Article Highlights

Key Takeaway:

For MaaS expert David Hensher, mobility-as-a-service initiatives lack scalability and commercial sustainability. He recommends that MaaS backers drop their “multimodal” approach in favor of a “multiservice framework.” The latter includes rewards and other nonfinancial perks.

Key Data:

In the conclusion of the final report on the two-year Sydney MaaS Trial, Hensher wrote that the few actual MaaS products on the market, such as Whim or Ubigo, “are either pump-primed by venture capital or government subsidy.” Operational offerings are scarce, he noted. As a result, “MaaS is in danger of becoming a hyped socio-technical phenomenon lacking full-scale implementations.”

Organizations Mentioned:

• ITLS (Univ. of Sydney)
• Transport for NSW
• Uber
• Whim (MaaS Global)

Mobility as a service, at least in its present form, will not scale and has little commercial sustainability. MaaS, in fact, may never live up to its hype or see large-scale rollouts.

David Hensher, a prolific writer and researcher on MaaS and founding director of the well-respected Institute of Transport and Logistics Studies at the University of Sydney, didn’t reach that conclusion lightly. In fact, he was originally bullish on MaaS as a way to use digital technologies to create sustainable modes of transport and get more people out of their cars.

But after seven years of study, including heading one of the most important pilots of MaaS to date–the two-year Sydney Mobility-as-a-Service Trial–Hensher believes the challenges MaaS faces will be difficult, though not impossible, to overcome.

Among these challenges are unsustainable business models, lack of compelling offers for users and, just as importantly, substantial mistrust among mobility providers and other parties that would participate in a MaaS scheme.

Transport industry veteran and well-connected MaaS promoter Andy Taylor of Cubic Transportation Systems called Hensher a “true MaaS scholar, who has done more for the development of MaaS than any other academic.”

Hensher, however, doesn’t speak in the often dry language of an academic when he discusses what he thinks is ailing MaaS and how the industry can avoid what is shaping up to be a “MaaSive failure” of the technology, to use a term he and some others in the industry have coined.

Mobility Payments spoke to the British-born academic and commentator in a wide-ranging interview about MaaS. (The following Q&A has been edited for length and readability.)

Mobility Payments: You’ve said that “the ecosystem of MaaS appears to have many challenges to face and resolve before we can see a pathway to scalability, and even a business case that might have commercial legs.”

It sounds like you’re saying you have your doubts that MaaS can (ever) scale and doesn’t have a sound business case. Is that what you’re saying?

David Hensher: Yes, I’m saying that exactly. We are, mind you, at the very beginning of the learning curve in terms of MaaS. And there’s so much we still hopefully can learn. But at the end of the day, the fundamental question is, what do we need to do in designing a MaaS offer that actually attracts people to change their travel behavior?

That’s the ultimate question. And if we can’t change travel behavior and in a sustainable way in terms of goals like reducing emissions or congestion, then MaaS has no value at all. And at the moment, we are not seeing anywhere in the world at all that the (MaaS) products are getting people out of their cars in any significant way.

Mobility Payments: In the conclusion of your Sydney trial report, of which you were the lead author, you noted that the few actual MaaS products on the market, such as Whim or Ubigo, “are either pump-primed by venture capital or government subsidy.” Operational offerings are scarce, you noted. As a result, “MaaS is in danger of becoming a hyped socio-technical phenomenon lacking full-scale implementations.” What, in your view, can save MaaS?

Hensher: Well, I think, first of all, there’s got to be a realization that just simply delivering the next fancy trip-planning app–which will have a lot of useful information about different ways in which you can travel–but unless it can change travel behavior in a significant way, then growth in use of the MaaS concept will not be there.

I guess what I’m trying to say is that, at the end of the day, MaaS will only have a future if it changes travel behavior of a sufficient number of people. Now, let us not get into the discussion as to who, at the moment, should own that platform–should it be owned by the public sector or by the private sector or a mix of partnership. To me, that is far less important than what is in the product that would change travel behavior to grow patronage on all the modes that are offered through the MaaS product, be it PAYG or subscriptions.

