In this interview I talk to Onésimo Flores, Founder of Jetty, a (sort-of) microtransit company from Mexico City.
Marcos Schlickmann: Thank you for participating in this interview. Please introduce yourself and talk a little bit about how Jetty came to life and what is your idea behind this project.
Onésimo Flores: I’m Onésimo Flores, the founder of Jetty. I have a PhD in urban planning from MIT and a master’s in public policy from Harvard. I graduated in Law from the Universidad Iberoamericana, Mexico. The idea of Jetty came about by contrasting a conflicting approach to regulation in public transportation in a place like Mexico. On one end of the spectrum, a you have a very tightly-regulated, low-quality, scarce public transport service, most of it operated by private, informal, artisanal, minibus operators, and on the other hand, ride-hailing apps, taxi apps, that had emerged not only Uber but several others, that enjoy a lot of regulatory leeway in terms of freedom to set their fares, to operate anywhere, to open the market to private individuals with spare time and spare vehicles. So, in that context, the hypothesis was that, in a way applications like Uber have made it possible to standardize a level of service: people can know what to expect, know that somebody will be held accountable if something goes wrong, know the basics of the trip, the fare and the rated quality of the driver. The level of information the passengers will get is standardized no matter who the supplier of the services is. So, the hypothesis in Jetty is that we can do something similar for collective transportation without relinquishing the economies of scale of using larger vehicles, but we do give the public access to the service improvements made possible by technology.
MS: Talk a little bit about the urban mobility scenario in Mexico City: what are the main challenges and how and why did you think Jetty was a necessary option for the citizens of this great metropolis?
OF: In Mexico City, what you have is precarious public transit. You have a relatively small publicly operated and subsidized service which, combined, move approximately 5.5 million trips daily. You have another network of transit, which is essentially privatized, run by thousands and thousands of small-scale entrepreneurs that face a tightly regulated fare: they cannot charge whatever they want. Anything beyond the set fare is constantly renegotiated with the government. The colectivos, the peseros, the microbuses, these guys are really the workforce of mobility in Mexico City. They move almost 12 million trips every day, more than double the publicly subsidized network.
Over the years this network of minibus operators has really saved the city from gridlock. They run without requiring government money. They charge a very low fare – approximately US$0.30 without fare integration. Despite the low fare, they are able to make a profit because they’ve learned to skimp on everything that matters to passengers: they have insurance with questionable coverage, they overwork their drivers, they undermaintain their vehicles, they continuously postpon the renewal of their fleets and they cram their vehicles to sometimes inhumane levels. So you have a sort of like a microeconomic problem, in which you have the very low prices and very high demand, but the quality of service is very low. Anyone that’s able to afford an alternative abandons public transit forever: they buy a motorcycle, they pay a taxi, they purchase a car. So, you have this terrible equilibrium, in which you have low-quality transit and you have a small minority of people clogging the street with cars. The question is – and this is the hypothesis on which Jetty is operating – to what extent would we be able to create another mode of service, a high-quality public bus, a high-quality public van that really cares about safety and comfort, but that’s still more cheaper than a taxi and Uber.
MS: Are the minibuses and colectivos legal in Mexico City?
OF: In Mexico City you can operate dollar vans. The colectivos and the minibuses are not only legal, they are a vital part of the public mobility system.
In the case of Mexico, you have some rules that give these minibus companies some level of monopolistic power over service areas or corridors, but really the only thing that the government has really focused on regulating is the fare. There’s this big commitment to having affordable ubiquitous service and the government has been willing to compromise on other features of service, like safety, accountability, regularity of service and so on, in order to maintain a non-subsidized cheap fare. So those guys are regulated but in a very lax, very artisanal way.
MS: And they can stop everywhere in the city?
OF: The minibuses get a concession from the government to operate, and they must get their bus routes approved, so they can essentially stop anywhere along an approved bus route. Efforts to force and determine specific stops in the past have failed, because of the business model in which drivers have a very strong incentives to maximize revenues. So, if the minibus has to race against other minibuses running along the same route, they will do so in order to maximize the number of passengers onboard. So, in Latin America, you have something that’s been called the pennywar: drivers fighting for passengers.
MS: A little bit about Jetty now: how does it work? what type of vehicles do you operate? everything is done by the app through the cellphone?
OF: Jetty is a system in which the passenger tells us where he is and where he wants to go. We match that request to a nearby pick-up and drop-off point and the passenger would reserve a seat on that vehicle. He receives trip information via cellphone and gets a notification when the van or bus is approaching. Once he boards, the driver will check the ticket and allow him to enter the bus. Once he gets off, he’ll get the opportunity to rate the service of both the driver and the overall experience. That information gets processed by us and is discussed with our bus operators. We work with fleet owners, so we do not own the vehicles nor hire the drivers. We are, however, quite hands-on in the sense that we establish the standards: what insurance policy; what type of vehicle; what type of salary and benefits the driver should have; what type of training and so on.
