Making MaaS work: overcoming the issue of governance
Governance, not technology, is the real challenge facing MaaS implementation, says Søren Sørensen, MaaS Ambassador and Facilitator, SFMCON ApS, as he assesses the business models that will make it work, and asks whether the ‘Finnish model’ is the only way forward…
Public transport has been talking about multimodal smart ticketing for decades. While some have managed to get multimodality to work in cities, very few are multimodal on a national scale. The Netherlands and Denmark are two examples that have managed to be successful nationally, with Ov-chipkaart, a contactless smart card system across The Netherlands, and rejsekort, a commuter combi travelcard popular throughout Denmark.
Multimodality is mentioned frequently in debates on public transportation systems, yet we all try to minimise modal shifts whenever possible for convenience reasons. This is why the car is a powerful door-to-door mobility device. How can we ensure that people can not only travel from A to B but from door-to-door using shared mobility services?
The MaaS vision
Do we think shared mobility in the future will be able to create more value to the users, suppliers and society?
Imagine if all shared mobility suppliers, public and private, plugged into a digital open market with open data defining their service offerings, enabling everybody to see and choose.
Now imagine an open API plug that can offer, book and pay for mobility services between actors on the market, providing complete travel plans, prices and a single payment for customers.
Finally, imagine that suppliers send mobility production data to a shared data repository and receive relevant information back for tuning their operation.
This is a basic framework for an open MaaS ecosystem. Although it appears easy to imagine, the question is how easy is it going to be to accomplish?
Finland is the first country in the world to regulate an open market for mobility services for passengers and goods. The new law on Transport (The Transport Code), effective 1 January 2018, essentially mandates all mobility providers to open data and API’s to third parties. At the same time the Transport Code regulates that essential business and tax rules are followed by everybody, including the MaaS providers.
Business model for mobility service providers
In general, all shared mobility suppliers have the same basic elements in their organisations to support their business, which are displayed in Figure 1. All suppliers can move customers from one point in the geography to another, but this does not necessarily cover the whole door-to-door journey. It is up to the customers to navigate between the silos of mobility suppliers to find a travel plan that fits their mobility needs. The private car can be an easy alternative to avoid the hassles of planning mobility freedom through shared mobility services.
Mobility suppliers feel a high degree of ownership to their customer base and are almost instinctively against a new party (MaaS provider or agent) in the value chain between the service offering and the consumer.
Business model for MaaS
The MaaS agent is going between the customer and the suppliers of shared mobility services. Through aggregation and the bundling of offerings, the MaaS agent helps customers to select the right package of mobility based on a set of questions, including where from, where to, how and how much?
The ambition for the MaaS agent is to deliver a complete journey door-to-door: one price, one ticket and one payment.
However, the MaaS business case has some serious challenges to overcome in order to be successful:
- The willingness of incumbent public and private mobility suppliers to interface to and work with MaaS agents fronting the customers
- Commercial agreements with MaaS agents on conditions to sell on behalf of a mobility supplier for a reasonable fee or commission, mark up on volume purchases or other forms of compensation
- Customer conversion to, and adoption of, MaaS one-stop shopping
- Ability to present a trustworthy offering to customers to maintain freedom of mobility by conversion from private car ownership to use of MaaS.
Making it easy for the customer to get from A to B requires a lot of work behind the curtain. Look at the airlines which transport customers anywhere with one ticket reference and one price in one currency. Easy for the consumer, but only possible because all participants see the benefit of being part of a global shared mobility ecosystem coordinated through IATA and the major reservation systems.
To bring a ground based-MaaS ecosystem alive requires a similar level of governance, coordination, trust and investment.
Governance – the potential showstopper for MaaS
How can public and private mobility operators coexist in the same mobility grid and how do we handle the governance between parties? In Finland, the governance has been resolved on a national level by law so a level playing field has been established for both local and international actors, including MaaS. Is it possible to create an open ecosystem for MaaS elsewhere, not by law, but as a joint effort between shared mobility actors and upcoming MaaS agents, simply because it makes sense?
Consider the mobility market as a Red ocean or a Blue ocean market, displayed in Figure 2. The split between mobility produced by private car and shared mobility options is typically 80:20. The private car dominates the mobility market and will of course try to protect its market share. How can suppliers of public and private shared mobility services act in the market?
Red ocean strategy:
The shared mobility actors see each other as rivals competing for the same customer base (20 per cent). As a result, protectionism and marginal gains/loss between the actors will be witnessed, with an overall unchanged customer volume.
Blue ocean strategy:
The shared mobility actors see the privately-owned car as the main competitor in the mobility market. By partnering and making it easy for the customer to maintain freedom of mobility using shared mobility services, the shared mobility actors can win market share from the use of private car. If you can convert just five per cent of mobility to shared mobility you could increase the shared mobility business by 25 per cent.
MaaS is not just smart technology. It is a question about governance and good business sense.
Can we see the value for everybody in creating an open market for shared mobility services? The MaaS market relies completely on the willingness of the mobility actors to open access to plans, available inventory, bookings and payments.
However, MaaS by itself is not enough to increase the market share for shared mobility. It must be combined with investment in growing the total grid of shared mobility options. Access to shared mobility including a mix of shared cars outside your door or within short walking distance is needed. Without that, the private car will remain the winner of freedom of mobility.