Offsetting loss of public transit revenue due to ride-hailing services

By Logan Dredske

Chicago Mayor Rahm Emanuel is proposing an increase in the city’s fee charged to ride-hailing companies such as Uber and Lyft to offset the loss of revenue from public transit users who switched to ride-hailing services. Currently, the city charges Uber and Lyft 52 cents per ride-hailing trip. The proposal would raise the fee to 67 cents for 2018 and 72 cents for 2019.

The 15-cent increase in the fee will provide $16 million for the Chicago Transit Authority in the first year and $5 million more in the second year. This additional revenue, to be used specifically for mass transit, will add to the $59.6 million generated in 2016 as a result of the fee.

“Chicago will become the first city in the nation to institute a fee on the rideshare industry dedicated specifically to mass transit and mass transit improvements,” according to the mayor’s spokesman, Adam Collins. However, Chicago is not the only place to create such a fee; in 2016 Massachusetts began charging 20 cents per trip, with the funding going toward taxis, cities and towns, and a state transportation fund.

Emanuel claims that ride-hailing industries have drained $40 million from city and other local government funds, with most of the loss coming from fewer users contributing to parking garage fees, CTA fares, and rental car taxes. Research from University of California–Davis Institute of Transportation Studies found that ride-hailing services decreased public transit use by approximately 6 percent.

Interestingly, Uber and Lyft representatives did not oppose the increases in the fees. “We appreciate the mayor working to build a sustainable future for ridesharing drivers and passengers in Chicago and look forward to continued collaboration on providing safe, convenient and affordable transportation options for the city,” said Lyft spokesman Campbell Matthews. “At Uber we believe that the future of urban transportation will be a mix of public transit and ridesharing, and that by encouraging residents to use a variety of options, we can all ride together to build a better Chicago,” said Uber spokeswoman Molly Spaeth.

Logan Dredske is a Project Assistant at SSTI.