CHAPTER 2

Literature Review

This chapter synthesizes relevant literature on topics related to providing on-demand microtransit service in rural settings. Key topics that are addressed in the literature review include on-demand microtransit service models; procurement for on-demand microtransit services; strategies for marketing and customer education of on-demand microtransit services; technology considerations of on-demand microtransit service; and performance measurement of on-demand microtransit services.

On-Demand Microtransit Service Design Overview, Use Cases, and Operating Models

On-Demand Microtransit Service Design Overview

On-demand microtransit service offers nearly unlimited opportunities to customize service parameters to meet the needs of the provider and its customers. The service provider can define the boundaries where the service should operate, identify permitted out-of-zone destinations, set parameters related to how far someone could be asked to walk to get to their pick-up point, identify which categories of trips or passengers to prioritize, and much more. For example, service providers can create overlay zones to keep some vehicles within a certain area while allowing others to roam around a larger service area.

In the United States, rural microtransit service areas typically fall into two general categories:

• Countywide or large area service involves microtransit operated within the boundaries of an entire jurisdiction or multiple, connected jurisdictions. This type of service usually covers at least 50 square miles of area—typically much more—and in some cases, up to thousands of square miles.
• Town or small area zones are less—often much less—than 50 square miles, and the zones are set to enable people to circulate within the area but not connect to major destinations outside of the town or a neighboring town. In this type of zone, a vehicle is typically never more than 5–10 miles away from where the next trip request will originate. In these cases, vehicles typically cannot travel between zones unless the zones overlap (N-CATT, 2023).

On-Demand Microtransit Use Cases

On-demand microtransit service can address a variety of purposes or fit into one or more general “use cases,” or typologies. In some cases, agencies use on-demand microtransit as just one service in a family of services. There is also no one-size-fits-all for transit service, and on-demand microtransit service can serve multiple use cases (Volinski, 2019). However, understanding the need and purpose for an on-demand microtransit service is helpful for agencies when designing

their service. Common use cases for on-demand microtransit services in rural settings include service coverage expansion, replacement or supplement for a traditional demand response service, and first-mile and last-mile coverage/connector.

• Coverage expansion. In many rural settings, transit agencies provide service to multiple localities across a large, low-density service area. Microtransit service is sometimes implemented to expand coverage. In some cases, transit agencies supplement fixed-route or deviated/flex route bus service with on-demand microtransit service to provide transit service coverage across a larger area (N-CATT, 2023).
• Dial-a-ride replacement. Some agencies have implemented on-demand microtransit to fully replace their traditional dial-a-ride service. Transitioning dial-a-ride service to microtransit gives customers the flexibility to book via mobile app for on-demand (immediate) service, typically improving the customer experience and convenience. This option can also reduce the burden on call center staff of booking and dispatching trips. For agencies that provide a separate ADA complementary paratransit service, microtransit can reduce demand on that service, as ADA customers sometimes organically shift to microtransit. Furthermore, the technology used in microtransit service can also be used for scheduling and dispatching ADA paratransit trips (N-CATT, 2023); the practice of co-mingling passengers on microtransit and ADA paratransit services is rapidly evolving.
• First-mile/last-mile service. Another use case for on-demand microtransit service is to provide a connection to fixed-route service; this is often referred to as a “first-mile/last-mile connection” or “feeder” use case. In addition to increasing coverage, a service of this use case allows customers to connect to fixed-route services that operate in areas beyond walking distance. Connecting to fixed-route transit by foot or mobility device can be a particular challenge in rural areas, which tend to be auto-oriented with limited sidewalks and low-density land uses (N-CATT, 2023).
• Fixed-route or deviated route replacement. Some agencies have implemented microtransit services to replace fixed-route, or deviated route, service(s). Typically, agencies do this when fixed-route services are relatively unproductive (i.e., operating at a relatively high cost per passenger trip or per passenger mile). In some cases, this replacement may also be made upon the request of customers or stakeholders who desire an alternative service type that is more flexible to meet the needs of passengers’ travel.

