Why wait for Uber and Lyft? On-demand public transport.

The term on-demand public transport refers to a transport system and a public transport service that operates with extensive flexibility in terms of routes, timetables and vehicles. In fact there are no predetermined routes or timetables. As the term suggests, the system is based principally on individual or group demand for travel rather than on a planned and defined supply of public transport options. In the most common applications, customers would have to call, or send an email / SMS at least an hour before their desired trip and expect to be picked up from their origin within a few minutes of their desired travel time. The reason for this is that the system groups similar requests based on location of origin and destination and time of travel and then assigns suitable vehicles to transport all such requests at the same time. On demand PT Systems provide a service similar to taxi but at a cost lower than the taxi and higher than the regular PT service. Historically on demand transport systems were developed to serve rural, sparsely populated areas and also as a service to elder or disabled people. Such systems have the following three elements in the core of their operation:

The contact centre

 

The contact centre is the central hub for the system’s incoming requests. Staffed appropriately and equipped with all different communication technologies, it serves the purpose of gathering requests and entering them into the system. It also provides available information on how the system works and answers customers’ questions. In the past, such centres were dealing predominantly with telephone calls but since the introduction of the Internet and especially nowadays with the wide spread of smart phones, most of the requests can be fully automated. Quite often on-demand transport contact centres are outsourced to specialised businesses sharing this way the overheads with other systems or companies. Trying to exploit globalisation and lower the cost of the system sometimes contact centres are outsourced to countries with much lower wages.

The routing software

Route planning and scheduling for regular public transport services is a complicated procedure that needs to take into account many parameters. When planning bus routes or train timetables, the strategic vision and objectives of the whole-of-city transport system is equally important to the estimated trip matrices of each mode or sub system. Routing software has been available for decades to help transport planners propose the most effective routes and schedules. The first attempts on developing such software, were heavily based on the shortest path routing algorithm. Over the years, the algorithms become more complicated taking into account travel times, toll roads and motorways and even network restrictions. Most large transportation or trucking companies use similar software not only to select the most efficient routes for their operations but also to track their fleet and measure its performance. Today there’s plethora of commercial applications for this purpose and also a large number of open source solutions that lower the cost to the transport operator of an on-demand system. Of course the most widely used route planning tool is none other than Google maps.

The fleet

 

Public transport operators usually try to limit the types of vehicles that they have on their fleet. Having the driver salary as their major cost, they try to minimise maintenance cost by having a fleet of certain types and models of vehicles. This allows them to get better prices by buying spare parts in bulk and no need for vehicle mechanics specialised in various types of vehicles. In doing this, they usually select large vehicles which while they provide passenger capacity; they often are not able to drive through narrower residential streets and provide door to door service. On-demand PT systems opt for a different approach: Different sizes and types of vehicles with different passenger capacities. This sometimes includes even motorcycles or motorised tricycles. The most commonly used vehicle in such system is the mini-bus with seating capacities between 10 and 20 passengers.

Part of the wider 'On-Demand Economy'

On-demand PT systems have not been particularly successful all these years since they first appeared.   Such services are considered a wider part of the On-Demand Economy, “defined as the economic activity created by digital marketplaces that fulfil consumer demand via immediate access to and convenient provisioning of goods and services.” The recent successes of other sectors of the on-demand economy indicate that maybe the time has come to see a rapid expansion of such transport systems.  The food industry is one of the areas where on-demand economy is growing with companies like Seamless, GrubHub or Instacart growing their annual revenues and attracting huge amounts of funding for their expansion. Home services and repairs is another sector that the on-demand economy is taking big steps every day. And of course the giant of on-demand services, Amazon is envisaging that soon would be able to deliver purchased items literally from the sky with the use of drones. The success of the on-demand economy businesses that indicates that public transport should go the same way is due to mainly three reasons:  