When you ask, have any of these MaaS programs changed travel behavior? It’s marginal; it’s very, very marginal. It’s nowhere near enough to suggest that the value proposition for an Uber or a taxi or public transport can actually benefit by joining a MaaS product rather than just staying as a single mode.

Mobility Payments: Your Sydney trial report concluded that without a “monetary incentive,” travelers appear to see very little value in MaaS and instead might go on using Google, Apple or Opal Connect from the Sydney public transit agency. Is that what the trial found?

Hensher: I really said it in my latest paper. Just think about it: All that MaaS is doing is taking a bunch of unpackaged modes and packaging them. But if you package them so the levels of service and the fares do not change compared with the unpackaged, what are you actually gaining? There’s no financial or can I now say nonfinancial incentives. We’re now suggesting that both financial and nonfinancial incentives need to be considered.

And this has led me to move away from MaaS as a multimodal framework to a multiservice framework. And when you think about it, that’s pretty much what many other sectors do anyway, like the airlines, which package a hotel and a rental car and discounts for certain shops through your frequent flyer points.

Well, that’s what I’m saying MaaS has to look at. It has to have a reward program that goes beyond discounts on the modes to other incentives of a broader nature. I think there are not enough appealing features of multimodal–such as (offering) a small financial incentive, a 10% reduction in fares, in a MaaS product to really get enough people interested.

Mobility Payments: Is MaaS, in a commercial sense, sustainable, or will MaaS platforms need to have government subsidies? Of course, transport is already subsidized. But do you think government needs to go further to subsidize these initiatives?

Hensher: At this stage, yes. And herein lies the dilemma–because you’re absolutely right that conventional public transport is pretty heavily subsidized, in most Western societies anyway. And from what I’m reading and in talking to various government agencies, they’re not interested in putting any more subsidy through to MaaS. And one of the reasons is they have a dilemma. Because if there are going to be many MaaS products provided, do they subsidize all of them, or do they take just selected ones?

But having said that, at the moment, government’s also said, “Why should we subsidize Uber in MaaS? And if we subsidize MaaS, are we actually benefiting the public transport component? The government’s got the view that, “We don’t subsidize the nonpublic transport modes.” So therein lies a problem.

Mobility Payments: What kind of government regulation do you think will be needed in addition to subsidies to help MaaS along?

Hensher: I’ve made this suggestion in a current project we’re working on with the Queensland government, which is trying to work out how to build in a future MaaS product in their ecosystem. And one of the things we think they should try and do is to basically come up with a number of requirements that need to be met, like reduced emissions and reducing car use, and put it out to tender and just see what happens.

Mobility Payments: Regarding payments models, you seem to believe that the pay-as-you-go option may not be enough to attract potential users or change their travel behavior. Do you think the subscription model holds more promise, and if so, why?

Hensher: It does, yes. Unless pay as you go can have built-in financial incentives, which we didn’t test, then a subscription package is more appealing. To date, it’s been suggested that financial and nonfinancial incentives should be built into the subscription plan, whereas with PAYG, it’s not clear how the financial incentives can be funded.

And that’s another important point. When you have a trial, we got money to subsidize the financial incentives. In real markets, who’s paying for the financial incentives? I can tell you today that the suppliers (mobility providers) are not interested. And the reason they’re not interested is because I don’t think they’re convinced at this stage that the market is big enough to warrant providing a subsidy through MaaS.

In fact, Uber has told us that until it is scalable and they can see huge growth in patronage that doesn’t dilute the non-MaaS market that they have, they’re not prepared to consider any discounts within the MaaS ecosystem. So scalability is in many ways a really big determining factor for who will actually support the financial incentives.

Mobility Payments: We’ve heard some proponents of the pay-as-you-go model say that with the pandemic, which completely changed travel and commuter patterns, people are going to need flexibility. Can that be built into the subscription model better than with pay as you go?

