
begin to increase the desirability of ridesharing.

2.1.2 Lack Of Information: Ridesharing lacks variety of information. At the most basic
level, drivers and passengers willing to share rides may not have any way of identifying
one and other. This challenge has been largely addressed through the development of
increasingly sophisticated ride matching systems. Even if drivers and passengers can be
successfully matched, little is known about each individual. Some of the questions that
remain unanswered using the sophisticated technology: What is the driver’s driving
history? Do either the driver or passenger have a criminal record? These information gaps
can be important in determining ones likelihood of sharing a ride. The lack of
information challenge is closely associated with some of the behavioral rideshare
challenges outlined further.

2.2 The Rideshare Challenge –Single Occupancy Vehicle Travel Economics

While ridesharing suffers from various economic barriers, single occupant,

private vehicle ownership and vehicle use continues to capitalize on rather favorable
economics.

2.2.1 Decreasing Costs of Vehicle Buying: The average cost of vehicle ownership has
followed a downward trend historically. The Comerica Auto Affordability Index, Figure
4 below, measures the number of weeks of family income needed to purchase a new

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vehicle. While the index has been as high as 30 weeks of family income in 1995, it has
since decreased to an all-time low of less than 22 weeks of income in 2009 (Figure 3).
This chart is only concerned with the average purchase price of new vehicles; it does not
include variable costs such as gasoline or insurance, and it does not include the costs of
buying a lower-priced, used vehicle instead of a new one. However, it highlights the
increasing ease of auto ownership. [8]

Figure 4: Comerica Bank Auto Affordability Index, 2009

Source: Comerica Bank, 2009

2.3 The Rideshare Challenge – Social / Behavioral

The rideshare challenge can also be characterized as a set of social & behavioral
obstacles to be overcome.

2.3.1 “Stranger Danger”: Surveys have suggested that as little as 3% to 10% of shared
rides occur between unknown passengers, with the rest occurring between family
members, co-workers and neighbors. These statistics clearly reflect the phenomenon of

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“Stranger Danger”, whereby drivers and passengers show little interest in sharing rides
with strangers because of personal safety concerns.[9]

2.3.2 Reliability of Service :One of the largest behavioral challenges to be overcome is

the perception of low reliability in rideshare arrangements. In a typical rideshare
arrangement, passengers agree to share rides with a single driver for a period of time, in
many cases several months. The driver and passenger agree to a schedule and make small
modifications as needed. However, if the driver has an unexpected appointment or
emergency, the passenger may be left with no rideshare options for the return journey, a
situation that is unacceptable to many passengers.

2.3.3 Schedule Inflexibility: The lack of schedule flexibility has been one of the existing
challenges in ridesharing. For rideshare arrangements to last for a reasonable period of
time, drivers and passengers often agree to a relatively fixed schedule including arrival
and departure times, agreed upon meeting locations and driving responsibilities. This
type of arrangement does not allow for much flexibility.

2.3.4 Lasting Change In Behavior: While rideshare services may initially generate
strong interest through promotional activities or as a result of external factors such as
high gasoline prices, travelers tend to return to previous modes of travel over time unless
they perceive strong value in their ‘new’ travel option. The approach to encouraging
lasting behavior change should be to keep rideshare options salient in the minds of
commuters and offer benefits that are perceived as having long-term value by
participants.[9]

2.4 The Rideshare Challenge – Institutional Roles

The majority of the institutional challenges can be broken down to a question of

what are appropriate roles for the private and public sectors in encouraging ridesharing,
and which stakeholders are in the best position to capture value and share it with
rideshare participants.

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2.4.1 Insufficient Institutional Collaboration: Private firms that specialize in the
development of rideshare matching software and travel management solutions have a key
role in reducing costs and providing better information for travelers. Large employers
often have the ability to influence passenger behavior through the modification of parking
prices or by providing benefits for those that choose commuting alternatives. City
agencies like NYSDOT and TLC have a critical role in creating incentives for
ridesharing, and developing effective policies to support ridesharing, such as
modifications to taxi regulations. [10] The challenge lies in encouraging each of these
stakeholder groups to collaborate with one and other and take action in those areas in
which they have an advantage. Given conflicting goals, resources, power and perceived
public mandate it can be difficult for all of these institutional stakeholders to reach a
consensus on their respective roles.

2.4.2 Business Model / Revenue Model: Generally, ridesharing providers use three
general approaches to revenue generation; offering matching services free of charge
while relying on advertisement/marketing revenue, capturing a percentage of transaction
value as it is transferred between passengers and drivers, and the development of
rideshare services for public agencies. The revenue models that attempt to charge either
drivers or passengers are likely to discourage participation. [11]

2.5 The Rideshare Challenge – Technological:

The substantial advances that have been made in Technology have not translated
into increases in participation. It is becoming increasingly clear that technological
advances must be paired with solutions that address the previously described challenges
if rideshare participation is expected to increase.

