November 30, 2015

Operators strive to remain relevant in the digital world

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What does digitisation mean for the urban public transport services of the future? Kevin Smith reflects on how rail operators are responding to these challenges from views expressed during the International Public Transport Association's (UITP) international rail conference held in Munich at the end of October.

DURING the opening session of the UITP World Congress in Milan in June, Mr Carlo Ratti of Massachusetts Institute of Technology's Sensable Cities lab presented a new vision of transport in cities based on a network of autonomous driverless cars.

Communicating via smart technology, these vehicles are programmed to avoid collisions through intersections and minimise stops to travel at good speeds and deliver passenger directly to their destinations. Ratti said the on-demand service could transform car utilisation from individual to communal ownership. And with several key breakthroughs already made, he added that it was no longer an issue of if this type of service would appear, but when.

"Cars are in use approximately 5% of the time, and for the remaining 95% they are parked," Ratti said. "Many cities' infrastructure is designed for the car but it is clear we could use it much better. In New York City deploying this notion of shared mobility could satisfy the transport needs of all citizens with only 20% of the cars currently in use."

For the rail operators in the room it was a stark reminder of the potential threat posed by a new generation of services and what "digitisation," the process of converting information into a digital format, might mean for the future of transport.

Speakers returned to the issue at the opening session of the UITP Rail Conference in Munich on October 28. Dr Manfred Rudhart, DB Regio CEO, who will soon take up the reins at DB subsidiary Arriva, pointed out during his keynote address that digitisation has opened up streams of competition that existing operators could not predict just a few years ago.

Rudhart says services like Uber and car-sharing schemes have become attractive because of their cost-effectiveness, usability and their ability to offer customers greater understanding of quality control. However, he was keen to point out that rail operators should not fall into the trap of imitating tech companies and new players in the marketplace.

"Being in love with technology is the wrong direction to head as you can lose sight of what you are doing," Rudhart says. "Attempting to compete with Google will end in failure but you can learn from what they are doing and build it into your daily concept and business model so that you might develop better services for your customers. Transporting passengers from A to B safely, securely and sustainably is the mission. Digitisation is just a tool for achieving this."

Munich was an apt location for the conference given local public transport operator Munich Transport's (MVG) apparent success at adapting to the digital age. Indeed MVG CEO Mr Herbert König told delegates that MVG no longer considers itself as just a public transport operator, but a complete service provider for transport in the city.

"In today's mobility market our customers have new attitudes," König says. "They are multi-modal people and new players are emerging with new business models and ways of offering public transport which are attractive to this new generation. It is clear that in this environment we can no longer be a mere transport carrier so we need to be a service provider first which meets the ambitions of our customers and our municipality."

MVG's focus is demonstrated in a new motto: "Quite Simply Mobility" and in a new bike-sharing scheme. It is also involved in car-sharing initiatives by partnering with five companies operating in the city.

MVG is allowing these companies to share real-time information with MVG's users through its smartphone app, which is consistently at the top of the download charts reflecting MVG's success at becoming the first choice for all transport information in the city.

Lessons

One of the lessons which Munich and MVG offers other public transport operators according to UITP secretary general Mr Alain Flausch is its strong relationship with the city's politicians and decision makers.

He says this is crucial in delivering the long-term infrastructure improvements and expansions that will sustain the future of urban rail transport. "We will always have the issue that projects will be late in meeting demand, and within one year will be saturated," Flausch says. "It is crucial then that operators push to accelerate the decision making process or risk being bypassed."

Rudhart argued that access to dedicated infrastructure provides rail with a significant advantage over road. While building new infrastructure is preferable, it is expensive and time consuming so utilising digitisation tools can play an important role in making better use of what you already have. For example by increasing capacity through enhanced train control and improving passenger information to offer viable alternatives when things do go wrong, Rudhart believes rail can attract new passengers.

This is increasingly important amidst aggressive competition from other modes, with older non-rail users a particular target as they may be unaware of how services have improved since they last used them. Rudhart says the challenge now is to embrace what is available to improve the offering, so rail can continue what it does best.

"It is essential that our business models adapt to changing demand," he says. "There is no need to run away from what we are doing, but to do it even better."

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