How Technology is Changing Ground Transportation
The ground transportation landscape has changed significantly over the past three decades as technological advances continue to shatter the traditional means by which companies and consumers communicate. This landscape is also being continually altered by other factors, like the focus on greener energy, the shift in generational buying power and preferences, and automation of numerous aspects of daily life.
All industries know the importance of remaining ahead of the curve as no company wants to replicate Kodak’s great folly which saw the company close its doors in 2012. Airlines, although an unwaveringly necessary part of modern society, must also remain abreast of emerging disrupters and the knock on effects they can have on key industries and consumers.
Developing rapidly in the wake of soaring motoring costs, GoCar has moved quite successfully in the short term rental vertical of the ground transportation space. The company began 2017 with 150 GoCars and now boasts a fleet of 275, with a target of doubling that number by mid-September. According to GoCar press officer Darragh Genockey they have over 12,000 members despite only being active in two Irish cities, Dublin and Cork.
In terms of tech, GoCar allows the consumer to book and access a car through an app on their phone, or online through a web browser. The app allows a consumer to find the nearest available car and book it for as little as an hour, leaving the user a list of places to park when they’re finished with the vehicle.
Earlier this year the EU identified bike and car sharing as a focus and encouraged local authorities to launch and promote permanent measures to assist in its development. Following this, MEP Brian Hayes called on Irish local authorities to engage with car sharing service providers to make available space for additional cars. “Car sharing is a concept which is becoming increasingly popular across Europe,” said Mr Hayes. “It is ideal for people who only need occasional access to a vehicle and don’t want to own one. Fuel, tax, insurance and maintenance are all included.”
Although GoCar has only penetrated two cities in Ireland, this concept and business model will have disruptive consequences for both long established car rental companies and motor retailers. If not adequately examined and monitored it could negatively affect an airline’s ancillary sales revenue by diverting customers towards short term rentals with limited commitment.
Working in a similar space, ParkPnP was launched last year with the aim of tackling Dublin’s parking shortage and offering people an ability to generate revenue from their parking spots. They give users with access to parking in the city the ability to list, advertise and generate revenue from their underutilised spaces. So far they have 3,000 spaces across Dublin with 10,000 users and according to ParkPnP press officer Daithi de Buitléir, their average home owner made €116 per successfully booked space.
A third company, which is firmly in the start up phase, aims to combine elements of both GoCar and ParkPnP, by allowing motorists to rent their private cars out when they’re not in use. Fleet, the peer to peer car rental app, will allow a car owner to rent out their vehicle, provided it’s not more than 10- years-old, has a valid NCT and road tax, to any Fleet app user. Users have to be 25-years or older and have a full Irish driving license for more than two years, thus limiting its access to international rental customers, so its effect on airline revenues would be minimal.
ParkPnP, however, has the potential to disrupt some automobile centred ground transportation companies based in cities and established car parking facilities, both in urban centres and periphery rural areas. The ability to park a vehicle cheaply for a short period of time at an airport adjacent property could be seen as a viable option for frequent short haul travellers, as opposed to using expensive short term car parks.
The Emerging Tech-Driven Corporate Travel Revolution paper from Egencia-Phocuswright predicted that Artificial Intelligence (AI) will be a key part of the transport landscape within three years. An example of travel tech AI which has already progressed rapidly is Hipmunk, a travel concierge bot which can link to Slack, Skype and Facebook Messenger and offer assistance in sourcing flights and hotels, and will also alert the consumer of price fluctuations and better offers.
AI is used on a daily basis through voice commands, smart satellite navigation, crash prevention and autonomous drive systems. Fully autonomous self driving systems are still a long way off in Ireland, in part due to the myriad of legal questions surrounding the adoption of such vehicles.
However, a certain level of Assisted Driving (AD) is currently available to the mass market; with self parking cars in use on a daily basis which have 360 degree sensors, complimented by front a rear facing cameras allowing the vehicle to position and park itself. These technologies have been available for a number of years, but have been the preserve of luxury, high end cars.
Ford, keeping up with its historic reputation of bringing exclusive technology to the masses, has included this system in its new, affordable €16,500 Fiesta. The 2017 Fiesta boasts an enhanced, night vision pedestrian detections system that is controlled by two cameras, three radars and twelve ultrasonic sensors which monitors 360 degrees around the vehicle, scanning the road ahead up to a distance of 130 metres. Utilising this hardware the car can park for the driver, deliver brake interventions to prevent bumps and will warn ahead of a possible collision.
