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Archives of Business Research – Vol. 9, No. 12
Publication Date: December 25, 2021
DOI:10.14738/abr.912.11462. Giglio, J. M., & Chieppo, C. J. D. (2021). Metro Transport Corporations: New Governance for Urban Mobility. Archives of Business
Research, 9(12). 238-249.
Services for Science and Education – United Kingdom
Metro Transport Corporations: New Governance for Urban
Mobility
Joseph M. Giglio, Ph.D.
Professor of Strategic Management
Suite 313, Hayden Hall, D’Amore-McKim School of Business
Northeastern University, 360 Huntington Avenue, Boston, MA 02115
Charles Chieppo, J. D.
Principal, Chieppo Strategies LLC, 74 High Street
Needham, MA 02494, Adjunct Professor, Suffolk University
College of Arts and Sciences
ABSTRACT
Urban mobility revolution is transforming and traditional transportation agencies
may be ill-equipped to oversee the changes. Even before the COVID-19 pandemic,
U.S. transit ridership was down as more people in metropolitan areas chose the
convenience of options like Uber and Lyft. The apparent durability of working from
home has exacerbated both fiscal and equity challenges for transit. Meanwhile,
vehicle travel is already ahead of pre-pandemic levels in 15 states. The combination
of reduced transit ridership and more cars threatens to worsen the challenges
posed by climate change. Consumers have demonstrated their preference for the
convenience new technologies provide. But the skills and capabilities of traditional
urban transit agencies do not foster innovation. We propose that urban mobility be
overseen by “Metro Transport Corporations,” public-private partnerships that
combine the accountability of government with the entrepreneurial and
technology-savvy influence of the private sector to address equity and
sustainability challenges while driving superior customer service.
Keywords: Governance; Future of transportation; Technology; Urban mobility; Public- private partnerships
INTRODUCTION
The United States is in the midst of an urban mobility revolution. Ridesharing has burst upon
the scene offering door-to-door service, often at an affordable price, and is attracting customers
who previously took public transportation. Reliable and affordable ridesharing service has
impacted transit, which has traditionally provided station-to-station service. This development
has caused transit ridership to decline, exacerbating already serious environmental and
congestion concerns.
The COVID-19 pandemic has made the situation even more challenging. Transit ridership
plummeted when much of the economy closed down last year. And while massive federal aid
headed off a short-term financial crisis for public transportation agencies, ridership is
rebounding slowly, with some projecting that it will be years before it returns to pre-pandemic
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Giglio, J. M., & Chieppo, C. J. D. (2021). Metro Transport Corporations: New Governance for Urban Mobility. Archives of Business Research, 9(12). 238-
249.
URL: http://dx.doi.org/10.14738/abr.912.11462
levels – if it ever does. In addition, working from home is looking like a far more durable trend
than previously thought, creating still more challenges for transit agencies.
These developments raise a host of equity issues. Poorer workers are far less likely to have the
option of working from home and also have fewer – if any – alternatives to public
transportation. Ridership data reveal clear stratification. Vehicle traffic is rebounding more
quickly than transit. Among public transportation modes, ridership on buses that serve a
greater percentage of low-income people has recovered the most, while commuter rail, which
tends to serve higher-income suburbanites more likely to be able to work from home, is only
attracting a fraction of its pre-pandemic customers.
Much has been written about this urban mobility transformation, but far less about its
oversight. This paper attempts to outline the changes we are likely to see – which are materially
different than what we expected pre-pandemic – and asks whether traditional transportation
governance structures are up to the challenge of governing the changing world of urban
mobility. We close by proposing a new approach to urban transportation governance for a new
era.
THE TRANSFORMATION OF URBAN MOBILITY
Transportation is the second highest average household expenditure (Bureau of Labor
Statistics, 2020), behind only housing [1]. But technology and changing lifestyles had begun to
alter work patterns even before the changes were accelerated by COVID-19. A rising number
of workers were either self-employed or worked as independent contractors. Some were
independent contractors because they weren’t able to find jobs with benefits, while others, such
as parents of small children, chose that route because of the flexibility it offers.
Technology makes working from home feasible for more people. Needless to say, those who
work from home don’t commute. And those who don’t have the traditional nine-to-five work
day commute differently.
Transit
The pre-pandemic urban transportation landscape was rocked by the rise of ride hailing
companies like Uber and Lyft, and dockless micro-mobility options. Between 2012 and 2018,
the number of ride-hailing trips rose 241% in nine major U.S. cities [2] (Chase 2018).
i
Changes in the nature of work and competition from transportation network companies (TNCs)
like Uber and Lyft contributed to declines in public transportation ridership, particularly on
buses and in mid-sized cities. According to the American Public Transit Association, U.S. transit
ridership fell by 2.9% in 2017 [3] (APTA 2018).
Even in transit-dependent New York City, subway ridership was down by around 2% in 2017
compared to 2015 [4] (Metropolitan Transportation Authority, 2020). The drop was sharper
in the outer boroughs, with the number of subway trips falling by 8.2% in the Bronx and 6.6%
in Brooklyn from 2017 to 2018 alone [4] (Metropolitan Transportation Authority 2020).
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That was nothing compared to the degree to which the pandemic decimated transit ridership.
Figure 1 below shows that ridership on seven major transit systems fell from more than 60%
to over 90% and the rebound has been very slow thus far.
Figure 1: Percent change in select transit operators’ monthly averages, January 2020 to most
recent.
Nationwide, the American Public Transportation Association (APTA) estimated that first
quarter 2021 transit ridership was down 63.5% from the same quarter in 2020 [5] (APTA
2021), but unlike before the pandemic, commuter rail – not buses – has taken the biggest hit.
Buses, which generally carry a larger percentage of low-income riders who have fewer
transportation options, experienced a 50.1% first quarter decline. By contrast, ridership was
down 79.9% on commuter rail systems that serve more white-collar suburbanites traveling to
downtown workplaces [5] (APTA 2021). In addition to having more transportation choices,
this group is also more likely to have the option of working from home.
Despite plummeting ridership, the credit rating agency Moody’s classifies the current financial
outlook for U.S. transit as stable, thanks to strong economic growth that will likely drive tax
collections that fund transit, and around $70 billion from three federal relief bills that is likely
to stabilize operations through fiscal 2022. To put that amount in context, it’s about 4.3 times
annual farebox revenue and enough to cover around 17 months of operating expenses for the
entire U.S. transit sector.
However the longer-term picture is far less clear. Moody’s is uncertain about future work-from- home levels, and while it reports that ridership is expected to rise significantly in the next 12-
18 months, the rating agency expects transit ridership to stabilize at 80-85% of pre-pandemic
levels by 2023 – a significant decrease [6] (Moody’s 2021). Another rating agency, S&P, is
perhaps even more pessimistic about ridership trends, predicting that “a return to near pre- pandemic ridership levels could be many years away” [7] (S&P Global Ratings, 2021).
That view was reinforced by the findings of a McKinsey & Company study commissioned by
Massachusetts Governor Charlie Baker on the degree to which much pandemic-driven shifts in