2.5.1 Measurement of Rideshare Trips :If participants are to be rewarded for taking a
rideshare trip, or if city agencies and employers are attempting to determine the
effectiveness of their ridesharing initiatives, there must be a method of measuring
successful rideshare trips.

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2.5.2 Establishing a Common Rideshare Data Specification: A large technological
challenge to be addressed is the creation of a common data platform for storing rideshare
information. It is a preliminary step towards integrated, multi- travel information and the
formation of rideshare trips from multiple databases. The development of a common data
platform for ridesharing will enable the data stream from multiple databases. Currently,
many rideshare matching services seek to attract as many passengers as possible to
increase the probability of matching up a driver and passenger. However, most services
can only search for matches within their own system. With a common data specification,
multiple provider databases could be searched simultaneously potentially leading to
higher overall number of matches and successful rideshare trips. Also this will lead to
create a more authentic rating system for both passengers and drivers.

3. Expansion To Developing Nations

The rise of the ridesharing is highly dependent upon access to these necessary
technologies, which many people in the developing world lack. Earlier this year, Pew
Global Attributes Research published findings on the use of cellphones and the Internet
in emerging nations.[12] According to this report, in every nation surveyed, smartphones
remain a minority of cell phones used. These minorities are significant in a number of
countries such as China and Lebanon, where 37 percent and 45 percent of people owned
smartphones respectively. (Figure 5) [13]

Figure 5
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 In developing countries one can find a lack a government that functions well
enough to provide an effective regulatory regime. Additionally, unreliable governance
can make it even harder to attract the investment required to build global companies with
significant capital. But a decentralized, crowd-based ratings system doesn’t require lots
of investment. It doesn’t require effective regulatory bodies and governance. It lowers the
capital and regulatory bar for the existence of an effective services industry.[14] In a
country with a corrupt government, what is better having a cab driver with good reviews
or one with a bureaucratically issued license?
For example, recently India's home ministry has ordered all states to ban web-
based taxi firms after a driver for the Uber service was accused of raping a passenger in
the capital Delhi. [15] If Uber had properly done its homework before expanding into
India, it would know that Indian transportation systems have long been dangerous places
for women. (Figure 6)

Figure 6:Protest Over Uber Rape Incident in Delhi, India

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4.Recommendations

The evaluation of past and present rideshare initiatives has brought a number of
approaches to increasing rideshare participation. Recommendations for individual
stakeholder groups are outlined in this section.

4.1 Focus on Large Employers

Large employers should be the primary focus of rideshare initiatives. They have a
much stronger ability to encourage alternative travel behavior among their employees,
largely due to the variety of incentives and disincentives at their disposal. A modification
in parking pricing tends to be the strongest disincentive to drive alone, and incentives
such as reduced pricing for rideshare parking, preferential rideshare parking, pre-tax
transit benefits and cash awards all help encourage shared vehicle use. This allows for
much more detailed travel recommendations.[16] Recently, Barclays, which has 4500
employees in New York, has tied up with Bandwagon to provide ridesharing service to
its employees and also offering incentives for not using their personal vehicles.

4.2 Individual Motivations and Personalized Marketing

Some travellers may be willing to share rides, but simply do not know where to
find appropriate match. Others may be willing to share rides if the incentives to do so are
sufficient enough. Some subset of travelers is very likely to never share a ride because of
personal preferences. Understanding these individual motivations can be time consuming
and often requires large amounts of personal data, leading to privacy concerns. However
the benefits can be substantial. Personalized marketing and travel planning that responds
to individual motivations is more likely to result in changes in travel behavior. [17]

4.3 Recommendations for Large Employers

Large employers considering improved ridesharing options for their organizations

should consider a number of important points when choosing a given strategy.
Information like employee travel behavior is relatively easy to gather and low cost in
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Priyank  Bhatia    
most cases, although privacy concerns will need to be considered.[16] Travel surveys
allow for a much greater understanding of personal travel decisions and may allow for
much more customized incentive for passengers. The resources that would have gone to
more general marketing and promotion can be focused on those who are most likely to
change their behavior, which is also known as target marketing. Performance
measurement is a key feature that should be included in all rideshare initiatives. The
measurement of shared rides, commuter incentive preferences and long-term changes in
travel behavior are all important metrics.

