6 August 2024 - Startups, transit agencies, and policymakers are eager for “MaaS” apps that let help travelers choose multiple modes — and give up private cars. But revenue has been elusive.
Traveling around town used to be a lot simpler. In Europe and North America, commuters in 1950, 1980, or 2000 were limited to a fixed set of options that included driving a car, riding public transit, walking, biking, or hailing a taxi. The United States Census Bureau placed commuters into boxes based on the mode of transport they used.
But then a wave of mobility innovation arrived, and new services entered the mix — car-sharing startups Zipcar and Turo, ride-hailing firms like Uber and Lyft, public bike share systems, and then a candy-colored rainbow of companies offering shared rides on electric scooters, bicycles, and mopeds. Those who don’t drive an automobile might use several modes in the course of a week (or even a day). The good news was city residents had many new ways to travel without a car; the bad news was that navigating so many options complicated the process of getting from point A to point B.
Enter “ Mobility as a Service,” or MaaS, which envisions an urban resident choosing from all available transportation modes on a single platform, like an app. She can then use that app to book individual trips, or she could purchase a subscription that gives her a basket of mobility services — and the freedom to get rid of her automobile.
This tech-enabled vision of car-free cities made MaaS a trendy concept after Sonja Heikkila, a Finnish graduate student, first proposed it in 2014, inspiring many a conference and webinar (and at least two associations). Numerous transportation operators have sought to refashion themselves as MaaS platforms, as when Uber’s Chief Executive Officer Dara Khosrowshahi referred to his company as “the Amazon for transportation.” But they face skepticism that they can be unbiased brokers of urban trips. A few transit agencies, such as those in Berlin and Louisville, have gotten into the MaaS game too, though such agencies generally have an unimpressive record building complex, user-facing software.
Instead, MaaS’s most prominent champions have been a group of popular startups offering slick apps like Citymapper, Transit and MaaS Global (the company behind Whim). Millions of users across Europe, North America, and Asia have downloaded these apps, and venture capital firms endorsing their vision of a multimodal urban future have invested tens of millions of dollars.
But MaaS’s momentum (“MaaSmentum”?) is at risk of stalling. To date, MaaS companies have found limited traction among urban residents, even in favorable markets. In Antwerp, Belgium, for example, local law requires mobility operators to integrate with at least two MaaS platforms, but in the surrounding region of Flanders just 3% of transit tickets purchased on mobile phones are bought through a MaaS app.
“MaaS seems to be top of mind for policymakers,” says Matthias Dill, CEO of Energy Impact Partners, a venture fund that invests in mobility startups. “But it doesn’t match with consumer preferences or commercial traction.” Indeed, some of MaaS’s corporate pioneers have encountered headwinds this year, with Daimler unloading its Moovel North America unit, and Citymapper reportedly facing a shortage of cash. Nat Parker, the previous CEO of Moovel North America, sees more turmoil ahead: “There are a lot of well-capitalized companies and smart people that are going after a ghost,” says Parker, who now runs a mobility consultancy.
For MaaS companies to fulfill their vision of urban liberation from automobiles, they will need to adjust their underlying strategy — quickly.
An examination of their business model reveals why. MaaS platforms are popular among those planning trips — on a recent podcast, Transit’s COO Jake Sion claimed that “millions of people” use the app daily — but the companies only earn a commission when a user takes a specific action. For instance, an e-scooter company might agree to pay a commission for every customer who books a trip or creates an account through the MaaS app. These commissions are typically modest — under 10%, company execs told me — and sometimes aren’t collected at all, forcing MaaS companies to facilitate lots of transactions. For example, a 5% commission on 10,000 weekly scooter-share trips that cost an average of $4 would yield only $208,000 in a year. And most shared mobility companies have yet to make a profit, limiting how much they can pay.
The bulk of non-vehicular urban trips occur on public transportation, a sector that has often been wary of MaaS startups. In Helsinki, local transit agency HSL prefers that riders use its own app instead of an external MaaS platform. “It’s part of them retaining the status quo,” says Sami Sahala, a mobility project leader for the city of Helsinki’s innovation agency. When Finnish law required HSL to pay MaaS companies the same commissions as other resellers, such as kiosk operators, HSL opted to cease paying commissions entirely — to everyone.