Consumer behaviour

Probably one of the most researched areas in the field of psychology, taking elements from almost all other social sciences, consumer behaviour study has done huge progress in tracking people’s attitudes and understanding the reasons behind their decisions when buying goods or services. Since the introduction of the Internet, consumer behaviour that was more or less stable for decades started changing dramatically. The average consumer today, demands fast, simple and efficient buying experiences. She’s no longer satisfied with issues that in the past used to be the norm, such as the local shop running out of a certain product and having to wait even a few days until it restocks. Consumers are also much more sensitive in terms of pricing. Specialised websites and businesses offer price comparison services, available to the potential customer instantly. The ease of scheduled deliveries and the reduction in required delivery time are also relatively new factors.  Personalised services and digital connectivity are now considered standard requirements by the tech-savvy generation Y.

Consumer technology

As discussed the big drive of the consumer behaviour change comes from the new technology. It started off as technology to support communication, defence and infrastructure but soon found numerous applications in the business and consumer world. The Internet was the first big factor but it was the smartphones that made such services available to the masses and most importantly all the time. The slogan “always on, always connected” made most marketing executives extremely happy, realising the potential. Having a smart phone allows the consumer to have all the goods and services available constantly. Sitting on the daily commute you can order dinner to be delivered at home exactly at the time you get back from work.  And these mobile devices truly deserve the title smart: Personal digital assistants allows consumer to search for products and services according to their own criteria and weights. Other consumers’ reviews provide useful information on the products and services we are about to purchase.  The new generation mobile phones can act as a wallet too. The contactless payment technology is becoming the most common way of payment. At the same time transport, freight and delivery logistics got much more efficient and less costly. This made ordering and purchasing a product from remote markets much easier and more attractive.

Innovative business models

A series of disruptions in traditional business models was another big driver for the expansion of on-demand economy. Access economy is a business model where the focus moves away from ownership and goods and services are traded on the basis of access. With the use of technological platforms, consumers are connected with suppliers willing to rent goods for short or medium term. Why do you need to buy a hammer drill when you would only use it just once to install a new furniture?  Movies and generally home entertainment has already adopted this model and quickly it is becoming the norm. Even software like Microsoft Office or Adobe Acrobat is now offered on an access basis. The other big trend in business models is sharing economy. Quite often the two terms, sharing and access are used interchangeably but at least in my view, there is a significant difference between the two terms. In access economy businesses rent products and services they produce and own while with the term sharing economy we usually imply businesses offering services which themselves don’t own.  Uber doesn’t own taxis nor employs any taxi drivers. AirBnB doesn’t own any hotels, houses or apartments. Both companies provide the connecting services. The other big difference between the two terms and models is the fact that usually companies in the sharing economy connect consumers to goods and services from people that don’t operate as a formal business. Most AirBnB accommodation is people’s houses or holiday houses, most Uber drivers have a regular job and they drive for Uber as a form of supplementary income. 

Who can implement such a system and how?

Such a system is obviously missing from Brisbane, South East Queensland and pretty much the whole of Australia. There’s a small number of successful on-demand PT services operating in Melbourne and Sydney. But they are mostly services to and from the airport. The term shuttle service is commonly used for these types of services. Skybus transports passengers from Melbourne Tullamarine airport to their CBD hotels and the other way around. Similar services exist in Brisbane too. There are also a couple of Translink and Brisbane City Council initiatives that resemble on-demand transport. Personalised Public Transport (PPT) is a service that operates in areas where TransLink services are restricted. Community transport is available to help people who have a disability, travel for shopping and social activities or medical appointments. All of these attempts though are nowhere near the successful examples in Europe and the USA. Of course the giants Uber and Lyft are leading the way with UberPool and Lyft Line but new players pop up constantly. Even large vehicle manufacturers like Ford are jumping on board and start providing similar services. Eventually all these companies will start appearing and providing services in Australian cities. The question is what will traditional public transport service providers do? Is there a space for operators like Translink or PT Victoria in providing such services? The short answer is, yes of course. In fact such operators have a series of advantages over every other competitor:

Huge customer base

Scale of operations is one of the most critical issues for the success of on-demand PT services. Scale was one of the main reasons of the discontinuation of the hugely popular and successful Kutsuplus service in Helsinki. Uber is spending hundreds of millions of dollars to achieve this large scale of operations. Traditional PT providers have an already established large scale operation. Millions of customers provided with Go Cards or Myki Cards are the already constructed base for such a system.  

