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Private Bus Transit Is a Global Phenomenon

This is part 3 in a 7-part series on the privatization of transport

Previously, I described how U.S. rideshare companies that transport 12 passengers could scale to become small private buses.

This is not hypothetical—it happens worldwide—and one step is road pricing. But something else must happen: the U.S. cities where these rideshare services operate must truly legalize them. Contrary to popular opinion, that has never happened. 

Companies like Uber entered the market by willfully breaking protectionist laws. Eventually new regulations were written to make space for them, but never fully so. In New York City, there is a cap on the number of rideshare vehicles allowed in the city, and limits on where they can go. In Seattle, rideshare companies must pay their drivers the local minimum wage of $16.39. For a while in California, there was a question of whether the companies could legally hire their drivers as contractors rather than employees. State voters gave them that right in a 2020 ballot measure, but only after the companies spent millions in lobbying. 

The examples go on. These regulations all have the larger effect of bringing instability to Uber and Lyft—and to the startups trying to compete against them. 

What does that have to do with buses? Regulations that city governments put on rideshare establish, de facto, what the business climate will be for larger shared mobility options. A tough climate discourages these companies from investing their resources to develop larger and more sophisticated services. 

To name one example, Uber has a bus line (Uber Bus) that it rolled out in Cairo and Monterrey—two cities that already have liberalized transport markets and a critical mass of patrons. It is unsurprising that Uber Bus hasn’t opened in the U.S. They had enough trouble gaining permission for small carpools, and there are even greater regulations, dating back a century, that outlaw buses. I will get to that. 

But private buses are common outside the US. It is hard to give them one name (analyst Lucas Foljanty calls it Demand-Responsive Transit, or DRT), because services are diverse. “DRT” can range from the low-occupancy rideshare provided by Uber; to flex route microbuses that take 5 or 10 people roughly point-to-point; to standard private buses that seat dozens and follow fixed routes. Below is a breakdown, by no means exhaustive, of some DRT models worldwide.  

Colectivo: This is a generalized name for the DRT found throughout Latin America. It doesn’t refer to any one vehicle type, but to an array of private rideshare services. One notable system in Buenos Aires features Mercedes buses that are about as large as public buses in the U.S. According to a 1996 study, the subsidy-free system had 14,000 vehicles operated by 230 companies, and provided 11 million daily rides. 

Tro Tro: These small buses are the main form of transport in Ghana. In the capital city of Accra, 70% of commuters use them (compared, states a World Bank report, to 10% for SOVs, 8% for taxis, and 0.3% for public transit). While there has been some recent government investment, Tro Tros are mostly a decentralized, unregulated service run by private unions.

Jeepney: Based in the Philippines, Jeepneys were first assembled using spare parts from U.S. military jeeps left behind after WWII. They are now constructed using standard auto parts, and carry 15-20 passengers. An NPR profile estimated that there are 180,000-270,000 Jeepneys in the country, including 75,000 in metro Manila. There is, however, a pattern of government harassment, and a national modernization plan looks to remove Jeepneys from roads and replace them with more environmentally-friendly vehicles. 

Van Jái: It seems that the wealthier the country, the likelier that it outlaws private transit and replaces it with public transit. But Hong Kong is an outlier, with a mostly private model. It provides public transit by bus, but franchises provision to 5 different companies. The 427sqmi special administrative region also allows thousands of non-franchised buses, including minibuses known colloquially as “Van Jái.” They are tightly-regulated, with limits to driver and passenger behavior, to avoid the problems that DRT can cause elsewhere.

As these examples show, DRT seems to be the default free-market outcome globally. More advanced services like rail and bus rapid transit tend to require government centralization for tackling thorny issues about infrastructure and right-of-way easements. But minibuses are more the natural order of things—if a city is dense and deregulated, they will inevitably pop up through small-scale entrepreneurship.  

This could have happened in the U.S. if not for a century of oppositional policy.

Jitneys—which are the westernized version of DRT buses—became popular here in the years before the US entered WWI. The first American Jitneys appeared in 1914, and within a year there were thousands of these shared vehicles in major cities. Automobiles had recently been invented, and people were learning that they were more flexible than trolleys, and almost as cheap if rides were pooled with other people. But because these buses cut into trolley companies’ profits, the companies lobbied to have them banned. Within years the industry was dead, and some of those protectionist laws remain.

That doesn’t mean jitneys disappeared entirely. In San Francisco they were common until the 1970s, when the city regulated them away (see case study below). In New Jersey, some suburban jitney services still feed commuters into New York City. And the services exist inside the city, although they work in the shadows because they’re mostly illegal. Jitneys in the U.S. are generally operated and patronized by immigrants who are importing their native traditions to their new country. Services are spartan even compared to public buses.  

But just as compelling are the nascent services that might be called “Jitneys 2.0”. They are startups that leverage e-hailing technology, venture capital, and nicer interiors to lure a more professional-class clientele. I already mentioned one example – Uber Bus – and the role it could have in U.S. cities if regulators were more welcoming. Other examples include Chariot and Leap, two sleek services that ran for a few years in San Francisco before being quashed by SFMTA.

It seems, then, that there is a market for jitneys in the U.S. Different companies are lobbying government bureaucracies, or ignoring them altogether, to provide services to different classes of patrons. And it’s been this way for over a century, suggesting the jitney market has always been here. 

Which leaves me with a speculative question: just how advanced would this industry be if it hadn’t been illegal the whole time? And how different would U.S. cities be? 

If the jitney industry had been allowed to scale – as it was quickly doing in the 1910s – would there have been as much need long-term for mass car ownership? Would transit usage and availability be higher in America? Would there have been such a mad post-WWII rush into suburbia if cities had been easier places to get around?

We don’t know. What we do know from current market activity is that demand for private buses is there. And we see tremendous proof of concept for how it’s happening in other countries. The industry just needs to be legalized.

Private bus case study: the death of Chariot and Leap in San Francisco

If San Francisco had CDMX’s relatively-unregulated bus market, would private buses be as common there? Maybe that’s a stretch – but there’s zero doubt the industry would exist to some degree.

In the 1910s, there were 1,400 jitneys operating in the city, according to SFMTA records, and they remained ubiquitous into the 1970s, patronized by the city’s Asian and Latin immigrants. But around that time the city wanted to encourage public transit use on MUNI and BART. It disliked the competition, so began issuing fewer permits and forcing jitneys to raise fares, as not to undercut the public option. In 1978, the city stopped issuing permits altogether, causing a gradual industry decline.

In 2011, some reorganizing within SFMTA created a brief period of deregulation, and like clockwork new jitneys surfaced, such as Chariot and Leap. But SFMTA was soon back harassing them, writing regulations that let the agency micromanage where the buses could stop, stating in the bylaws that “routes must complement, rather than compete with, Muni.” SFMTA also authorized permit fees, limits on vehicle length, and mandates that companies share data with the city. Within a few years, Leap and Chariot both went under.

Scott Beyer is the owner of Market Urbanism Report, a media company that advances free-market urban policy reform. He also writes columns for Catalyst, Governing Magazine, and HousingOnline.com. Follow him on twitter: @sbcrosscountry