Other cities have seen tensions between MaaS platforms and transit agencies. In London, Citymapper purchased transit passes and then sold them at a discount to users — without coordinating with Transport for London, the local transit authority. In a recent MaaS webinar, Sanneke Mulderink, a partner at the Dutch MaaS company Tranzer, cited transit authorities’ resistance to MaaS companies as the single biggest obstacle to adoption, complaining that “not all [transit] tickets are available in the market.” But it’s not clear what MaaS companies can do about that, short of convincing governments to enact laws that force transit’s hand.
Beyond commissions for individual trips, several MaaS companies have sought to make money by offering mobility subscriptions that cover multiple modes. MaaS Global has been a pioneer in such subscriptions, such as charging €59.70 per month in Helsinki for access to a transit pass, bikeshare, and discounts for taxi trips. MaaS Global CEO Sampo Hietanen says that Whim now has “over 10,000” Helsinki subscribers in a region of 1.1 million residents, far more than in its other markets. Scaling that number may be tough; research from Finland suggests that most people will purchase a MaaS subscription only if it offers a discount of more than 30% from their current mobility expenditures. That’s a high bar for MaaS providers, especially since car owners systematically underestimate how much they spend operating and maintaining their vehicles.
And then there is the variable that no MaaS company can control: local transportation policy. As I argued previously in CityLab, only governments can implement the additional transit service, protected bike lanes and higher automobile fees that make a car-free lifestyle (and MaaS apps) work. “There is this huge hype that’s been created around MaaS,” says Karen Vancluysen, the secretary general of Polis, a network of European city transportation officials. “It’s an appealing idea, but the assumption that offering an app to the user is going to be a revolution because people will switch to sustainable mobility right away — that’s just not going to happen.”
Some MaaS executives acknowledge this essential limitation. “We’ve always viewed MaaS as an incremental layer on top of everything, not a silver bullet,” says David Block-Schachter, Transit’s chief business officer.
So does this mean that MaaS companies are ultimately doomed? Not necessarily — if they can adjust their business models.
One possibility is to pivot toward selling MaaS solutions to employers instead of individuals, an approach pursued by Skipr, a startup based in Brussels. Announcing a recent €7 million ($8.3 million) raise, Skipr CEO Mathieu de Lophem took a shot at consumer-facing MaaS services: “Whilst B2C MaaS players are often still looking for a business model, our B2B solution has been generating revenue from day one.”
Skipr seeks to capitalize on movement away from the “company car,” a longstanding, tax-protected employee benefit in many European countries that has nudged more workers to drive. In 2016 more than 10% of Belgium’s 5.7 million automobiles were registered as company cars. To wean Belgians off of them, the government recently began offering employers “mobility budgets” providing tax benefits for those commuting on other modes like transit or e-scooters. Skipr sells subscriptions to Belgian employers, helping them keep track of their workers’ tax-protected trips. Company cars are also an entrenched corporate benefit in countries like Germany and France, suggesting bigger possible markets for B2B MaaS solutions.
The United States doesn’t have the same culture of corporate vehicle subsidies, but targeting employers might make sense there as well. States such as New Jersey have begun requiring employers to offer tax-protected commuter benefits, potentially creating opportunities to sell MaaS solutions to businesses unaccustomed to inserting themselves into workers’ travel habits.
There could be other markets available to MaaS startups too, such as selling mobile public transportation tickets, as Transit has done, or positioning themselves as an asset for data-hungry autonomous vehicle companies, a move that may have helped Moovit land a $900 million acquisition from Intel. Citymapper sought to provide its own data-driven bus and shuttle service in London before abandoning the effort last year.
Whim’s Heitenan, one of MaaS’s original apostles, calls for patience: “If you’re going to disrupt automobiles, one of the biggest industries in the world, it will take a bit of time.” MaaS providers could get a boost in the coming months from new bike lanes and car-free streets that cities like London, Seattle, and Milan have created in the wake of the coronavirus pandemic. Congestion pricing, which cities including New York and Los Angeles are pursuing, could eventually encourage more urban residents to explore car-free lifestyles.
But it’s telling that all the MaaS executives I talked to claimed to be looking beyond MaaS’s original model of focusing on individual consumers. In its first six years, MaaS companies have shown that their vision of cities liberated from automobiles can capture imaginations. To make that vision a reality, they just have to prove that it’s a viable business proposition, too.
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Image: Helsinki’s innovative adoption of “Mobility as a Service” has been a model for other cities. But Maas still struggles to make money. Photographer: Francis Dean/Corbis Historical via Getty Images