Service Delivery Models

On-demand microtransit service can be operated using a wide variety of service delivery models. These models can fall on either end of a spectrum—that is, they can be fully directly operated or fully contracted out to a single vendor—or they may fall somewhere in the middle through a “hybrid” service delivery model. Functions such as reservations, scheduling, customer service, operations, vehicle provision, and facility provision can all be directly managed by a service provider or contracted out (Rodman, 2022). The different approaches to service delivery are described in detail in TCRP Synthesis 161: ADA Paratransit and Other Demand-Responsive Transportation Services in Small to Midsized Transit Agencies (Rodman, 2022) and summarized in Table 1.

Procurement of Rural On-Demand Microtransit Services

Rural Challenges to Accessing Private Sector Providers

While the market of operators for on-demand microtransit service is evolving, transportation network companies and providers of contracted services most often work in more urban

Table 1. Demand response service delivery models (adapted from Rodman, 2022).

and suburban settings rather than in rural settings. Although most technology providers can operate in rural settings, it is not uncommon for rural on-demand microtransit providers to directly operate or use a hybrid approach for service delivery (Rodman, 2022). Microtransit service vendors are sometimes not as inclined to work with small transit agencies that lack the resources of larger jurisdictions. Smaller agencies may require more direct support and training from software vendors than larger agencies do (Virginia Department of Rail and Public Transportation, 2023).

In one example, RIDE, the on-demand microtransit service in Wilson, NC, struggled to find enough vehicle providers to meet demand during its pilot period. RIDE started as a service fully contracted to the technology provider, which partnered with a vehicle provider that could only perform maintenance at a facility located over an hour away from the RIDE service area. The limited availability of vehicles led to decreased quality of service and lower ridership (North Carolina Department of Transportation, 2023). This is largely an issue in fully contracted operations, where the service provider is relying on a vendor to provide vehicles to operate the service. However, if an agency is operating under a fully contracted model, it would typically want to ensure the contractor has an adequate supply of vehicles and maintenance services within reasonable proximity to maintain the expected level of service, a requirement which can be challenging in rural areas.

In addition to maintaining an adequate supply of equipment and services, another challenge of operations in rural areas, under any service model, is operator availability. Nationwide, transit agencies are experiencing operator shortages. Accelerated by the COVID-19 pandemic, many

transit service providers have faced hiring challenges, especially for transit drivers and maintenance staff. Additionally, the transit workforce is aging, which will further exacerbate the workforce shortage (APTA, 2023). This issue can be felt particularly in rural areas, where the potential workforce is more dispersed compared to denser urban and suburban areas. The proportion of U.S. residents living in rural areas has been on the decline for over a century.

Procurement Process

Rural agencies have also run into challenges with procurement of on-demand microtransit technology and/or service in general. Small rural agencies often do not have staff who are familiar and comfortable with procurement processes, nor do they always have staff available to monitor and oversee a vendor once a contractor is procured (Rodman, 2022). For microtransit vendors, it may be difficult to make the business case for pursuing a request for proposal for just one small rural agency.

Marketing and Customer Education

Marketing is essential to both ensure that the public is aware of the new service and to teach current and potential riders how to use the service. Transit agencies can use their past techniques to promote the service; still, educating the public on a new and unfamiliar service can present challenges (Volinski, 2019). Transit service providers have found success when marketing and education efforts are continuous, beginning prior to service implementation and continuing after a service launches. This effort requires forward thinking and planning with regard to project budgets, resources, and staffing. Proactively maintaining connections with customers and community stakeholders can result in strong relationships between the service provider and microtransit customers, as well as higher ridership retention rates (Hansen et al., 2023).

Transit service providers can use a variety of strategies to market on-demand microtransit service and educate current and potential customers. In general, marketing campaigns are most effective when they are tailored to specific audiences. Some customers, such as those less comfortable or familiar with smartphone technology, may respond best to in-person communication and demonstrations, while others may respond better to other types of marketing campaigns (Hansen et al., 2023).

