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Abstract Traditional fixed-route transit services are inefficient in low-density areas due to limited and dispersed service demand. Many transit agencies look for effective alternatives to provide adequate transportation services in these areas, especially by leveraging mobile ICT-enabled new mobility services. This study evaluates the cost-effectiveness of transit incorporating mobility-on-demand (TIMOD) compared to fixed-route bus transit, driving, and commercial ride-hailing services in suburban areas. It extends a comprehensive analytical framework to evaluate the cost-effectiveness of TIMOD and other alternatives from a societal perspective by considering transportation externalities. The analysis accounts for travelers’ monetary and time costs, service providers’ operating costs, and external costs to society. Using real-world data from a TIMOD program, Metro Flex, in the Seattle region and estimates based on simulation, the study compares the economic cost of TIMOD trips with counterfactuals by other travel modes within two separate suburban case areas. The results indicate that, in our study areas, TIMOD trips have a total generalized cost for travelers that is higher than driving but lower than fixed-route transit trips and ride-hailing trips, owing to its on-demand nature coupled with subsidized fare. Compared to TNCs, TIMOD’s more common shared rides contribute to its lower external costs by reducing vehicle miles traveled per person. Adding service operation, TIMOD in the suburban areas becomes less cost-effective due to high operating costs. However, the disparity is slight in comparison to fixed-route transit. Our findings also show that areas with higher population densities result in lower operation costs per rider of TIMOD. Riders living in higher income areas with lower population densities and more limited transit services benefit more from TIMOD services with a higher reduction in travelers’ generalized cost compared to fixed-route transit. The study highlights the potential benefits and tradeoffs of providing TIMOD services in suburban areas, shedding light on the conditions under which such services are economically competitive.
Cai et al. (Mon,) studied this question.