Premium Shared Mobility Services and the Redefinition of Luxury
When we think of ‘premium’ in the market for mobility, we often think of luxury cars. Flashy, powerful vehicles which both feel and look important. In a future of unbundled mobility, with mobility increasingly provided as a service, new premium services will be required for operators to distinguish themselves from the crowd and to squeeze out additional revenues. While before, engine specifications and brand names alone were enough to wow, the premium mobility markets of the future will be defined just as much by comfort, convenience and experience. As air and train travel have shown, there is always an appetite for more luxurious transit services.
The great unbundling
Owning a car is expensive and, at times, inconvenient. Bearing in mind they are only used for a fraction of the time (5% in the US), many are starting to consider whether it is even worth owning one at all. Add to that the enormous headache of crawling through heavy traffic and the hopeless search for parking spaces, then a shift to using mobility services — such as scooter and car sharing — appears overdue.
Whether this entails the end of ownership is unclear, but if mobility as a service (MaaS) becomes more convenient than car ownership, many shorter trips will be favoured by smaller, nimbler and, in the future, autonomous vehicles.
For shorter trips, particularly the first and last mile, lighter vehicles such as e-scooters are set to become the preferred method of transport. Easy to set-off and park, and relatively low cost, they are perfect for whizzing around urban terrains. For those less keen on the scooter variety of travel, and due to the natural limits on how far they can go, autonomous vehicles in the form of robotaxis are expected to become a serious alternative to car ownership. An indicator of the shift away from car ownership can be seen by the fact that only a quarter of US teens had driving licenses in 2017, half the proportion of teenage drivers in 1983. Thus, it appears that in cities across the world, mobility decisions are being taken increasingly on a case-by-case basis rather than the one-size-fits-all of the modern car.
With the focus in the vehicle sharing market currently on achieving scale as quickly as possible, operators have largely ignored premium service offerings. Nevertheless, with consolidation and a need to distinguish themselves from a crowded field, operators will eventually need to find new ways to upgrade their services in order to get ahead.
Unbundling of the brand — a lesson from planes and trains
Premium travel services are not new. Long distance trips such as those undertaken on planes and trains have had ‘premium’ offerings since their inception. Agatha Christie’s Murder on the Orient Express would not have half its mysticism if all of its passengers were squashed together in third class. Premium services such as catering and greater leg room, as well as distance from crying children, have been considered worth paying for.
If we look at plane travel, there is one feature that has determined the price of a seat more than anything else.Not brand, not catering but leg space.In fact, an extra ten inches of legroom can lead to as much as a threefold increase in the price of an international flight, while domestic ones also become sizably more expensive. Gaetano Crupi, CEO of Cabin Technologies, points out that just as in air travel, the move away from car ownership will lead to a similar dynamic which he terms the “unbundling of the brand”. Like air travel, passengers of autonomous vehicles will no longer care for the brand and its defining features such as safety, which will be expected regardless. When the getting from A to B becomes a formality, it becomes more a question of: How?
From looking at the air travel industry, we can see that there is likely to be much crossover for AVs. With AVs shifting the experience from driver to passenger, luxury will be defined more by comfort than the ‘feel’ of driving. Crupi proposes a fascinating idea for long distance, inter-city travel. He argues that automation will turn vehicles into moving real estate, envisioning fleets of moving hotels, where the only differentiator in price will be the amount of space. This is, of course, applicable for long journeys but how about the shorter kinds?
Although the desire for such space is lessened for shorter journeys, there are still opportunities on the premium end of the scale. In this case intercity train journeys may be a better indicator. Here patrons often pay extra for comfier seats and a quieter carriage. This desire for comfort and quietness raises the possibility of a new form of private travel. It is of course not possible to book a whole train, but why not take the individual compartment out on the road? This is essentially what AVs can offer; the premium service of privacy without the eye-watering costs. It is possible then to imagine, for short and medium length journeys, scenarios in which business meetings are hosted on the move, while others use the opportunity to catch up on emails over breakfast. Additional in-vehicle services such as food and drinks, or even massage chairs, are plausible luxuries that users would be prepared to pay for.
