Lyft, Uber Edge Closer to True Ridesharing With Carpooling Services

Lyft and Uber have announced new features that could bring them closer to true ridesharing than ever before. Last week, Lyft launched its new “Lyft Line," which allows users to share rides with strangers going along similar routes. Not to be outdone, Uber preemptively announced that it would be launching a similar feature -- UberPool -- on August 15.

There has been a lot of controversy over the use of the term “ridesharing” to describe the services provided by companies such as Uber and Lyft, with many claiming it to be a misnomer. Just a few months ago, for example, one reader commented on an article I wrote about Lyft’s new insurance coalition:

“Uber, Lyft and Sidecar are NOT ridesharing! Ridesharing is when the driver of the car is going some place for their own reasons, and gives other people who want to go on the same route, a lift.”

Well, technically the reader was not wrong. If we break up the term ridesharing into its two parts, “ride” and “share," this implies that two or more people are agreeing to share a ride that they would have otherwise taken separately. In reality, Lyft and Uber are more like taxi services, where a driver is paid to pick up a passenger and deposit them wherever it is they want to go. But Lyft and Uber also aren’t quite taxi services.

This is why in September 2013, the California Public Utilities Commission’s (CPUC) decided to establish a new business category called a “Transportation Network Company” (TNC) to describe companies such as Uber and Lyft. In creating this new category, along with a series of rules and regulations, CPUC effectively legitimized Lyft and Uber’s businesses, at least in California.

Despite the establishment of the TNC label, popular discourse continues to favor the “ridesharing” verbiage -- granted, Uber and Lyft have since carefully eliminated it from their marketing.

But this could all change with the launch of new carpooling features. Both Lyft Line and UberPool will initially operate exclusively in San Francisco, with plans to add more cities in the future. To access Lyft Line, users request a ride through the app's "Line" feature, enter the destination, then wait while Lyft's algorithm matches them with one or two other Lyft riders who want to go in the same direction. The driver picks each rider up in order of proximity, with curbside wait time for the second and third rider limited to one minute. Once all of the passengers are onboard, the driver takes them to their desired destinations.

The primary benefit of the carpooling function is that users are guaranteed cheaper rides even if they aren’t matched anyone to share the ride. However, drivers still receive the same amount of each group fare as they do on solo trips. For example, a trip to the airport that normally costs $40 could cost $25 or even less, depending on how many riders are sharing with you. Lyft says most Lyft Line trips can cost up to 60 percent less than regular rides.

Another upshot to the carpooling service is that it could service people who don’t live near existing public transportation lines. In fact, Lyft says its carpooling function is creating a new category of transportation -- personal transit. The company said in a blog post:

“Personal transit is about access for everyone. We believe that modern cities should offer reliable, affordable transportation wherever you live. We want to bring the best parts of Lyft — on-demand service, door-to-door trips, and community — to daily travel.”

Lyft and Uber have been locked in an epic battle for ridesharing … or should I say, TNC … supremacy. Lyft’s closing of a $250 million Series D round in April finally leveled the playing field against Uber’s Google-backed endowment. For now, the incessant competition seems to be benefiting consumers with ever-more exciting innovations. Stay tuned for what else awaits further down the road.

Based in Washington, D.C., Mike Hower is a writer, thinker and strategic communicator that revels in driving the conversation at the intersection of sustainable business and policy. He has cultivated diverse experience working for the United States Congress in Washington, D.C., helping Silicon Valley startups with strategic communications and teaching in South America. Connect with him on LinkedIn or follow him on Twitter (@mikehower)