“Our company has experienced, like many others, a real nightmare in 2020,” said Alain Krakovitch, CEO of Voyages SNCF. “Our revenue dropped from €8 billion per year to €3 billion per year.” Like so many other industries, the pandemic hit mobility where it hurts – the wallet. But as economies reopen in many parts of the world, the industry is looking for a rebound. Fueled by changing consumer appetites in why and how they travel, that rebound is a moving target.
A group of senior mobility executives was convened by the Oliver Wyman Forum for an online discussion about profitability and new business models. Everyone agreed: Mobility needs to be sustainable, profitable, and holistic in its offerings post-pandemic. Shaping new mobility ecosystems requires industry players to formulate new working models between governments, business, the finance community, and those that regulate the airways and lanes in which we travel.
It starts by understanding new consumer behaviors. Mobility substitutes like telehealth or work video conferencing that blossomed during the pandemic are here to stay. Even after vaccines, Oliver Wyman Forum research has found that 80 percent of consumers plan on using these digital substitutes for traveling.
The value that mobility services need to provide to evermore safety- and sustainability-conscious consumers is the convenience in connecting A to B instead of moving from A to B. And the foundation of that convenience is built on holistic and an efficient mobility ecosystem in which a traveler can go from a train to a carpool to reach their destination in the fastest and cheapest way. That can not only drive customer satisfaction, but profitability as well.
“The source of profitability for us has always meant efficiency in pulling the mobility network together,” Frederic Mazzella, founder and chairman of BlaBlaCar, said. “When you have a car with only one person aboard, you spend as much energy and resources as you would if there were three or four people in that same vehicle. When we match the technology to the people, we save a lot in energy, pollution, and money.”
The shift to greener and more efficient mobility requires significant investment, and the key question lies in whether the balance sheets of mobility players support them making that investment transition. Particularly for the established, incumbent mobility players, convincing investors that new, eco-friendly mobility services can be profitable is a challenge.
A part of that solution should be partnerships with others to help foot the bill. “Where partnerships truly come together is to both create an enhanced customer experience and drive a much more resilient business model,” Richard Bartlett, senior vice president of future mobility and solutions at bp said. “Whether it’s a ride-hailing company or an original equipment manufacturer, when you bring those together to drive the same outcome, you get to a much richer place. We’re proud of our partnerships with leading mobility service providers, from tech startups to established ride-sharing companies.”
While partnering is easier said than done, the payoff is worth it. “When you’re talking about partnership, you’re also talking about how to allocate the value creation, how to share the investment, how to share the benefits. It’s here where it gets complicated,” said Aurelia Cheval, chief strategy officer of Europcar Mobility Group. “But we’re working more to make sure that we can integrate technologies between partners. This is a must-have if we want to offer the right services, at the right price, and in a sustainable manner.”
While business partnerships are essential, so too are those with local governments. There’s an avenue for mobility services to not only make their own business models more sustainable and profitable, but those of public transportation as well. “Public transportation has the potential of course to offer the most sustainable service, but it’s not always that way from the efficiency perspective,” Mariano Silveyra, global vice president of public affairs at Cabify said. “When a bus or a train is running empty, that’s not sustainable at all. Local governments need to manage local public transportation with intelligence, innovation, and technology. There’s a lot of space to complement public transportation with private models so we can provide a seamless mobility experience to everyone.”
It’s been a tough year for mobility. Existential questions were raised about the industry’s place in an increasingly digitized world at the height of the pandemic. New business models and the massive investment required to go carbon neutral highlight how industry isn’t out of the woods yet.
But don’t ring the death knell for mobility. “Our studies show that there could be either an increase of one percent to a decrease of four percent of rail travels,” Krakovitch said. “What we’ve studied shows that it’s not true when people say business travel is dead.”
And after an extended period in lockdown, mobility holds a talismanic draw for just about everyone. “In the regions where we operate where the infection rate has decreased with increased vaccinations, like in Australia, New Zealand, or the US, the demand for mobility is exploding,” Cheval said. “It just goes to show how mobility is synonymous with freedom.”