Prior to launch, strategies for marketing new on-demand microtransit service typically include:

• Creating a dedicated website for the service;
• Developing a press release that directs potential customers to download the microtransit mobile app;
• Creating a short video on how to use the service and sharing it on the website and on social media;
• Distributing brochures and flyers;
• Using brand ambassadors at key travel destinations fluent in English and/or other languages appropriate for the local population;
• Purchasing radio spots and television commercial time on channels in English and other languages appropriate for the local population;
• Presenting information at community meetings, including homeowner association meetings or local government meetings;
• Engaging with community partners through meetings and events;
• Conducting travel trainings for current and potential transit customers;
• Mailing notices and free ride coupons to residents living within the new service area; and
• Holding ribbon-cutting ceremonies at the start of the new service (Volinski, 2019).

Once a service launches, to encourage ridership some agencies use fare promotions, such as offering a fare-free period or offering the first two rides for free. Agencies and organizations operating on-demand microtransit service sometimes also promote ridership through referral programs with existing riders. The on-demand microtransit vehicles themselves can also serve as a marketing tool; a branded vehicle moving throughout a community is advertising the service while simultaneously providing it. Transit service providers can also leverage available data collected by the mobile app to inform their marketing tactics. Some service providers target direct marketing to areas that generate or attract the most trips, such as apartment complexes, and can send emails and push notifications to existing riders (N-CATT, 2023; Hansen et al., 2023).

Technology

Rural Technology Challenges

On-demand microtransit service relies on mobile broadband service to operate, which can pose barriers in rural settings. On the operating side, a lack of broadband internet coverage can interrupt on-demand microtransit operations. Because on-demand microtransit service is dynamic, operators must be connected to the microtransit technology when in the field. Limited broadband and cell phone service in rural areas can make this a challenge. For example, when the Baldwin Regional Area Transit System (BRATS) first implemented on-demand microtransit service, operators used tablets in their vehicles. However, due to connectivity issues, operators had to switch to smartphones to have more reliable service that provided operators with the most up-to-date routing possible (N-CATT, 2023). Federal investment in broadband infrastructure is expected to lessen gaps in broadband coverage in the coming years (The White House, 2023).

Another key challenge that rural transit agencies face is technology availability. While urban and suburban transit agencies are typically set up to use a range of transit technologies, including automated vehicle locators, GPS, and computerized scheduling and dispatching systems, rural transit providers are often equipped with only cell phones and voice radios (Potts et al., 2010). Rural agencies in Michigan, for example, indicated through a survey that they are interested in implementing technology solutions such as scheduling/dispatching software and fare collection software as well as in-vehicle software (Michigan Department of Transportation, 2022).

A third challenge for rural agencies is comfort with technology for both agency staff and the people the agency serves. In the survey of rural transit agencies in Michigan, for example, agencies indicated that although they are interested in technology solutions, they also see a lack of technical experience among staff and customers. When asked how tech-savvy the public and their transit agency are, respondents rated the public an average of 4.3 on a scale of 1 to 10 and agencies an average of 5.4 on a scale of 1 to 10, with 10 being the most tech-savvy. This indicates a gap in ability to use, or comfort with using, a technology-enabled, smartphone-reliant transit service such as microtransit (Michigan Department of Transportation, 2022).

Challenges Related to Broadband and Smartphone Access

While the gap in broadband availability in the United States is decreasing, the ability to take advantage of it remains an issue in some locations and for certain population groups, including older Americans, lower-income Americans, and people with disabilities. Surveys indicate that older adults are less likely to have a smartphone than those ranging in age from 18 to 64. Smartphone ownership increases with income; approximately 79 percent of people in households earning $30,000 or less annually own a smartphone. Smartphone ownership increases to 90 percent of people when income increases from $30,000 to $69,999 annually. Research has found that

nearly a quarter of rural Americans say broadband access is a problem in their community, and approximately 15 percent of rural Americans do not own a smartphone (Gelles-Watnick, 2024).

