The nagging questions about Mobility As A Service

Assorted mobility services in Quito, Ecuador. Image: Getty.

Mobility As A Service. Discussed at length in specialist magazines, here on the pages of CityMetric, and increasingly in the popular press, it is transport’s latest buzzphrase. And with promises of a seamless choice of mobility across all modes of transport, in just one place, it is a very tempting offer.

But one nagging question keeps coming up when people keep talking about it. How on Earth will anyone make any money out of it? This is for one very simple fact: it is very difficult to make any money out of transport.

In a time when it is commonly shown that companies are making millions out of transport, this seems hard to fathom. But transport is a high cost industry, with a lot of money tied up in vehicles and infrastructure. Despite the headlines of millions being made by train operators, for instance, their combined profit margin is barely 2.4 per cent. In the bus market, while operating profit margins of near 9 per cent are reported, this hides significant regional variation.

And this is before you consider the ‘loss-leaders’ that are the likes of Uber and other car sharing companies. And now, Mobility As A Service operators want a further slice of that revenue pie.

The challenge to Mobility As A Service is not technology or data. It’s making the whole proposition attractive, not add to costs, and generate revenue. Previously, generating more revenue and more demand involved one or more of the following tactics:

  • Changing your prices. Demand for public transport doesn’t change much over the short term in response to price increases, with a 1 per cent fare increase typically resulting in a 0.2 per cent decline in patronage: after all, people can’t just change their travel patterns overnight. But it does lower demand over the longer term, with a 1 per cent price increase ultimately resulting in nearly a 1 per cent decrease in demand.
  • People traveling more. But when there are only a set number of hours in the day, and long term research has indicated a typical ‘travel budget’ of one hour daily – and most of us don’t ride buses and trains for the fun of it – that is very hard to do. The only exception is in places with lower trip rates in comparison to their peers.
  • Taking trips off your competition. In the public transport sector in the UK, on-road or track competition rarely exists, as the bus inquiry and a review of bidding for train operating franchises shows. That means you are attempting to take trips off other modes, ones which have very different social-economic characteristics to your own.
  • More people. Sadly the transport sector can’t just magic more people out of nowhere. It relies on housebuilding, new employment sites, and population growth for that sort of thing. In fact, the UK Department for Transport estimates that the main driver of future traffic growth in the UK will be growth in population.

This is important to understand in the context of Mobility As A Service. In order for any such service to work, every part of the mobility system needs to benefit. For one part to extract from another undermines the commercial viability of the whole proposition. After all, if people are paying the same amount for a mobility service, and they are still getting the same public transport service that is in turn getting less money from them, it is not an attractive proposition.

Oh, and enabling demand responsiveness and efficiencies in operation because ‘data’ is unlikely to cut it. What’s more, selling data to advertisers is increasingly a challenging proposition when so much data about customers is already available. 

It is worthwhile considering the fact that Mobility As A Service as has been sold is still largely just an idea. We don’t know whether or not it will work commercially, simply because we have not tried it commercially yet for any sustained period. And early trials such as Helsinki and Gothenburg have hardly set the world on fire in terms of proving the business model, although they have shown that some modal shift is possible. It’s worth noting that they are in environments where the public sector plays a significant role in the provision of public transport, however.

Creating a new market is a very tricky proposition – and it’s not guaranteed that what will result is any more in the customer interest or financially viable. This does not mean that we should not try or experiment: doing so is the only way of moving the transport industry into the digital age.

But the emergence of new dominant market players is not necessarily in the interest of the customer and the whole mobility ecosystem .If the future is Mobility As A Service, we cannot afford for the winner to take all.

James Gleave is a transport planner who has worked on projects ranging from school crossing patrols to autonomous vehicles. He writes about the future of transport on his blog at Transport Futures, and has also written for Local Transport Today, How We Get To Next, and The Guardian

 
 
 
 

Here are eight thoughts on TfL’s proposed cuts to London’s bus network

A number 12 bus crosses Westminster Bridge. Image: Getty.

In 2016, the urbanism blog City Observatory had a modest proposal for how American cities could sort out their transport systems: “Londonize”.

Its theory, the name of which referenced another popular urbanism blog, Copenhagenize, was that the key plank of Transport for London’s success was something that even transport nerds did not consider very sexy: its buses.

Though the Tube might get more glamorous press, London’s bus service really is impressively massive: It carries roughly 2.3bn passengers per year—much more than the Tube (1.3bn), close to the New York City subway (2.8bn), and nearly half as much as every bus service in America combined (5.1bn), while serving a population roughly 1/35 as large.

How has TfL done this? By making its bus network high frequency, reliable, relatively easy to understand and comprehensive. We rarely talk about this, because the tube map is far more fun – but the reason it’s so difficult to fall off the transport network in Greater London is because you’re never that far from a bus.

Given all that, we should probably talk about TfL’s plans to rethink – and in most cases, cut – as many as 36 different central London bus services over the next few months.