Uber, under its UberX moniker, is at the forefront of self drive tech and in conjunction with Volvo has been running 43 specially adapted, autonomous Volvo XC90 SUVs throughout the US. These vehicles reportedly clocked up a staggering 20,354 autonomous miles over one week in March of 2017. All UberX autonomous vehicles have a ‘safety driver’ on board who can intervene if necessary. According to reports these 43 cars only drove an average of close to 0.8 miles before the safety driver had to intervene.
Currently self driving vehicles are broken down into five levels: the first being basic cruise control, while the second level moves on to include lane assist and emergency breaking. Level three autonomous vehicles are cars which can drive for an extended period of time without the driver’s assistance, enabling the car to make advanced decisions based on traffic flow and driving conditions.
Level three, however, is seen as a stopgap on the way to the inevitable fully autonomous car and for this reason many manufacturers are skipping it and aiming their sights firmly at level four. Level four cars are expected to have a driver, however they are not going to be required to intervene and many of these vehicles are not expected to have driver controls, like pedals or steering wheels. At the top of the scale sits the level five, the autonomous driverless car, which will require no human interaction and will change the driving landscape significantly, with fleets of constantly moving AI vehicles. Level five autonomous vehicles could have a detrimental effect on short haul flights as motorways free of human error could cater for high speed, radar guided cars or buses.
According to Liam Mulligan of Engineers’ Journal, buses are particularly suitable for electric operations as they have set routes and a very predictable energy use. Volvo and Siemens have been working together since 2012 on an automatic charging system for a planned range of plug in hybrid and all electric buses. Pantograph charging points will be installed at each stop, briefly connecting with the coach and charging it, negating the need for them to be taken off the road for recharging. Combine this with self drive technology and you have a 24/7 low cost bus network. This would allow some short haul commuters to avoid the stress of airport security while also catering for those travellers who prefer not to fly.
However autonomous cars are still a long way off and despite level three cars like the Mercedes S500, Audi A8L and Tesla Model 3 and X, the Irish legal landscape still restricts use of most key autonomous features as Irish law doesn't recognise any form of automation as an acceptable assistant to a driver.
The change in focus from traditional travellers to ‘Millennial’ customers has taken centre stage for many transportation companies over the past decade A Study in Contradictions, by Skift, links this focus on market size, quoting findings from the U.S census 2014. According to the data, those born between 1982 and 2000 make up more than 83 million individuals in the US, or roughly one quarter of the country’s population and account for between $200 and $300 billion in annual spending.
The millennial market’s stereotypical prioritisation of travel purchases is leading many in the industry to pay significant attention on how to design and market products and services with this demographic in mind. In 2015 Eventbrite commissioned a survey which looked into millennial spending habits and found that consumer spending on experiential purchases pointed to a dramatic upswing in this kind of spending between 1990 and 2010. This ultimately reached .05% of all consumer spending in 2010, which is double the low point seen prior to 1990. New points of focus have had knock on effects within the industry, as we see older travellers ignoring the traditional taxi or hotel in favour of an Uber or AirBnB. The millennial ‘tech first’ trend opens the way for virtual reality (VR) to assist in travel planning. This will allow the consumer to test drive the car they’re considering renting or view the seat on a bus, train or aircraft which they’ve just booked for a trip. VR will also allow the consumer to peruse a hotel room and inspect its sea views, before booking. This tech will develop into the ultimate travel brochure, allowing the consumer to book ancillary items during the VR experience.
An example would be a convertible car parked outside a hotel being viewed by a consumer through a VR brochure. The vehicle would have a call to action button on the side, both allowing the consumer to sit inside the vehicle and arrange to book it for their holiday. Moving VR from being a marketing gimmick to a tool that can generate booking revenue will be a key disrupter.
Although, like fully autonomous cars the VR industry has some time to wait before it’s fully ready for market. Currently Facebook, Google, Microsoft, HTC, Sony and Avegant are developing VR rigs which will be used as a consumer’s primary computing interface and tool, while a company called Navitaire is developing proof-of-concept software and hardware which is aiming to turn VR headsets into transactional tools which can be used by the travel industry.
Navitaire is owned by travel tech giant Americas for Amadeus which is responsible for creating booking platforms for many of the world’s major airlines and hospitality companies. According to International Data Corporation, a US based research firm, total shipments of headsets for VR are predicted to rise at a compounded annual rate of 58% over the next five years.
My advice to any airline CEO would be to constantly remain vigilant and abreast of potential industry disrupters, even though some may appear counterintuitive. Prepare for a rental market that requires less commitment and less human interaction as customers lean towards AI driven short term purchases and peer to peer arrangements.
Morgan Flanagan Creagh