Mobility-as-a-Service: the key to the future of urban mobility

In the past few decades, we’ve seen a radical change in urban mobility, driven on one hand by unbridled urbanization in cities, and on the other by the high-speed technological and digital evolution. The first has caused an upsurge in road congestion, and with it, escalating levels of air pollution. This, in addition to the increasingly frenetic pace of people moving around the city, makes urban spaces less and less livable for city dwellers. The second, instead, is paving the way for mobility options that make greater use of smart technologies and connectivity. These may help partially alleviate the situation, giving the future face of cities a makeover of sorts. If we consider the fact that the population of urban centers is projected to explode by 50% over the next 25 years, it’s clear that this transformation can only accelerate, which presents serious challenges for society, as well as promising business opportunities for companies.

One of these opportunities is Mobility-as-a-Service (MaaS), which leverages digital technologies to provide services based on using rather than owning various modes of transportation. In 2022, the global value of MaaS hit $99 billion, with an annual growth rate tracking at 32.6% in the last five years (source: Statista). Strong growth is expected to continue, with projections ranging from $230 billion to $815 billion in the next five to ten years – numbers that fluctuate wildly depending on how the concept of MaaS is defined. In any case, taking a closer look “under the hood,” so to speak, of Mobility-as-a-Service, we can get a clearer view of what transportation options fall under this umbrella, and how they can contribute to problem-solving for citizens.

According to recent market research run by mobiUS, SDA Bocconi’s lab dedicated to future mobility, the main services offered in the framework of MaaS are: car rental and carsharing; ride hailing (car plus driver) and mobility on demand; micro-mobility (bike rental, electric scooter rental); travel planning (navigation and mapping services); public transport (MaaS before MaaS was officially invented, today more relevant than ever); urban air mobility (passenger drones); and multimodal mobility (offering travel solutions or mobility combinations via software and apps). Thanks to the variety of services encompassed by MaaS, they can solve various problems citizens may have, and companies, in turn, can seize a number of market opportunities.

Speaking of a specific example, the keys to solving the traffic problem in cities are micro-mobility and urban air mobility (UAM), each with very different growth prospects and roles. For the first, growth will be driven more and more by young users who need to travel short distances. Older, wealthier users instead will turn to UAM - if technological, legal and psychological barriers to adoption are overcome first, that is. Also, public transport will grow across the board, both because it’s seen as green by new generations, and due to stepped up bans on cars in city centers.

Ride hailing and mobility on demand aim to diminish the stress associated with traffic, allowing users to go from being drivers to being driven, without sacrificing flexibility and personalization as they travel. Mobility companies can step in here to offer integrative services during the trip, such as entertainment, online learning opportunities, or information. This opportunity is also available to – but still underexploited by - public transportation companies.

Specifically regarding mobility on demand, this service also has the potential for being highly inclusive, enabling users to reach outlying urban areas, or places that may not be well-connected to other transportation networks, thanks to ad hoc routes often covered with cutting edge modes of transport (such as electric shuttle buses or self-driving vehicles), requalifying more critical zones and neighborhoods. In this sense, private operators offering these types of MaaS have market potential that also derives from integration with the city’s network of public transportation.

Travel planning services and multimodal mobility make journeys smoother and simplify the process of choosing among the various mobility options. In fact, users get information in real time on a number of services, all on a single interface. As urban mobility options multiply, travel planning services enable users to view and compare solutions that offer alternatives to owning a car. Services on offer, which are interoperable and easily accessible to users, include various public and private transportation options. The ultimate aim is to create a customer journey that centers on the traveler/citizen.

Lastly, car rental is a service that will become an ever more effective way to satisfy the needs of private individuals. On one hand, these are people who use cars in their free time, for a weekend away for instance, but don’t have the means to deal with the rigidity or the cost of owning a car themselves. On the other are people who consider it risky to invest in a durable good with technological standards that are none too clear. Added to this is solid demand from business/corporate clients, who see renting a car as a flexible solution for their employees (along with company shuttles and carpooling).

To ensure that these mobility services actually provide concrete solutions to urban transportation problems, there must be widescale adoption. What’s more, such services must be seen as opportunities, not only from the perspective of citizens, but of mobility companies as well. As restrictions are tightening on access to city centers by motor vehicles to cut down on emissions and enhance the livability of public spaces, market opportunities are opening up linked to the need to offer sustainable mobility alternatives, to include MaaS. Even if public transportation networks are ramped up, they can’t be the only option for the future. This means that public-private collaboration is indispensable to give an unequivocal, integrated response to escalating market demand.

Start-ups may turn out to be invaluable travel companions on this journey, since by definition these young businesses are catalysts of transformations and innovation in technologies and business models. For example, many start-ups do business in software and e-commerce, creating solutions with an accent on easy-to-use interfaces, to respond to the demands of the new generations (peers of the start-uppers themselves). In this way, start-ups can become sandboxes for incumbents too, to exploit thanks in part to public funding and public calls for project proposals.

Finally, it is essential to inform demand and invest in educational programs and awareness-raising campaigns to promote the benefits of MaaS for users of all ages. Naturally, this is assuming that the services in question live up to expectations, and they can actually achieve a level of quality, efficiency and safety that makes old-fashioned travel solutions seem unappealing and obsolete.