4.4 Recommendations for Private Providers

Private providers like Bandwagon and Uber-Pool will continue to have a strong
role to play in the provision of rideshare software and matching technologies. While
various business models have been attempted in the past, the targeting of large employers
and regional/statewide public sector agencies appears to have the greatest lasting
potential from a revenue generation perspective, and from a rideshare participation
perspective. [16]The use of rideshare services on smart phones allows for the provision of
real-time information on alternative travel options such as tracking of rideshare trips and
the incorporation of safety features.

4.5 Recommendations for Public Sector Providers

The public sector has various important roles to play in the success of ridesharing.
While the provision of regional or statewide ride matching services is one potential role
for the public sector, this is certainly not the most critical. Public sectors like Department
Of Transportation NYC and NYSERDA have a strong role to play in encouraging large
employers to promote commuting alternatives to their employees. For example,
Washington State’s Commute Trip Reduction ordinance, which requires large employers
to reduce vehicle trips. [18] The provision of technical assistance to large employers in the
development of ridesharing (or ‘commuting alternative’) initiatives and the funding of
comprehensive demonstration projects would appear to be suitable roles for the public
sector.

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4.6 Focus On Senior Citizens

Real-time ridesharing experience is quickly becoming an expectation of

transportation system. But while the target audience of Bandwagon, Uber-Pool, Lyft,
Sidecar, and other transportation network companies have been young people, these
services could expand transportation options far more in the opposite market: seniors
living in suburban and rural communities who are no longer able to drive. Recent report
on New York’s Transportation, "Aging in Place: Stuck Without Options," shows that as
people grow old to drive safely, alternative means of transportation options are often hard
to find.[19] Based on recent surveys, 88 percent of older adults continue to drive at age 65,
but that percentage drops to 69 percent by age 75. This means that by age 75, 31 percent
of seniors must seek alternative ways to get around.

Senior citizen transportation in non-urban environments may be limited to

volunteer driver programs, social services vans, or family members taking time off of
work. Even if community offers these choices, they may fail to provide the
responsiveness, flexibility, and independence desired by a retiring Baby Boomer
generation. Senior transportation programs can be costly to operate, subsidized shuttle or
van services can cost $60-$80 per hour to operate. Peer-to-Peer ride services offer seniors
real-time mobility, in addition to giving qualified community members an opportunity to
provide a public service for seniors where very few or no transportation options exist.
The technology platform that has enabled Bandwagon and Uber-Pool has allowed drivers
to go online at any given time using their phones and accept requests for pickups. This
system is more efficient than most similar volunteer driver or senior shuttle programs,
which may rely on complicated ride scheduling systems. Using this platform, sharing ride
services offer an interesting opportunity to fill a niche where existing senior
transportation options are limited.

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Priyank  Bhatia    
5. Future Research

There remain a number of rideshare-related discussion areas that are suitable for
further research. It is worth emphasizing that many of these future research topics can be
explored through properly designed and managed rideshare demonstration projects.

5.1 Behavioral Links between Ridesharing, Transit & SOV Travel

Research into the relationship between modes of travel may be worthwhile.

Behavioral research into how travelers choose and mentally rank their travel preferences
would be helpful in changing travel behavior or personalized marketing.

5.2 Household Use of Automobiles

Many of the potential benefits from ridesharing (including cost savings, reduced
fuel use and reduced emissions) assume that the passenger’s vehicle is not used during
the day. There is some indication from past research that rideshare passengers share rides
specifically so that other household members may use their vehicle for other purposes.
The degree to which this occurs needs to be better understood. [20]

5.3 Behavioral Responses to Incentives & Determination of Incentive Effectiveness

While the provision of incentives for rideshare purposes is relatively widespread, and
while the variety of incentive types offered has been rather substantial, there does not
appear to be much recent research on the effectiveness of different types of incentives.
Additional research into the effectiveness of innovative incentive packages, and their
ability to encourage greater rideshare participation would also be worthwhile. [16]

6. Conclusion

The platforms provided by companies like Bandwagon will play a critical role in
averting a possible dystopian future for the ‘sharing economy’, one in which the safety
net created by modern capitalist societies over the last century is whittled away over time.
Yes, with great opportunity comes great responsibility, but that’s only part of the story.

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Forward-thinking platforms should realize that preserving and enhancing these
protections is also a path to longer-term profitability. They should welcome this new role.
It fulfills part of their destiny as the new economic institutions of the 21st century.

If ridesharing participation has to be increased, the focus of future efforts should

be on improving institutional collaboration with state agencies like NYSERDA and New
York City Department Of Transportation and the economics of ridesharing, while
incorporating the real advantages that new mobile technologies provide in a well
designed and focused ridesharing initiative.

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Priyank  Bhatia    
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