Workshop: Openness and paying for transport

Discussion from the TravelSpirit Conference, 26 September 2017

Derek Halden, Loop Connections and TravelSpirit UK board member

Presentation:

Workshop:

The technology revolution offers huge potential for connected, flexible and better travel opportunities but global companies battle for power to carve out the monopolies through which the greatest future profits could be delivered. Which company will run the default software for autonomous cars, or the ‘go to’ place to make new types transport purchase?

After housing, in developed countries, transport accounts for the largest element of spending in household budgets. There are very large potential prizes for the winners in transport markets.Technology enables transport services to be bought and sold in an online marketplace, but online purchases still make up only a very small proportion total sales for some types of transport. Travelspirit has been looking at why bus and rail transport, for example, remain so closed. A restaurant, retailer or event provider cannot easily offer promotional free bus or rail travel.

At the workshop representatives from the bus and rail industry got together with policy makers, researchers and technologists to identify a roadmap towards more openness. How could bus and rail travel be sold alongside other transport, other services and retail purchases?

The workshop identified three main things:

The message from transport operators to customers remains that the best value, when travelling on their services is from buying direct. What they don’t tell customers is whether another company could provide a better alternative, or even if the customer has made the best choice in their direct purchase. For rail travel, many ticket prices are are regulated, so there are restrictions on how tickets can be retailed which also constrains openness. Government has cast itself in a consumer champion role, but its initiatives to promote multi-operator ticketing and payment systems and information about prices (including rail ticket price anomalies on non regulated tickets), lack the flexibility that has enabled open user friendly systems in other sectors.

Travelspirit could take on a stronger role to highlight gaps in openness and score bus and rail operations according to their level of openness. The Travelspirit ‘openness index’ is one way to achieve this with specific scoring for the openness of payment systems.

There is a need for an “open internet of mobility” where mobility services by bus, rail, taxi, parking, cycles, car hire and other travel can be traded under clear terms and conditions defining the rights of customers when purchasing through an intermediary. Transport legislation will need to be refreshed to clarify customer rights and responsibilities such as what happens if a service does not meet a defined level of performance. If a taxi is held up in road congestion so a customer misses a train losing out on a cheap rail ticket then is the additional cost paid: by the customer (as at present), by the roads authority (for failing to keep the roads congestion free), or the taxi operator (for failing to complete the journey as scheduled). The potential terms and conditions in the open internet of mobility are immensely complex and it can only be built step by step.

Given that taxi, car hire, bike hire, air services and parking all have current levels of openness and commisson structures for third party sales above that for bus and rail, the promotion of mobility accounts and mobility as a service (MaaS) could tend to boost the competitiveness of the more open options. Progress in making bus and rail ticketing more open will be needed to avoid MaaS being a competitor to potentially more socially efficient transport services.

Travelspirit’s survey of the industry identified that everyone wants a payment system that allows one purchase for all modes of transport. Online marketplaces like Ebay and Amazon have shown that purchasers can find better value when offered more choice, provided the sales are backed up with a clear customer service promise. It may be that if all customers were perfectly informed and all transport operators of equal quality then buying direct would offer better value but they are not. There is value to be added from packaging and bundling transport to help people lead more rewarding lives. The barriers to a more open marketplace for transport are less about technology than about the embedded business models for current transport operation.There were many companies like Loop Connections at the workshop looking to bundle and retail services in new ways. This is a potentially very large market, so collectively all of the companies do better if payment systems can become more open.

Once other consultations have taken place with partners, Travelspirit will publish a roadmap to open payments later in the year.

Further resources:

Open Payments Discussion Paper

Further discussion:

Derek Halden Blog