Intermodal Passenger Transportation and the Opportunity for Ancillary Travel Revenue

In many cities across the globe, transferring from one mode of transportation to another is nearly seamless. Just consider the quick shuttle from the airport arrivals gate to the car rental center, or the upstairs-downstairs transfer from railroad to subway at major stations. Demand for travel is growing exponentially and operators are investing in new mobile solutions to support growing numbers of travelers, seamlessly and efficiently.

With the increase in global travel demand, options for intermodal transport are multiplying, including high-speed rail, late night bus service and ridesharing. Travel operators are filling service gaps by design through contracts or partnerships with private operators, or by necessity through rideshare companies and taxis. But they will need better mobile solutions to more easily connect passengers across all modes of transportation.

Mobile Solutions and Intermodal Travel Commerce
Some travel merchants (particularly airlines) have made significant progress in how they use passengers’ mobile devices to streamline transactions (e.g. booking, ticketing, payments) and reduce friction throughout the customer journey. Other travel sectors such as rail and ferry have seen basic investment in mobile apps for booking and ticketing, but less progress in more profitable areas of travel commerce, such as integrating loyalty rewards with ancillary merchandising. Many travel merchants still lack the mobile capabilities needed for ancillary merchandising across the entire journey. In some cases, for rail operators, the only ancillary revenue generated comes from seat upgrades.

For intermodal passenger transportation to achieve its full revenue potential, it will be important for all travel merchants – air, ground, bus, hotel, hospitality, ferry, cruise, tourism – to invest in mobile solutions that make it easier to share common revenue opportunities (such as duty-free shopping or tourism activities) across each mode of transportation. With the right mobile solutions, operators can realize new opportunities for ancillary revenue, while reinventing themselves for a mobile-first environment.

Maximizing Utilization in Intermodal Passenger Transportation
The formula for success in travel is fairly simple: maximize utilization (i.e., how often a particular mode of transportation gets used) while minimizing cost and inefficiency. To understand the revenue potential for intermodal passenger transportation, we need to understand how mobile solutions impact critical business metrics, such as utilization.

Uber, for example, recently introduced an “Express Pool” service which picks up multiple passengers at fixed stops, making it easier to maximize utilization of each Uber vehicle. In exchange for walking to a fixed stop and sharing a vehicle, Uber will discount the price of the ride, a strategy that minimizes cost and inefficiency while incentivizing users to ride more often (utilization). In this case, Uber is operating more like a bus than a taxi and building a market for “micro-transit,” which complements traditional bus or rail service. With the emergence of driverless cars, Uber could run all night without stopping, filling the gaps in late-night bus service in areas where it is not financially feasible for bus operators.

The lesson for bus operators and other ground transportation providers is clear: when demand is steady, the way to maximize utilization comes down to delivery methods and/or execution. Operators with strong mobile solutions can lead their industries in metrics such as utilization, profitability and efficiency. However, the ultimate objective is for all operators to be on board with mobile-first solutions, because intermodal transport will require it.

Uber excels at catering to the mobile expectations and travel habits of smartphone users. Today’s travelers take for granted that they can open an app and hire a private vehicle for a few dollars, and the experience is cashless, seamless and frictionless. Users also can track their Uber vehicle via GPS and get real-time information (such as delays). Uber is further able to monetize its mobile user base through ancillary services like Uber Eats.

Uber and other rideshare companies are revealing new possibilities within intermodal passenger transportation. Passenger smartphones can be the all-purpose channel (‘omnichannel’) for booking, ticketing, payments, loyalty programs and ancillary merchandising. That vision for travel commerce is entirely possible for major travel operators, including airlines, ground transportation providers and hotels/hospitality companies, but it will require foresight and scalable mobile investments.

Ancillary Revenue in Intermodal Passenger Transportation
Travel operators are looking at limitless possibilities for ancillary merchandising and mobile revenue capture across the entire passenger journey, but the lack of mobile capabilities holds them back. Some rail operators, for example, have stopped selling food on trains because it is too inefficient. Mobile solutions could easily work within this constraint by allowing passengers to order on the train and have their food or merchandise waiting for them at the station.

Smartphone users also want to consolidate travel management around their personal devices rather than at kiosks. The ability to use their smartphones is a huge convenience, particularly when planning and traveling across multiple modes of transportation. Without adequate mobile solutions, intermodal transportation will be held back by legacy ticketing systems and frustrated passengers waiting in line for paper tickets and cash payments.

Once travel operators solve transportation-specific problems (transitioning from physical to mobile ticketing, for example), they can continue to build on their mobile investments. Operators do not have to become the “Uber” of their respective industries, but they do need mobile-first solutions that can manage the complexities (and opportunities) of intermodal travel. With direct channel access to passenger smartphones, travel operators can extend ancillary merchandising beyond seat upgrades, and build strategic partnerships for more profitable travel commerce.

CellPoint Mobile provides mobile-first solutions for operators across the travel sector to maximize selling opportunities, improve user experience and increase ancillary revenue. To learn how these strategies can help improve your transportation service – and its revenue potential – contact us here.