Published on August 3, 2018
Most people writing about MaaS (Mobility as a Service) are either trying to attract investors, promote their product, or demonstrate their personal foresight and innovative potential. Therefore, it’s not surprising that most articles focus on the positives and the opportunity of an imminent personal mobility revolution.
Instead, for this article I thought I’d try to focus on some of the challenges to achieving the vision. This is not to say that the vision can’t be achieved, but a key step to getting there is understanding how to address the challenges that lay ahead. Perhaps it’s a timely reflection, given the recent retraction of dockless bike ambitions.
Transport choices are complex
Underlying many MaaS visions is an assumed rationality – that people will move to lower cost shared services as an alternative to costly private cars. But, if cost was such a dominant factor, wouldn’t all car owners drive a Sandero?
If we all had the same transport preferences, we’d all choose the same modes for the same journeys. But we don’t – our choices are highly personal.
Big factors include cost and journey time; but there’s a plethora of other factors – our tolerance of exercise; our tolerance of other people or preference for personal space; our desire to work or to relax whilst travelling; our need for certainty of arrival time; our need to take things or people with us.
This isn’t necessarily a fundamental issue – MaaS generally implies choice - but MaaS propositions have to appeal emotionally as well as rationally. At the moment many services still benefit from novelty factor, and associated kudos – but, by definition, that’s a transitory benefit.
Not all cities are alike, and not everyone lives in cities
There is a tendency to use case studies from existing schemes, and to extrapolate these to other cities and regions. It often appears not enough is done to understand the differences between areas though. Factors such as the physical road network, the size of the city, employment types and spread of employment clusters, the appetite for political and policy intervention, the range/frequency/quality of public transport options, the commute to work areas, or even factors such as terrain and climate impact local choices. In many areas using public transport is simply not the cultural norm in the way it is in London – and culture change takes time.
Road capacity is finite
MaaS presents a vision of a variety of different ways to travel – hire car; private hire; demand responsive bus; traditional bus; train; bike; etc etc – but the majority of these are still competing for the same largely finite road space.
MaaS doesn’t implicitly mean a net decrease nor increase in the number of road vehicle miles. The changes are complex, but in balance look likely to result in an increase.
Factors such as migration from private car to public transport should cause a reduction, but migration from train and bus, to private hire and smaller demand responsive buses will cause an increase. Other factors such as ‘positioning’ movements as ‘on demand’ vehicles are positioned to exploit demand also create journeys.
Smart journey planning and navigation systems should make better use of available road capacity, such as identifying alternative routes – but at the expense of migrating through traffic to local access roads.
To the extent that MaaS utilises demand responsive pricing, this might help smooth peak time demand, but conversely flat rate bundles may have the opposite effect.
Changes to highways capacity are slow to implement, and PAV’s still some time away, so in the short-term MaaS will have to work with what it’s got.
One portal vs shopping around
Core to the MaaS vision is the concept that a portal, or app, acts as the single gateway to your travel needs – planning journeys, identifying travel options, booking and paying for them (or indeed bundled within your subscription).
The vision is that the app is so good at what it does, you’ll not look outside it for other options. Working that through, that means no more Uber app, no more Trainline, just one app to plan and buy all your mobility needs. That sounds suspiciously like some of the walled garden concepts advocated by mobile phone operators 15 years ago, and which they failed to achieve when consumers wanted the choice to shop around.
It clearly is possible. Amazon has achieved similar with the Amazon marketplace – you don’t really know or care who the retailer is – you just use one portal to search and pay for goods, and in some cases Amazon is the retailer themselves. But as yet, there are more markets where this hasn’t happened than it has. Whilst package holidays continue to exist, the wider trend has actually been away from travel agency aggregators to individuals booking direct with airlines and hotel price comparison sites. Whilst the vision of a single portal could happen – it shouldn't be taken for granted.
Imbalance of supply and demand
A key conundrum for the MaaS ecosystem is achieving an adequate balance of supply and demand.