All the searches that passengers make in the Jetty App get aggregated and we use them to determine whether to launch new bus routes, to adjust the location of our pickup points, to increase the frequency of service and so on. Even though we’re not really an on-demand service, we are certainly a much more demand responsive service than traditional public transit.
We started off with 13, 14 and 19-seat vans, but since we’ve expanded the unit of analysis is the seat, not the type of vehicle. We don’t really care if it’s a bus, a van or taxi. In fact, we currently have 4-seaters sedans, vans as well as very large 41- seater buses in our network.
MS: Is Jetty similar to microtransit companies like Bridj from Boston or Chariot from San Francisco? What are the differences and similarities? In terms of operations, Jetty works with optimized or fixed stops and routes?
OF: We are similar to Bridj or Chariot inasmuch as having an App, using technology, having digital payments, but the context makes a tremendous difference in terms of what we’re achieving. If you look at any of the published documentation from Bridj or Chariot, you’ll very quickly realize that they never achieved scale: their buses run empty most of the time and they were really struggling to get economically viable bus routes. That’s because the context matters!
In the case of Mexico City (and cities similar to Mexico City) what you have is a very low-quality transit system compared to the US. So rather than calling ourselves a microtransit company I would perhaps make the argument that we are a microregulator, in the sense that we are establishing the standards that justify passengers willing to pay a higher fare. So we are, in a sense, a planner, a regulator of service, rather than a direct operator. Running a higher-cost fancy bus in Silicon Valley doesn’t even begin to portray what we’re trying to do in Mexico City.
The closest reference to what we’re doing is in India: there are few companies in Delhi trying to do something like us. The largest one is called Shuttl and they call themselves a bus aggregator. We need to figure out a new label for what we’re doing and microtransit it certainly does not cut it.
MS: What is your typical fare? How did you decide the areas to start operating?
OF: Our cheapest fare right now is 25 pesos, which would be slightly over a dollar. Our average fare is around 40 pesos, which is roughly US$2.00, and the most expensive fare is now a little bit over US$4.00, which is service that runs on a tolled highway. That ride would probably be US$15 on an Uber.
Jetty is currently mostly a commuter service, meaning that we operate at peak hours, covering mainly home-to-work trip. We have very clear destination points in the city’s 3 business districts: Santa Fe, Polanco and the Reforma Corridor.
MS: Is Jetty an independent company or is it part of a public operator or private operator? In legal terms, what is the position of the company?
OF: Jetty is not a bus operator company. It is a technological layer. The public transit industry in Mexico City is very territorial and very hesitant to try new things. They are on the defensive, especially after observing what happened to the taxi industry after Uber. So, rather than positioning ourselves as a company that displaces the existing bus company, we’re trying to position ourselves as the solution for bus companies that might be worried that Uber will come in and work with buses and minivans in the next few years.
MS: Do you think the private automobile is your main competitor?
OF: We poll our passengers roughly once a month and a key question that we consistently ask is: if Jetty were not available, how would you complete your last trip? About 50% answer that they would have taken a taxi, a private car or an Uber.
MS: What is your opinion on autonomous driving?
OF: Specialists talk about three revolutions: the autonomous driving revolution, the electric vehicle revolution and the shared trips revolution. So, most likely you will use autonomous vehicles more intensely than you use cars now. You may send it to pick up a pizza or to pick up your kids after dropping you off in your office. Potentially, you could live two hours from your office and use your two hours commute as the first two hours of your day. So, if you have autonomous vehicles alone, the net outcome for cities would very likely be a net negative of a more car dependent, more congested, more sprawled out city.
The hopeful alternative is that both electric and autonomous happen at the same time as shared transportation. If we’re able to have autonomous electric buses and those become the main ways to move around the city, in which you click on a phone and a vehicle comes but it doesn’t only pick you up it takes everybody that’s on the way and you have some level of shared transportation service enabled by technology, then you have an outcome that is much more positive, that’s denser cities, mixed-use cities, more environmentally friendly cities and so on.
Right now in Mexico we have close to 70,000 people that have downloaded the Jetty App. Our network is growing but still small relative to the needs of the city. Only when we have millions of people sharing trips – with Jetty or other platforms- will the real positive potential of the autonomous, electric and shared revolutions be truly unlocked..
MS: What is the future of Jetty?
OF: We’re trying to prove that people who can afford a taxi or a private car would actually prefer to commute on a bus or a van if they were safe and comfortable. We also want to survive as a small startup. We intend to prove to our passengers, our operators and to our investors that we can run a financially sustainable service. Once we do that, we will start thinking about expansion.