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MaaS transit: The business of mobility as a service

Amid declining ridership, transportation agencies find new software partners

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Image Credits: Bryce Durbin

In 2019, St. Louis Metro Transit was struggling to keep customers. Uber and Lyft, along with dockless shared bikes and scooters, had flooded streets, causing ridership to fall more than 7% in a single year.

The agency didn’t try to fight for attention. Instead, it embraced its competitors.

Metro Transit dropped its internal trip-planning app, which had been developed with the Trapeze Group and directed riders to Transit, a private third-party app that offers mapping and real-time transit data in more than 200 cities. That app also included micromobility and ride-hailing information, allowing customers to not just look up bus schedules, but see how they might get to and from stops — or ignore the bus altogether.

The following year, Metro Transit partnered with mobile ticketing company Masabi and added a payment option on some bus routes. Now, the agency is planning an all-in-one app where customers could plan and book end-to-end trips across trains, buses, bikes, scooters and taxis and plans to select a vendor shortly.

“What we do best is transporting large volumes of people on vehicles and managing mass transit,” said Metro Transit executive director Jessica Mefford-Miller. “On the software side, there are a lot of players out there doing great stuff that can help us meet our customers where they are and make trip planning as easy as possible.”

St. Louis Metro Transit isn’t an outlier. As transit agencies seek to win back riders, a flurry of platforms — some backed by giants like Uber, Intel and BMW — are offering new technology partnerships. Whether it’s bundling bookings, payments or just trip planning, startups are selling these mobility-as-a-service (MaaS) offerings as a lifeline to make transit agencies the backbone of urban mobility.

Third-party platforms have become more appealing to transit agencies as they scramble to keep buses, trains and rail full of customers. According to the American Public Transportation Association (APTA), ridership and total miles traveled has declined since 2014, including a 2.5% drop from 2017 to 2018. The COVID-19 pandemic could accelerate this trend as more people continue working from home or shy away from crowding into buses and trains.

“This is like Expedia, the idea of seeing multiple airlines in one place to comparison shop,” said Regina Clewlow, CEO of transportation management firm Populus. “A lot of operators are looking at the question of whether that would give them more rides.”

But that the private growth could come at a cost, potentially injecting private concerns into what should be a public good, Metro Transit’s Mefford-Miller cautioned.

“If we let the market handle this planning on its own, a company might only do it for someone with a digital device or a bank account or only help people who don’t need special accommodation,” Mefford-Miller said. “That’s why we have as an underpinning an equitable and accessible system. It’s the underpinning before we choose any tools we use.”

The players

Amid the swarm of new startups there are a few giants. One of the biggest established players is Cubic Corp., a San Diego-based defense and public transportation company. The firm already controls payments and back-end software for hundreds of transit agencies, including in Chicago, New York and San Francisco, and in January launched a suite of new products under the brand name Umo to expand their offerings.

The package includes a customer-facing multimodal app, a fare collection platform, a contactless payment system, a rewards program, a behind-the-scenes management platform and a MaaS marketplace for public and private offerings. Mick Spiers, general manager of Umo, said the goal is to offer a “connected, integrated journey.”

“We’re uniquely placed as an independent, trusted third party that can be the data broker for a journey focused around the needs of the user,” Spiers added. “The journey we create has no commercial interest for us.”

Israel-based Moovit, which debuted as a startup in 2012 and is now owned by Intel’s Mobileye subsidiary, uses public transit data and crowdsourced trip information to help users plan routes and provide transit data API to mobility and mapping companies, including Microsoft’s Azure mapping platform.

Transit has similar ambitions to be an all-in-one solution. The app is the official or endorsed partner for Boston’s Massachusetts Bay Transportation Authority, Los Angeles Metro and Maryland Transit Administration, among others, and has data from more than 175 metropolitan areas around the world. In a sign of growth, the app has also started providing ridership data to APTA.

Even ride-hailing giants Uber and Lyft, once perceived as the main enemies to public transit, have both added transit planning information to their apps in some cities. In 2019, Uber started allowing passengers on Denver’s Regional Transportation District (RTD) to purchase tickets directly through its app, a feature now available in more than a dozen markets.

In July 2020, Uber acquired Atlanta-based Routematch, which provides software to more than 500 transit agencies. Under the acquisition, Routematch’s employees have been folded into Uber as the two work to integrate their platforms. In a 2021 white paper, Uber signaled its intention to help transit agencies move to “a system that is truly integrated, connected and optimized in a highly agile way,” including microtransit, ridesharing and micromobility.

Other players have emerged to focus on offering agencies mobile and bundled payments. Masabi — which works with Boston, London, New York and Las Vegas, among others — said in 2019 that it was on pace to clear $1 billion in annual ticket sales. Masabi’s JustRide SaaS platform also provides the backing for Uber’s in-app ticket purchasing for Denver RTD.