Hensher: Absolutely it can. If someone’s working from home two days a week, then they’re not going to be willing to buy a weekly plan. But that can be easily solved by having flexibility in the plan. And we’re a great believer in that. But the other thing that is important, and we know to some extent (the) Whim (app) has this, you can subscribe to MaaS with a family or a group. In fact, I think group subscriptions or employer-based subscriptions may actually have more legs initially than individual subscriptions, because employers, who have these social licenses or these sustainability goals, see some merit in promoting these modes to their employees.

Mobility Payments: Another challenge facing MaaS is building trust among the mobility providers and other parties, and you’ve touched on this with Uber, for example. Why is it so challenging to foster trust?

Hensher: What I think we’re trying to do here is build a single business model to benefit many, many transport (and mobility) suppliers who have their own business models and don’t quite see how they can talk to each other. And because they’ve never really worked closely together before, they are very worried that each supplier will end up diluting the other supplier’s advantage within the product set. And so until it can be shown that that won’t occur, then they’re not so interested.

A pretty good example here, we tested using first and last mile with Uber. One of the suggestions during the trial was why don’t we try to get Uber to partner with public transport. If someone who is going to use public transport actually uses Uber to get to it (transit stop or station), there could be a significant discount on the Uber price. But you only will get a discount if you use it to connect to public transport, not if you use Uber all the way. Well, immediately, Uber thought that was a great idea. But then in the next breath they assumed that the public transport authority would cover the discount. And they (authority) said “No, it’s going to benefit you.” (Uber responded), “We’re not interested.”

(Editor’s note: This offer was separate from a planned trial phase by Sydney transit authority Transport for New South Wales, to offer users of its digital closed-loop Opal card an AU$3 (US$2.20) credit if they would take an Uber, ingogo taxi or Lime bike within 60 minutes before or after they would ride on a Transport for NSW metro train, bus or other mode. But the agency shelved the trial because of Covid. The Sydney MaaS Trial, on the other hand, did include a feature to allow users to get a discount with Uber if they took the ride-hailing service for the first or last mile for public transit. But Hensher said the discount “made no difference.”)

It wasn’t an attractive proposition at all, because it’s still an expensive fare. Uber’s not cheap even with a discount. (Instead) we catch a bus to a station or in some cases driving and parking.

Now the point is, if we’re going to make MaaS work as a sustainable outcome, we need to see what the emission impacts of all these strategies are. And since there was hardly any change in the use of Uber, it didn’t really have any emission impacts.

The biggest impact was when we started playing around with an (emissions) challenge. We were tracking car use, a challenge, which said that if you, in the group, could reduce your car kilometers by 1% (or) 2%, we will give you an emission rebate, equivalent to so many dollars in terms of your subscription fare. And we got into the field for two weeks, and that was showing really good signs but then COVID hit. Unfortunately, we couldn’t continue.

Mobility Payments: So do you think that, at least at the present time, the only way MaaS will be sustainable financially is through government subsidies–to meet climate change mitigation goals, for example?

Hensher:  I think the business model initially must start off with a commitment from government to support it and provide some amount of subsidy to support all the players until such time as it becomes scalable, where they can demonstrate or not commercial value. And commercial value does really mean significant nonmarginal changes in travel behavior.

Sadly, with Covid–I never talk about after Covid because that will never exist–I do think that we have gone backwards because private cars are starting to dominate again.

For future MaaS products, if you can’t get people out of their private cars, then you build the car as a corporate offering within MaaS. So, for example, people who don’t own a car can, through the subscription, get access to an electric car or a rideshare or public transport. And the electric car, like a rental car really, can be made available whenever they want it. And the beauty of putting it through a corporate model is that they don’t have to have the same vehicle all the time. It depends on their requirements. They might need a larger vehicle for moving something or a small car for commuting.

It’s electric, so it’s environmentally sound, and it will change travel behavior to some extent. But the trouble with that model is it might be just switching the private car to the corporate car and (users are) still traveling by car on the road.

So what I’m really saying is, wouldn’t it be funny in the long term if MaaS’ success is due to the growth in electric car use?

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