I’m not going to rehash details of the changes on which TfL is consulting from next month: there are just too many of them, and anyway it’s someone else’s scoop. The story was originally broken by Darryl Chamberlain over on 853 London; there’s also some fascinating analysis on Diamond Geezer’s blog. You should read both of those stories, though preferably not before you’ve finished reading this one.

Before offering my own analysis of the proposed changes, though, I should offer a few examples. More than a dozen routes are facing a trim: the 59 from King’s Cross back to Euston, the 113 from Oxford Circle to Marble Arch, the 171 from Holborn all the way down to Elephant & Castle and so on. A couple – the 10, the 48, the C2, and at most times the special routemaster version of the 15 – are being withdrawn altogether.

On, and one new route is planned – the 311, from Fulham Broadway to Oxford Circus. This will help plug some of the cuts to the 11, 19 and 22.

So, what does all this mean? Some thoughts:

1) This might not quite be as awful as it initially sounds

TfL says that demand for buses has fallen by around 10 per cent in London in recent years. It predicts it’ll fall further when Crossrail opens, as passengers switch to the new line, or to the tube routes relieved by the new line. So: the idea of taking some unwanted capacity out of the system is not, in itself, terrible.

Striping out unnecessary buses should also improve air quality in some of London’s worst pollution hot spots, and improve traffic flow, hopefully speeding up journeys on those buses that remain. 

A map from the presentation in which TfL explained its plans, showing the reduction in bus numbers on key arteries. Hilariously, notes Darryl Chamberlain, “It no longer produces its own maps, so has had to use one prepared by a bus enthusiast”.

The plans might even free up buses and staff to increase frequencies in outer London where demand hasn’t fallen – though these plans won’t be unveiled until next year and, for reasons I’ll come to below, I’ll believe it when we see it.

2) For many bus users, a lot of these changes will pass almost unnoticed

By my count, I use nine of the affected routes with any regularity – but only three of the changes are things that I’m likely to be at all inconvenienced by. Most of the changes either affect a part of the route I don’t take, or one where there are easy, and pain free, alternatives.

This is anecdotal, obviously – perhaps I’m just lucky. But my suspicion is that a lot of these changes will go unnoticed by most passengers. It’s only the sheer number of them happening at once that makes this look like a big deal.

3) The Hopper fare makes this easier...

Once upon a time, if you had to switch buses, you had to pay a second fare. This isn’t true of journeys on the tube or railways – and since bus passengers have, on average, less money than tube passengers, it amounted to a pretty unfair tax on poorer Londoners.

But in January, in what is probably his most notable policy achievement of his two years in office so far, London’s mayor Sadiq Khan changed the rules. Now you can take as many buses as you want within an hour, for a single fare: that means you can switch buses without paying a penalty.

That will have made it easier for TfL to cut routes back: replacing a direct bus journey with one that requires a change no longer means imposing a financial penalty on passengers.


4) ...but not that easy

That’s about where the good news stops, though – because there are reasons other than cost why people prefer direct bus routes. Needing to change buses will be difficult for anyone with any form of mobility impairment, for example. Even for those of us lucky enough not to fall into that category, it’ll be annoying: it’s just easier to stay in one seat for 40 minutes than to get turfed off and have to fight for a new one halfway through.

More than that, from the passengers’ point of view, excess capacity feels quite good a lot of the time: it means your bus may well be nice and empty. Reducing the number of buses along those key corridors will also make those that remain more crowded.

5) The motive is almost certainly financial

Another of Sadiq Khan’s big policy promises was to freeze fares. He made this promise at a time when central government is massively reducing the financial support it gives TfL (the work, Chamberlain notes, of Evening Standard editor George Osborne, back when he was chancellor). And the Hopper fare, while a great idea in many ways, means a further reduction in income.

So: TfL is scrambling for cash: this is why I remain cynical about those new outer London bus routes. I would be amazed if money wasn’t a motivation here, not least because...

6) TfL thinks no one will notice

Any attempt to reduce tube frequencies, let alone close a station, would result in uproar. Hashtag campaigners! Angry people pointing at things in local newspapers! Damning reports on the front of the Evening Standard from the bloke who made it happen!

Buses, though? Their routes change, slightly, all the time. And do you really notice whether your local route comes every 10 minutes or every 12? That’s not to mention the fact that bus passengers, as previously noted, tend to be poorer – and so, less vocal – than tube passengers.

So cuts, and the savings they bring, are much easier to sneak through. TfL probably would have gotten away with it, too, if it hadn’t been for those meddling bloggers.

Although...

7) Scrapping the C2 might be a mistake

The C2 runs from Parliament Hill, through Kentish Town and Camden to Oxford Circus. In other words, it links north London, where a lot of journalists live, to the offices of the BBC and Buzzfeed.

As occasional New Statesman writer James Ball notes, this is probably not the easiest route to quietly shelve.

8) None of this is set in stone

The consultation doesn’t even begin until next month and then will run for six weeks – so all these plans may yet be forgotten. We shall see.

Anyway – here’s Darryl Chamberlain’s original scoop, and here’s some detailed analysis on Diamond Geezer. Please support your local bloggers by reading them.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites.

Want more of this stuff? Follow CityMetric on Twitter or Facebook.