Small luxuries — premium services for the last mile
The evolution in premium services for medium length distances is clear, but less so for the last mile. Existing ride hailing services give us some indication. Uber’s premium services, for example, provide users greater comfort in the form of business class seats and more control over in car conditions such as temperature. Additionally, they offer greater flexibility over pickup times and advanced customer support. These features would be more applicable to shorter journey scenarios where the need for space is less pronounced. Other features such as higher driver ratings would be rendered irrelevant by autonomous vehicles, although vehicles which are deemed safer could in theory be considered as more desirable. Other services such as baggage assistance could also be included and could even be automated.
When it comes to micromobility, premium service offerings appear more difficult to define. As they will be used predominantly for shorter journeys, space and privacy would be less of a concern. This doesn’t mean they won’t exist.
In the race to e-scooter dominance we have seen numerous competitors spring up. Despite their different shades and single syllable brand names, on the whole, there is little to differentiate the different scooter designs. The difference in hardware is negligible and often dependent on which of the providers has most recently upgraded their fleet. The software does differ and some apps are more user-friendly than others, but the brand itself is rarely a differentiator. Therefore, aside from accessibility (the scooters being there) and price, it is difficult for scooter sharing providers to stand out from a crowded field. Providing a cheaper more convenient service is one way of attracting users, but it is also possible for operators to redefine the idea of premium in a market made up of simple hardware.
Comfort is one area. Vehicles could be designed with better suspension and with more than two wheels for greater stability. Single or two person automated pods would provide protection from the elements and a novel way of getting around.
Convenience could also be commoditized in the sense that an individual can book a scooter in a certain location, or pause a trip. Those who take a regular route to work may want to reserve a scooter for a specific location and expect to find it at a desired spot.The user therefore pays for prioritized access in the same way a business class passenger can expect priority when boarding a plane.This could even be automated.Self-driving micromobility scooters could ride to the user when called for and could be left to park themselves, thus providing the ultimate door-to-door experience. These automated fleets could be part of a premium package, only accessible to certain users.
Self driving scooter from Segway (Autonomous + tele operated possible). From Micromobility summit Europe, Berlin, 1 October 2019
The experience could also be an area where operators add value. Operators could better meet the needs of their users by offering vehicles that are better suited to different conditions. Off road scooters which can withstand sand or dirt tracks would enable a more varied experience, while scooters with space for two might be a more adventurous journey home than simply hopping in a cab. Smide, a Zürich-based e-bike sharing provider, caters to a more experience-orientated clientele. With maximum speeds for the basic package of up to 35 km/h, these are by no means slow. In fact a driver’s license is needed even for the basic package, putting Smide at the upper-end of the mobility service market. But, with their pro package, riders can unlock rapid speeds of up to 45 km/h, creating a whole new experience entirely. Who wouldn’t want to try the Bugatti of micromobility?
Supplying a premium demand
To distinguish themselves, mobility service providers will need to add more variety to their fleets and to understand where the users of such vehicles will be. Understanding the socioeconomic makeup of an area would enable operators to position premium vehicles in the right spots with business districts and popular restaurants obvious targets. Additionally, demand fluctuations at different times and on weekends would need to be accounted for.
Premium products and services have always been important differentiators. In the world of car ownership, the idea of luxury has been dominated by the “brand”. With a shift towards mobility services, old forms of luxury such as space are set to grow in significance while novel services like automated scooter reservation could provide ultimate convenience. The vehicles of the future may be commoditized, the services don’t have to be.
At Ubiq we are experts in demand prediction, supporting vehicle sharing operators in getting more out of their fleets. In doing so, we’re shaping the future of mobility. If you have any questions about the future of shared vehicle demand, get in touch at firstname.lastname@example.org be it premium or non-premium.