Services like Uber have tried to manage this in part with demand responsive pricing, that encourages more drivers to work at busy times, and encourages discretionary travel out of peak times.
On the other hand, flat rate bundles reduce the incentive to avoid peak-time travel.
Medium term changes to demand may also create different issues. Whilst private cars can relatively easily be repurposed for private hire, there is less flexibility to rapidly source or redeploy 33 seat midi-buses.
Supply and demand may also challenge the viability of many propositions outside of urban areas. As those who have tried to get a rural taxi at short notice may know, when demand drops below a certain threshold, it’s simply not worth basing capacity in an area - or a price premium is required to cover the low utilisation.
Autonomous vehicles might bring new shocks to this balance. Whilst vehicles still require drivers, the scope for major and rapid redeployment is constrained. Drivers might commute a bit for work, but you can’t realistically pull your fleet and drivers out of Birmingham and simply redeploy them overnight to Glasgow. However, no such constraint exists for autonomous vehicles – so could we see a scenario where operators are able to redeploy entire fleets, for example if the market isn't sustainable or they disagree with a local policy position?
Reduced demand for mobility
Home working, internet shopping, video conferencing, video streaming - all potentially contribute to a reduced need to travel. According to the National Travel Survey, we're making 10% fewer trips than a decade ago. Whilst decline in bus use has been a long term trend, decline in rail journeys and public transport in London appear to have been less foreseen. This might help MaaS if fewer trips makes traditional car ownership or season tickets less attractive, and catalyses the need for more flexible alternatives - but operating in a declining market usually brings challenges.
Margin squeeze
Traditional public transit operators have significant fixed costs – including vehicles with a 20 – 30-year life expectancy, significant staff costs, depots and maintenance facilities.
Published timetables, with a stable commuter and concessionary passenger base give predictable income streams against those fixed costs – albeit with some surplus capacity outside peak times.
The MaaS promise to consumers is one of a better, more personalised service for better value – but for operators this implies smaller vehicles, more drivers, more volatile demand, and reduced loyalty, which in turn creates a risk of lower utilisation.
Add to this the desire of MaaS portal providers to offer fixed price bundles, and the commercial case looks challenging.
The problem is compounded by the fact that many existing MaaS business models aren't based upon commercially sustainable pricing. They are either justified as loss making pilots, or running at a loss to establish a dominant market position - the longer-term commercially sustainable position is not yet assured. Will take-up be as strong if prices have to rise?
Furthermore, there is a desire for MaaS portal pricing to be better than the standalone pricing in the market. At first glance that appears to be a rational commercial proposition – discount your product and the MaaS portal will distribute it to more people and grow your market. On the other hand, that’s an immediate discount to many existing customers, whilst paying a commission to a MaaS portal that may diversify how they travel, so they make less use of your services in future.
Is there room for specialist MaaS portals in the long term?
Are MaaS portal providers building long-term business models, or quietly hoping to be the next ITA? (the flight comparison software business that was acquired by Google).
Given the already ubiquitous availability of Google maps, it’s not difficult to envisage how Google Transit evolves from a planning tool to a mobility broker, allowing transit providers to bid for their services to appear prominently in results – just like with web search.
This becomes more significant when considering the trend towards multi-functional digital assistants.
In which case, a small number may be successful in being acquired – the others may be left scrambling for a niche reason for customers to use their services.
Is the vision broken?
I suspect not. I can see parallels with the mobile evangelists of 1999 - 2000 bidding for 3G mobile spectrum. As I recall it, those business cases forecast that by 2003 we'd be using our mobile phones for a range of entertainment and information services, and that the mobile operators would play a pivotal role in providing and selling such services. The consumer promise actually wasn't far out - but it took almost a decade longer, and the mobile operators' role was largely limited to financing and plumbing.
Personally it's welcoming to see a few cracks being noticed, it helps reset the focus on building sustainable products and propositions - rather than growth through unsustainable discounting and marketing spend.
About the author:
Richard Rowson is a freelance consultant at f17.co.uk focused on public transport ticketing, information and fares.