MaaS Set to Get Rolling in Stockholm

At the beginning of 2019, a commercial mobility-as-a-service (MaaS) operation will launch in the Swedish capital Stockholm offering households five mobility modes – public transport, car-sharing, rental cars, taxis and bikes – via a single app on a subscription basis.

The operation, owned and operated by UbiGo, could determine the shape of future mobility according to CEO Hans Arby. The project will launch with 200 to 300 households in five specific areas in Stockholm, in collaboration with real estate developers who will be offering the service to tenants in lieu of parking spaces. “If you’re a real estate developer, you don’t want to build a lot of parking spaces, because it’s very expensive,” Arby explained. “If the developer shows the city that they have all these mobility solutions and receive lower parking norms, they will save a lot of money.” The housing project will need only a handful of parking spaces for the car-sharing vehicles and UbiGo and the developer will collaborate on marketing.

Currently, a similar MaaS project, on a much smaller scale, is being tested in a housing project in Gothenburg in which 70 families took part for six months. It was in that pilot that the business model being used in Stockholm was developed and refined. “We wanted to test if it was possible to offer a service that would convert car owners and if it was possible to run a business on it,” Arby said. “Convenience is really the trick because, even if you get stuck in traffic, you know how to use a car to get from A-to-B. A MaaS service has to be as seamless as using a car, and access to the different modes is important.”

Defining the price model was also a challenge, because of the varied and often complex price structures of the different transport modes and because the service is subscription-based. The subscription is shared by the entire household because the car is usually the primary transport mode for the entire family and that a family, inevitably, uses a mix of transport modes.

“Our price model is per hour,” Arby said. “So you decide how big a subscription you want –  6, 12 18 hours, say – and you can also use those car-sharing hours for a rental car. You decide how many days of public transport you need and how many hours you will use a car.”

For taxi use, it was decided that the simplest solution was to charge the user on the monthly invoice, where other charges were also added, such as forgetting to tank up the rental car after use. In addition, unused monthly hours are rolled over for the next month and the household can easily add hours to the subscription.

After the Gothenburg pilot it was found that most households wanted to continue using the service. There were other lessons learned: “There are three challenges [to mounting a MaaS venture]: recruiting customers, recruiting transport suppliers and making money,” Arby said. Regarding the first hurdle, he noted: “We found that it was harder to market than to sell. We had an ambitious recruiting program. People said we’ll start with this [transport mode] and that one but once they understood what we were offering, it was very easy to sell them on it.”

Finding transport suppliers was more challenging and there was a similar degree of reluctance to sign on by both public transport and commercial operators. “If you go to a car-sharing company or taxi company, they will see a big risk of cannibalism, that you’re taking away customers they already have,” Arby explained. “They fear losing customer relations, losing their brand. That is kind of the same for all suppliers. You really need to manage them, because if you don’t get suppliers, you don’t have a service.”

Arby said the argument UbiGo presented to reluctant suppliers was that, because the service targets car owners, they are actually creating new customers and that they, the suppliers, will be the only ones delivering the service to them. “That’s one reason we have just one supplier per transport mode – though car-sharing might be different, if one company is dominant in a part of the city. Another reason is that it’s easier to do technical integration.”

Another barrier to mounting the service was the reluctance of public transport operators to open their ticketing systems to commercial operators, Arby said. That is why they are asking governments to open public transport ticketing: “At least for standard tickets. There are a lot of companies that want to sell public transport tickets and reach new customers: event, tourist or taxi companies, for example. What we do is more complex and maybe they can do concession procurement and [pass] legislation to force public transport to open up.”

According to Piia Karjalainen, senior manager at ERTICO – ITS Europe and the MaaS Alliance, a public-private mobility lobby group, “We really need public transportation, because otherwise MaaS won’t be sustainable, economically or environmentally. We’ve learned that the issue that worries the public transport operators the most is transparency in the MaaS application. For them it’s of course important that it’s 100% transparent how the different mobility options are made available in the application and that it doesn’t prefer any transport provider over others. It’s a question of the neutrality of the algorithm.”

To provide a car-sharing service to its customers, UbiGo tweaked its business model, he explained. “We are now doing something I didn’t plan. We are taking responsibility for the car-sharing. We are a B2B customer to the car-sharing company. We recruit the customers and they run the service on our behalf.”

UbiGo had to resort to this strategy because the nationwide car-sharing provider Sunfleet is part of Volvo Mobility and the Swedish carmaker closed it to other businesses, Arby noted. “The auto market is very risk-averse and conservative,” he said. “The only way to convince them [to collaborate] is that they see they are making money they wouldn’t earn without this kind of service. We need to prove that it’s good for everybody.”

The most difficult, and arguably the most important, problem in running a MaaS service is that of any new business, making money, not only for the business itself but for its transport suppliers. “We have a model where we can make money but it’s going to be tough,” Arby said. “It’s based on volume, on having good deals, with very cost-effective marketing. We are all-inclusive, like a vacation charter company. That gives us the opportunity to get some margin off the subscription. If you just have a multimodal travel planner with lots of travel modes on it, which is a very expensive platform to run, and you get 2% commission, that’s not a business. You’re not making money on it. With MaaS you will never make a lot of money. If the integration doesn’t create value in itself, then you shouldn’t do it.”

Karjalainen foresees a future when MaaS subscribers are able to use the service as they travel throughout Europe, the way mobile phone users can today. “We would like to see a really wide rollout of mobility as a service, to see it available everywhere in Europe,” she said. “Our vision is more from a user perspective in that the service should be available in a roaming format, as mobile service is, so that the service the users have chosen in their domestic market is compatible and interoperable with services available whatever location they are in and that they have a number of MaaS operators to choose from.”

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