VTA on-demand service pilot torn between goals of ridership, revenue

VTA has started to test an on-demand pilot program to help people connect from the VTA Tasman Light Rail to the spread-out office buildings station in North San Jose and Santa Clara.  Riders will order the shuttle and identify their destination using a smartphone app, and be able to pay with the smartphone (the service doesn’t yet take Clipper, the Bay Area’s transit payment card, and isn’t covered by the employer bulk-discount EcoPass program. The software will design a custom route which takes multiple riders to their destinations, advertised as “without impacting travel times.”

In other Bay Area “job sprawl” locations, last-mile shuttles are essential to transit ridership.  Stanford’s Marguerite shuttles help the university achieve about a 25% Caltrain ridership rate. But unlike the last-mile-shuttles that connect workers from BART and Caltrain to offices for no additional charge, the VTA FLEX service costs an extra $2 (off-peak) or $3 (peak-hours), for a total one-way fare of $4 or $5 per trip.  The pricing model for the pilot suggests a tension between VTA’s goals of expanding transit ridership and increasing the amount of revenue it gets from riders.

Given the long walks from Tasman light rail, across busy streets and through parking lots to Tasman area workplaces, the service might make taking transit attractive to some commuters for the first time.  Will the extra charge, which puts the fare in the same range as a medium-distance BART or Caltrain trip, seem reasonable to riders, or seem off-putting, especially since worker parking in that area is fully subsidized?

VTA Flex shuttles

VTA Flex shuttles

With the pilot, VTA is testing several factors at the same time, especially 1) Will a convenient last-mile connection increase light rail ridership  2) How much will riders be willing to pay.

Because the service seems likely to appeal most to new transit users, VTA has an opportunity to market the service through the commute programs of major employers in the area.   Also, the service is available through an app, so the app itself is a marketing channel.  VTA’s presentation to advisory committees indicated that the agency would consider promotional pricing as a marketing tool. So VTA could could streamline its test by offering a commute programs and app users set of discount coupons, allowing riders to get their first 10 rides free – enough to get hooked on the service.

With “get-started” promotional pricing, VTA would be able to test whether the service will increase transit use, and then test whether riders will also be willing to pay.  Also, whether there are some users who are more price-sensitive, who would be candidates for low-income discounts.