Cities Need Mobility, Not Monopolies

San Francisco's anti-competitive regulation of a private transit service


San Francisco Commuters

San Francisco's traffic is terrible. Bay Area drivers lose 78 hours and $1,675 to traffic delays each year, making the metropolitan region the third most congested in the country. So you might expect city officials to appreciate the private bus service Chariot. Created in 2014, the company carries 3,000–4,000 commuters a day, taking cars off the road and reducing the strain on the city's Muni buses.

You might expect that, but you'd be wrong. Instead of welcoming Chariot, officials are trying to throttle its growth.

Next Tuesday the San Francisco Municipal Transportation Agency (SFMTA) will vote on new regulations aimed at keeping private transit services like Chariot off the city's bus routes. Existing Chariot lines would be grandfathered in, but new routes could not cover more than 75 percent of an existing Muni bus path. Effectively, this would keep the company from competing directly with SFMTA for ridership.

For some observers, that is the entire point. "The City needs to be asking a soul-searching question—is private transit really the right way to do things?" the San Francisco State University geographer Jason Henderson asked the San Francisco Examiner.

Yes, says Baruch Feigenbaum, a transportation policy analyst at the Reason Foundation (the nonprofit that publishes this website). "I think anytime you have competition, it's good," he says, adding that private transit services like Chariot have the potential to attract new riders with quicker and more flexible service.

"There is an induced effect, where people who didn't take transit before because they didn't think it was a good fit for them are now choosing transit," Feigenbaum notes. Transit agencies, he says, should have the goal of increasing ridership, "not protecting their turf."

This will not be the first time San Francisco took it upon itself to limit private transportation alternatives. Up until the 1970s, a robust network of private jitneys ferried some 7,000 daily riders all over the city. But in 1972 the city stopped issuing new licenses to jitneys, and in 1978 a new taxi medallion law prevented jitney licenses from being resold. With drivers unable either to acquire a new license or to purchase an old one, the industry quickly collapsed.

Chariot won't necessarily meet the same fate. The regulations on offer are restrictive, but they need not prove deadly. The company also has the financial backing of Ford, which purchased it for a reported $65 million last year.

But why keep it—and other companies—from fulfilling consumers' needs? In a dense, growing city like San Francisco, local officials should think less about how to hang on to a transit monopoly, and more about how to make the place as mobile as possible.