Bay Area-based startup Token Transit , meanwhile, has entered more than 100 agencies with a promise to be an across-the-board fare tool (unlike most offerings, Token Transit requires no development cost, but instead takes a percentage of sales). It recently launched a partnership with Google to support fare purchases in the tech giant’s apps.

“Long term, I don’t see people using our app at all,” said founder Zachary Browne. “I’d rather be the layer processing the payment and doing all the work between the agency and another app.”

Who’s investing

As automakers and tech companies expand their transportation options — and acquire valuable data to show how people could move in the future — there is interest from all sectors, including automobile companies, in MaaS and SaaS platforms.

Moovit raised $50 million in a 2018 Series D funding round led by Intel Capital and its Mobileye navigation division; other funders include BMW iVentures, Sequoia and NGP, among others. Masabi, the payment platform, announced in February 2020 that it had received an investment from Shell to support its MaaS platform, coming just after a $20 million funding round led by Smedvig Capital with MMC Ventures.

Transit app in 2018 raised $17.5 million from a group led by Alliance Ventures that also included investments from Jaguar Land Rover’s InMotion Ventures, Accel and Real Ventures.

In February, just after Umo’s launch, Cubic Corp. was acquired in a $2.8 billion cash deal by the private equity firms Veritas Capital and Evergreen Coast Capital, making Cubic a private company.

Even the federal government is backing new mobility platforms. The Federal Transit Administration’s Accelerating Innovative Mobility initiative offers grants to agencies to invest in new technologies and apps. In August 2020, the program gave $14 million to 25 projects, including $480,000 to the state of Oregon to build a web-based transit data repository.

A boon for transit?

Transportation was once defined by silos, but now interest in transit from automakers and other competitors is welcomed. Hypothetically, integrated MaaS apps could incentivize riders to ditch private cars for a cheaper bus or train ride, even if those apps are built by the companies that rely on those car owners.

The data that can be collected across broad mobility platforms can also inform better services by, say, showing a transit agency where an on-demand shuttle service could replace a more expensive bus route. A 2018 APTA report recommended that agencies with limited resources embrace private partners to better leverage data collection and analysis.

That’s how Uber has sold its interest in transit. In a partnership with California’s Transportation Authority of Marin and Marin Transit, Uber debuted its SaaS approach by integrating transit services into its app and then offering microtransit or accessible vehicles to supplement existing services. The project adds paratransit and microtransit services to meet the need, while also helping riders book through a platform they already use.

But, said Populus’ Clewlow, there is a danger that a private app (and its algorithms) may not reflect the values of a city to provide sustainable, equitable and affordable accessibility to all users.

“Having options is not a bad thing, as long as cities understand what’s happening under the hood and can steer it to align with their values,” said Clewlow. “It should cost a lot more for people to take an individual ride than take a bus with a high-load factor. Those incentives should be clear on any platform.”

That’s especially a concern when a giant like Uber makes the outreach. Beyond its ridesharing service, the company offers shared bikes and scooters after acquiring JUMP in 2018. Those may nicely complement a transit trip in some areas, but what if the best option for a rider happens to be run by a competitor?

“Is there a scenario where Uber creates a constellation of services but it incorporates CitiBike,” asked David Zipper, a visiting fellow at Harvard’s Kennedy School, referring to the New York City bikeshare service owned by Lyft.

“As a company with a mobility network, we want to provide riders with more options,” said Christopher Pangilinan, Uber’s head of global policy for public transportation. “If someone takes transit 10 times a week and one Uber ride on the weekend, that’s great for us.

What’s next?

There’s no single definition of MaaS, and the idealized all-in-one version that works across many modes and markets still doesn’t exist. Eventually, planners say, existing silos should be broken down entirely so that each rider can make individual choices.

“Someone may want the cheapest journey, or the quickest, or the greenest or the most active. We could curate that journey for them,” said Umo’s Spiers. “We’re not talking about an app that just gives you access, we’re talking about service assurance so that you know there will be a bike or an Uber or a train available when you need it.”

Getting there, however, will require new cooperation, data sharing and investment in technology. And even with that, there’s no guarantee that it will meet the goals of transit agencies to get people out of their cars without major service upgrades.

“Technology can only do so much,” Zipper said. “Which is more likely to get you to stop driving: an app with everything in one place, or a transit system that runs reliably every seven minutes and a street with a protected bike lane?”

10 investors predict MaaS, on-demand delivery and EVs will dominate mobility’s post-pandemic future

Correction: an earlier version of this article stated that Metro Transit has already selected a vendor for its all-in-one transit app.

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