Smartphone ownership, of course, does not guarantee consistent and stable internet access. Even when broadband is available, the high cost of data services and home internet plans can make consistent internet access a barrier to microtransit usage for low-income households, especially in rural areas. Many Americans who do not have home broadband internet cite affordability as a major barrier (U.S. Government Accountability Office, 2023). About 330,000 tribal households and nearly 3.5 million total rural households were enrolled in the federal Affordable Connectivity Program before it lapsed in 2024 (Federal Communications Commission, 2024), indicating a high level of need for affordable broadband access.

Funding

Although rural areas generate a lower concentration of demand for transit compared to urban and suburban areas, many residents of rural areas have unmet transportation needs. For this reason, rural transit providers serve as a lifeline for these residents. In some cases, no other publicly available and/or affordable transportation option may operate in the area, and individuals without their own private vehicle may rely entirely on publicly available transportation for all their travel needs. Rural transit providers often face specific challenges in operating service. Costs on a per-trip and per-passenger basis are generally high in rural areas compared to service in urban and suburban areas. Trip distances also tend to be longer than in urban and suburban settings, which decreases performance in standard productivity measures (Hosen and Powell, 2011).

Funding is often a challenge rural transit providers face in providing the service that individuals in rural areas need. Rural transit agencies typically serve large areas on limited budgets that attempt to meet a relatively high level of demand. While these agencies have access to federal grants, it can be difficult to access these funds because they cannot obtain enough funding to provide the required local match.

Some rural agencies have overcome funding challenges in innovative ways. For example, Treasure Valley Transit in Idaho worked with several communities in its service area to pass a hotel tax to help provide local funds for transit. Other rural agencies have generated revenues through agreements with retail stores to provide advertising, provide direct service, or both. Partnerships with healthcare providers can also serve as a way to generate additional funds (Hosen and Powell, 2011).

Performance Measurement of On-Demand Microtransit Services

Setting Performance Standards

Identifying and using performance measures to evaluate microtransit service allows providers to understand how well a service is performing and meeting predetermined service goals. Further, setting performance standards and regularly evaluating service provides transparency and data to support service planning and funding decisions (N-CATT, 2023). In one example, as part of the FTA’s Mobility On-Demand (MOD) Sandbox program, Los Angeles Metro and Sound Transit and King County Metro (Puget Sound, WA) developed a set of goals for a first-mile/last-mile on-demand program on which they partnered. These goals were then tied to specific performance metrics that could be tracked over time (Cordahi et al., 2018) (Table 2). While designed for agencies operating in an urban setting, a similar framework focused on increased service availability, generally and for target populations, could potentially be applied to a rural context.

Table 2. Example project goals, evaluation hypotheses, performance metrics, data elements, and data sources from the FTA MOD Sandbox demonstration program.

Note: TNCs are Transportation Network Companies; Via is a microtransit software provider; ORCA cards are a fare card used for public transit in the Puget Sound region of Washington state.

Establishing performance standards for on-demand microtransit service and evaluating service regularly is widely considered a best practice. On-demand microtransit service is often filling a transit gap; as such, performance standards are most useful when they are reflective of the context in which the service operates (Kittelson & Associates, Inc. et al., 2013). Low productivity, as determined through common measures such as passenger trips per hour, is not necessarily a reflection of poorly performing microtransit service, particularly if the goal of the service were, for example, ensuring everyone in an area could get to all their medical appointments on time and safely (Volinski, 2019).

All federally supported public transit providers—including rural providers—are required to report certain data including ridership, vehicle revenue hours and miles, expenditures, and funding sources to the FTA; as such, rural providers almost universally track these metrics (U.S. Department of Transportation, 2024). Many agencies also track on-time performance, customer satisfaction or customer complaints, or other metrics. In a rural context with one service provider in particular, the increased accessibility the provider offers its community is evident. This literature review did not identify any examples of agencies using nontraditional performance metrics to track the success of their microtransit services.