Ground transport – the exciting new battleground in travel distribution
In 2012 the travel distribution battleground has moved to ground transport, and what an interesting battle it is shaping up to be.
The way in which we book and pay for taxis and limousines is undergoing a fundamental shift driven by technological innovation tackling existing inefficiencies.
The impact on established players in this sector will be more profound than the impact the direct connect battles have had on the GDS industry to date.
The land grab we are starting to see in ground transport booking systems (aka taxi apps) is not unlike the land grab we saw when Groupon effectively created the daily deals business and who then, together with LivingSocial, went on to spend hundreds of millions of dollars competing with (or buying up) anyone in far flung markets who had established a local foothold in this space.
There was no shortage of imitators and wannabes in the early days, but their ranks have thinned out considerably in the past 12 months.
A local but big world
Local market specificities in ground transport will mean the consolidation process is not quite as rapid, but the taxi app path to globalisation will follow a similar roadmap to what we saw with the daily deals sector.
Get cash, get big, get there fast, and then get sold or get even bigger via acquisition.
The venture money is really starting to pour into this space:
- myTaxi from Germany pulled in an extra Euro 10 million
- Bangalore-based TaxiForSure recently closed a VC round
- Israel’s GetTaxi has just raised another £13 million bringing its total to £20 million to date
- Limos.com bagged $10 million on top of the original $5 million
- London’s Hailo has raised $17million for US expansion
- Taxi Magic (formerly RideCharge) has raised over $8 million to date
- US firm Uber (formerly Ubercab) is now at around $50 million in funding
They may be the big players, but there are many others like Cabulous, TaxiPal, TaxiSelect, Taxibeat, UbiCabs, GeoCabs, TaxiMonger plus a growing number of players in my home market of Australia wanting to shake up ground transport distribution as well.
It would be remiss to write an article on travel industry distribution reform without squeezing a GDS reference somewhere, so it was interesting this past week to see Limos.com winning the first ever Sabre Red Appy Award against competition from TRX, ExpertFlyer and others.
Always nice to win, although I suspect the $10,000 prize money will barely be noticed relative to all the VC money flowing into this sector at the moment.
Sabre Red is Sabre‘s competitive offering to Travelport‘s Universal Desktop or Amadeus One, and integration into this type of system implies working with travel agents and within the existing pre-booking framework for airport and hotel pickups.
The real disruption in ground transport will come from those more focussed towards the on-demand space than the ahead of time pre-book market.
Especially in the case of limos, the pre-book model is far less “broken” in most markets than the one for taxis, whereas the on-demand model for limos barely exists today.
This latter point is squarely the market disruption that Uber is facilitating, causing a lot of angst from incumbents and regulators along the way.
Hailo seemingly surprised many with its initial success in London, whilst in New York the Taxi and Limousine Commission has issued an RFP for an approved app – distribution reform is coming, but in New York they are doing it their own way.
Cries for reform in the taxi industry are also growing louder in Australia, for example.
From the speaker of the House of Representatives being caught up in a tawdry cab rorting saga, to a state government appointed investigation recently releasing a 580-page draft report calling for reform from top to bottom, the winds of change are coming down under.
German behemoth myTaxi has launched in Sydney but appears to be struggling to gain any traction when compared to local startups like goCatch and Ingogo.
One suspects the Uber team will kick off with a lot more conviction when its rumoured launches across Asia and even in into Australia become a reality.
The major thing holding back the hire car business (as town cars or limousines are referred to in Australia) from really shaking up the licensed taxi industry is booking and metering technology to better position them as upmarket cabs.
Uber’s booking system, integrated payments model, and especially their unique metered approach to hire car travel will make this space even more interesting to watch.
The key theme around disruptive ground transportation booking systems apparent today could be classed as “improved reliability” – meaning my chance of a booking resulting in a pick-up every single time is vastly improved from what has been the case using legacy systems.
The best innovations here are surge pricing and predictive demand modelling from Uber, and less technical but probably equally as effective, advance tip declaration from passengers – this is possible with both goCatch and Ingogo.
In the first case the fare is automatically increased to match demand and supply, in the latter I personally nominate during the booking process on a rainy Friday night that I’ll pay $10 or $20 above the metered fare and you can be pretty sure that the taxi driver will accept my job over a busy street of stranded and soaking wet potential passengers.
On top of working to solve the “improved reliability” puzzle, there is innovation in payments, innovation related to biasing search queries towards preferred drivers as happens with myTaxi, innovation around demand data begin shared amongst drivers as happens with Hailo, and much more innovative thinking that is shaking up existing distribution models in this sector.
So with all this disruptive technology and all this VC money chasing great ideas, you would think there weren’t any untapped greenfields opportunities remaining – that there was no idea that no-one in this sector hasn’t already got a team of developers already building?
Well here is a final thought.
How about adding a bit more accountability to what is such a large expense for so many corporations (those that reimburse employees for work-related ground transportation expenses), yet one that is notoriously difficult to audit.
Martin Collings is a contributing Node to Tnooz and is currently employed as Vice President, Innovation Management & Commercialization at MasterCard Labs, based in Sydney. In this position he manages various mobile payments initiatives with his role covering the region of Asia Pacific, Middle East and Africa.
Prior to MasterCard, Martin Collings spent six years with Amadeus IT Group, based in both Madrid and Chicago in a variety of airline roles, most recently as head of airline e-commerce sales for the Americas.
During his time at Amadeus he also wrote the Shearwater Blog covering various topics of interest for airline selling via direct channels. The views of Martin Collings are his alone, and do not necessarily reflect the views of MasterCard.