According to Phocuswright, global travel gross bookings could reach more than $1.6 trillion by 2021.
In terms of travel spend, air and accommodation lead the way but we are currently witnessing a surge in activity around innovation and investment in ground transportation. This is in response to the effects of urbanisation and how people are choosing to live and work. The capacity crunch is a global problem with urbanisation putting a strain on almost every mode of transport.
Digital disruption
In an age of digital disruption, passenger expectations are high. They are demanding technology that will manage their journey from beginning to end. They need to know about possible delays and how a travel app will help them with more than just one journey.
Mobility as a Service (Maas) or Transportation as a Service (TaaS) describes a shift away from personally-owned modes of transportation and towards mobility solutions that are consumed as a service. This is enabled by combining transportation services from public and private transportation providers through a unified gateway that creates and manages the trip, which users can pay for with a single account. Consumers are now buying transport options in bundles via smartphone apps as Mobility as a Service continues to disrupt the travel sector.
We are already witnessing great strides in innovation and digital disruption in the ground transportation vertical with driverless cars and high-speed trains taking giant leaps in tackling the capacity crunch issue. Uber used big data analytics to transform the car-summoning industry. It was able to connect with users directly through the power of the smartphone and the taxi industry was entirely disrupted.
Challenges for the rail sector
The rail industry can certainly use data to gain more valuable insights to provide a better passenger experience. Whether fair or not, it is often criticised for how it deals with passenger information during disruption. Disparate systems and booking portals often mean that rail companies cannot tell who is travelling on the system at a specific time or where they are going.
Only those that have booked through the company’s own retailing system will be known to that company but the millions of passengers commuting to Paris, London or any major city during peak times are currently an anonymous statistic.
Frequent and faster trains are a step in the right direction for customer satisfaction but technology is now expected as part of the commute or journey. Competition from aviation for short haul destinations is shaking the rail industry, forcing it to offer similar levels of service to airlines and airports. Public perception of passenger service quality is also low, particularly in UK rail.
Other EU systems focus on collaboration in rail markets but the UK is relatively isolated from cross border on-track competition, hence its focus on domestic competition. As demand grows for mobile solutions that make rail travel easier for passengers, train companies are starting to innovate further to do business in a more customer-oriented manner.
Seamless and frictionless travel is key
Given that it is a fixed transport system, the rail industry will not replicate the success of Uber so that consumers can summon trains. But by adopting a user-centric approach and focusing on its passengers, the rail industry can unlock opportunities.
The seamless ability to complete an end to end journey is key to improving the passenger perception of rail services. Solving the ‘last mile’ conundrum will be crucial for rail operators who will seek to integrate other rail content with additional transport modes.
Customer first – A more connected future for rail
Huge opportunities exist for rail companies to innovate with technology and offer more personalised travel services for customers. The emergence of new entrants into the European Rail market is driving more integration between rail companies and non-rail travel providers. As a result, rail companies are acting as mobility integrators, developing more attractive offers for passengers and making sure their trains and services are meeting the highest standards.
LNER (London North Eastern Railway) formerly Virgin Trains East Coast partnered with startup, Seatfrog, an app that auctions seat upgrades two hours before travel allowing passengers with standard tickets to upgrade to first class for an additional small fee.
In Germany, Deutsche Bahn has consolidated its existing mobile applications DB Navigator (mobile booking, real-time information with current departure and arrival times, delay alerts) Call a bike app (an app to locate city bikes at over 50 rail stations) and Flinkster app (car sharing system app which facilitates car rental at 1700 stations) into a multi-modal mobility platform.
Rail companies have also listened to and are now collaborating with SMEs in innovation to enhance their services. HackTrain runs an annual hackathon and conference with support from Great Western Railway and Arriva amongst others. Some of the issues explored for development include how the next generation of technology can improve the travel experience and how performance can be improved through the use of data and machine learning.
Mobile ticketing and payments could also be transformed by rail companies who could leverage passenger smartphones to improve the speed and convenience of frequent and recurring transactions. Rail operators are partnering with fintech companies to offer international passengers the option to pay for tickets in their own currency offering transparency on spend for both leisure and business travellers.
Such opportunities could also increase tenfold through the mobile channel where rail operators could sell to passengers in more sophisticated ways, when and wherever. Similar to airline-airport-retailer partnerships, rail companies can also embed further ancillary revenue opportunities into the journey through partnerships with retailers and other travel suppliers. After all, these services are now expected by rail travellers and this expectation will only get higher from an increasingly tech-savvy public.
Completing the end-to-end journey will be crucial to improving the rail passenger experience. Passengers need to know that they can plan seamless and frictionless train journeys using their mobile devices. Once this is possible, rail travel will become a more attractive proposition for both short and long haul journeys. By taking a mobile first approach to rail travel, operators can connect passengers to other transportation hubs, manage peak-time capacity in a more efficient manner and increase the opportunity for ancillary revenue.
Fexco offers innovative payment solutions which allow passengers to pay in their own currency whilst increasing ancillary revenue for rail operators. Visit our industry page for more information about our solutions for the Ground Transport sector or contact Andrew McCarthy for more details: AMcCarthy@fexco.com