Technical know-how

While traditional PT operators don’t have the specialised business knowledge and organisational structure to support the new business model trends, they do have extensive technical knowledge in terms of transport and route planning. Experienced transport planners, traffic modellers and even depot managers provide traditional PT operators with an unprecedented human and intellectual capital that companies like Uber could only dream off. They also have huge amount of travel data both from their card systems and from household surveys that they perform regularly.

They are government

While this might be also a disadvantage due to competition legislation, it gives traditional PT organisations the ability to achieve strategic alliances with all other government sectors that regulate transport issues.  Traditional PT operators tend also to have better relationships with the wide range of stakeholders involved in public transport. Local governments, fleet and service providers and community groups have regular communication with the government transport departments for a range of issues.

The easy first step

Politicians and transport bureaucrats are sceptical and hesitant in planning and implementing such new systems mainly because of the limited success that on-demand PT systems had in the past. Yet, there’s a simple solution to address such concerns and lies within the very first steps of planning, the pre-feasibility stage. Utilising the PT operators websites and specifically the “Journey planner” applications that all such websites have, transport planners can simulate such a system by treating each search as a request for travel. These websites attract a very large number of searches. They usually include the exact origin and destination of the trip and also other travel requirements as the required arrival or departure time and the maximum distance that the passenger feels comfortable walking. In addition to all this information, PT operators can ask Google for help. Google maps have a similar “journey planner” or “directions to” function. Running such a simulation for a long period (6-12) months would allow for a robust detailed business case, testing different scenarios. This exercise can be supplemented with passenger surveys, trying to estimate the level of fares that people are willing to pay for such a service.

The role of taxis and limo services

Taxis and limousine services are one of the industries that are going to be hit the hardest by the introduction of large scale on-demand PT services. There is already a huge wave of protests from the taxi industry in relation to Uber X services operating in cities. Taxi licence restrictions have in the past made the licence itself a valuable and tradeable commodity. With the expansion of such services and especially with the introduction of pool services like Uber Pool and Lyft line, taxis are bound to loose even more customers and the licences are bound to become less and less valuable to the point that might be worth nothing. The obvious solution for taxi companies is to step up and adopt modern business models, technological systems and customer focused mentality. Their most beneficial option though is to become business partners in such companies. Exchange their dropping in value government issued licence with shares of the newly formed on-demand PT operators. And add their vehicles and services to this large scale system.

The role of community groups and their vehicles

It is quite common for community groups to own one or more passenger transport vehicles. It is usually mini-buses and they are mostly used to transport the mobility-disadvantaged members to and from community centres and events. In most of these cases, the vehicles are heavily underutilised as the demand for such services in each community group is relatively low. This is often a problem for community groups with limited human and financial resources and such services can’t be sustained in the long term. Collaborative approaches have been proposed in the past, usually at a regional level with not much success. Integrating all such services and vehicles in a large scale on-demand PT system could provide a far more sustainable way for the local communities to serve their transport needs.

 

How about autonomous vehicles?

Autonomous vehicles are the hot topic of discussion for everyone in the wider traffic and transport industry. And it seems that in one form or another, autonomous vehicles would be a reality in our cities much sooner than original anticipated. There’s much speculation on the effect of AV technology in urban and regional travel and especially in the future of public transport. Would the anticipated increase of traffic capacity of roads, due to the introduction of such vehicles, decrease the demand for public transport? Would we end up having a fleet of autonomous vehicles running perpetually from one transport task to the next regardless of who owns them? While there aren't any easy answers to all such questions, autonomous vehicles seem to be destined to be used for on-demand PT systems. Global warming and air pollution in the cities would make the pooling function of such a system a necessity and AV’s are better suited for such a role, removing the human factor from the decision making and increasing the reliability of the transport system.