Partnering with transportation network companies (TNCs) for low-demand service: is it viable and beneficial for transit agencies?

In low-demand areas or during off-peak hours, fixed-route bus services often show low productivity when maintaining regular headways. Reducing headways further decreases service quality, presenting a challenge for transit agencies. This paper proposes a novel approach to solve the low productivity issue, by forming a partnership between transit agencies and Transportation Network Companies (TNCs), where TNC vehicles substitute fixed-route buses in certain segments. The study introduces a decision-making framework to help transit agencies assess when and where such partnerships are operationally feasible and financially sustainable. It identifies key factors that influence the viability of TNC substitution, including vehicle hours, mileage, and passenger loads. Based on these factors, the paper explores various compensation schemes and determines the cost of TNC operations—a critical component of the framework. The proposed framework is evaluated using a real-world case study in Long Beach, California, USA. Findings suggest that in low-demand scenarios, specifically when the number of passengers per stop is fewer than 0.5, replacing buses with TNC services reduces operating costs. The results also indicate that transit agencies should consider both cost savings and passenger experience while making substitution decisions, as truncating longer route segments may yield lower savings but may improve service for additional passengers. Overall, this research provides valuable insights for transit practitioners seeking to reduce expenses and enhance service quality in low-demand areas and off-peak hours through innovative public–private partnerships with TNCs.