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Could B2C(ities) be the Answer to MaaS Profitability?

Lithuanian based MaaS startup by the name of Trafi seems to have pulled off a successful pivot to providing its platform directly to cities. [1] Is this the business model needed to make the MaaS sector profitable?   

Two weeks ago Bloomberg CityLab published an article that highlighted the key problem which plagues a lot of MaaS startups – they don’t make money [2]. This isn’t because the sector is still in its infancy and hasn’t reached its mature scale. The maths just does not seem to add up, even under optimistic scenarios. For example, a MaaS operator who earns a 5% commission on 10,000 weekly share-scooter trips, costing an average of $4, would still only yield $104,000 a year.  

Enter Trafi, a MaaS startup that raised over $20 million of funding in April, during the midst of the Corona pandemic in Europe. This week, Trafi is rolling out the world’s first country-wide MaaS platform in Switzerland. It will also launch in Munich, and in a “huge city” in Latin America, says founder Martynas Gudonavičius. On top of that, Gudonavičius says Trafi is in “more than 10 tenders for different cities” in Europe (including five in France) and further afield. 

Trafi’s recent success can likely be attributed to two reasons. European cities were thinking about edging out of lockdown — and worrying about how to get their citizens moving again, safely, and without relying on cars too much. Secondly, news about the success of their platform in Berlin called Jelbi (commissioned by the Berlin transport Authority BVG), which is running since June 2019, made other city leaders take notice. The app connects Berlin’s public transit with e-scooter sharing (both kick and seated scooters), bike sharing, car sharing, and ride-hailing. It supports intermodal travel and ticketing can be done seamlessly within the app for all modes. Indeed, the Jelbi app even has a 4-star user rating on Google’s mobile app store, which is higher than Uber’s own app (3.9 stars) and just marginally lower than the most popular social media apps such as TikTok (4.2) and Instagram (4.5).

Trafi’s founder notes that while this city or transit authority-owned approach to MaaS was a very hard sell before, post-Covid, cities don’t need convincing anymore. “It’s all about the pros now,” Gudonavičius says. “Cities have realized this is a platform they really need.”

This business model — licensing off-the-shelf products to cities, tech giants, and transport companies, instead of trying to earn a commission off a direct-to-consumer approach — is helping Trafi grow fast, while other MaaS startups appear to be stalling.

 

Personal comment

I believe this approach of MaaS platforms commissioned by cities and local transport authorities is a really promising development for both advocates of MaaS and transport users. One of Drive Sweden’s previous articles [3] has already covered the apparent success of MaaS platforms in Belgium, where several privately operated apps compete for users in each city. However, this has often resulted in a patchwork of services and modes that may be available only through certain platforms, but not others. This defeats the purpose of having a single MaaS app to replace several other apps (one for each mobility mode) if you then need to have several different MaaS apps. A MaaS platform that is a commission by the city can be a lot more comprehensive as it provides the platform operator (e.g. Trafi) with much more leverage to bring all other private mobility operators on board – due to its exclusive integration with public transport services and ticketing. 

There is also a good reason for cities to be the owner of the platform, as it gives them the power to be the arbiter of which modes of transport to encourage and prioritize. Owning the platform means cities can build in behavioral nudges that are likely to support certain policy goals, potentially helping make MaaS even more competitive against private car use.   

As for profitability, it is probably still way too early to say. But on the surface, it does appear that a licensing model provides a much more stable and certain revenue stream compared to relying on commissions from ticket sales or subscriptions – commonly used by other platforms. And revenue stability may be just what is needed to allow a company like Trafi to focus on expansion rather than getting stuck negotiating commissions and subscription packages with dozens of mobility providers in every local market.  

*Even though I am not based in Berlin, I have actually downloaded the Jelbi app and tested it out of curiosity. Right away, the simplicity and user-friendliness of its interface stood out. I was also impressed by its route planning abilities and the way it intuitively displays all the different modal options (and there are indeed quite many) with corresponding travel times and costs so that it is easy to make comparisons between them. The in-app integration with third-party mobility provides (such as Voi) also seemed to be smooth.    

 

Written by Bobby Chen, RISE.

 

Sources

1. 2020-08-17. Has Trafi cracked mobility-as-a-service where others have failed?

2. 2020-08-05. The Problem With ‘Mobility as a Service’

3. 2020-05-07. MaaSive Win for Open Data Standards?