THE TAXI INDUSTRY’S GLOBAL OPPORTUNITY TO RECOVER: Interview with Mileus CEO, Juraj Atlas

Taxi drivers and operators across the world are planning and adapting for the world post-COVID. TaxiPoint were lucky enough to talk to Juraj Atlas, CEO of Mileus, to discuss the potential opportunities available to everyone in the industry, wherever you may be working, in the months and years ahead.

Mileus provide an intermodal mobility technology for taxi and private hire vehicle (PHV) operators, which aims to grow their ride frequency and revenue while reducing congestions and pollution in the cities they operate in. The Czechia based tech firm also aims to improve the comfort for commuters using taxi and PHV operators.

Do you predict a change in commuting and travel habits post-COVID? If so, what might they look like?

“It's clear that many businesses and their employees had to adapt to new working arrangements as COVID-19 forced them to work from home (WFH), which has lowered the need for commuting to the city on a daily basis.

“This was the case particularly for the knowledge workers who represent 26% of the total workforce and whose job doesn't necessarily require them to be present in their workplace and can often be done remotely. Some of them may have even increased their productivity while WFH.

“Despite that, I am a firm believer that we won't stay working from home post-pandemic, even if our occupation does not require our presence in the office at all. At least not every working day. Instead, I think we will adopt a new weekly rhythm combining WFH and working from the office (WFO).

“This newly formed rhythm will lead to a decreased commute demand compared to the pre-pandemic times as some occupations, especially among knowledge workers, will start splitting their workweek between WFH for some days and commuting to their work location a day or two within a week.

“As a result, the costs of commuting (discomfort and price) will decrease in line with the commute needs of the knowledge workers, now commuting only one to three times a week rather than the previous five times a week.

“Commuters using public transport will experience a lower number of these uncomfortable trips while saving money spent on tickets. In comparison, those using private cars will save time wasted in congestion and searching for parking spots, in addition to saving on fuel and parking costs.”

Will there be any new opportunities that offer themselves to the taxi industry?

“I am convinced there will be. The lowered number of commute trips might lead to an increased motivation of commuters to look for premium services in order to further decrease the discomfort of their commutes.

“First of all, the commuters will have a discretionary income saved by commuting less. Moreover, it will also cost them less, in aggregate, to upgrade and pay for increased comfort during their transport as they will make fewer commute trips per month. In other words, they will now be required to pay only two- or three-fifths of what they would have paid before to increase the comfort of their five commuting trips per week.

“It's also important to bear in mind that many occupations of the knowledge workers belong to the high-margin/higher-income economy segment.

“This shift in working arrangements will create a unique opportunity for the taxi industry that can take advantage of the newly found discretionary income of these knowledge workers. This should already bring some additional demand for taxi services as we know them.

“But there's an opportunity to further increase the motivation of commuters to pay for a premium service more frequently – by lowering the average order value (AOV) for a single taxi ride. Now, I hear you saying that's not possible without losing out on profits.

“But it is, through intermodality – an automated interconnection of public transport and taxi services. Our Mileus solution including API & SDK technology enables the intermodal service that helps taxi and PHV operators decrease the AOV for their transportation service without cutting the profits.

“This would allow the residents to enjoy more comfort by paying only a fraction of the previously required cost of the whole taxi ride.”

Do you think there will there be a sharp or slow demand increase for taxis once COVID-19 restrictions are lifted?

“There are opposing forces that will drive the demand for taxis. So it is quite hard to predict. Just as it is hard to predict how fast the pandemic measures will be lifted throughout time. One positive force is the fear of crowded places, such as transit. Another, negative one, comes from the economic downturn which, of course, will have a psychological effect even on those people who might not have been financially impacted by the pandemic. The whole society’s mood will take a toll on general willingness to pay for premium services.

“But there will undoubtedly be a new demand to be served by taxi services. Mainly because in addition to public transport commuters, private car commuters might also get motivated to use the premium service.

“Municipalities worldwide have accelerated their efforts of shifting urban road infrastructure from cars to active mobility during the pandemic, which will in turn increase the discomfort (congestion, parking) for private car commuters.

“Consequently, commuters previously using private cars might be willing to substitute their vehicles with a different transport mode for some of their commuting needs. What's important to mention here is that when it comes to comfort and guarantee of availability, they will expect a very close experience to what they were used to from their private cars.

“That's why having public transport or taxi as independent options might not be sufficient, but combining them together into an automatically integrated journey that’s guaranteed to be available every day might be the way to go.”

How can intermodality help taxi operators to capture the new demand?

"The numbers from Prague, Czech Republic tell us that an average monthly active user (passenger) goes to their taxi app five times a month and orders a taxi three times a month, paying EUR 30 per month in total.

"Could the whole month of commuting be paid for by those EUR 30? Let's consider a case of a resident who commutes to the city only once a week post-pandemic. Such a resident would commute twice per week (inbound and outbound) and nine times on average per month (as there’s an average of 4.4 weeks in a month).

"Considering the monthly budget of EUR 30 has previously covered three taxi rides, the price-per-trip (AOV) would need to be discounted by 67% to cover all nine trips. This, however, can't be achieved even with intermodality which can lower the AOV by 42%, as discovered during our pilot in the Czech Republic. You can see the full results and insights from the pilot in our recently published case study.

"But when you think about the difference in discomfort between the morning and evening commute, which one would you rather substitute? Would it be the inbound morning commute when you're fresh and energised? Or the outbound evening commute back home when your energy levels have dropped and the frequency of public transport has decreased, which further increases the discomfort?

"I know, it's a suggestive question. Anyway, could our resident commuting to the city once a week cover every one of their evenings commutes back home with the same EUR 30 budget by paying for intermodal service combining public transport and taxi?

The same monthly aggregated price would now need to cover the cost of 4.4 rides (as there are 4.4 weeks on average in a month) instead of the 3 monthly taxi rides that the user paid for before the pandemic.

"That requires roughly a 30% discount for the price-per-trip (AOV). And as intermodality can achieve even a 42% AOV decrease, there is a margin of safety for the financials to work out nicely for the taxi and PHV operator."

What can the taxi industry do now to prepare for post-COVID life?

“For a taxi or PHV operator looking to launch intermodal operations, it's often about answering these important questions. Where to deploy? In which residential area? How much capacity is needed, where and when? How much investment is needed? What's the ROI and how long to break even?

“This is where Mileus can also help with our analytical technology for modelling and planning the business, finances, and operations of the intermodal service. Our analytical solution enables the taxi or PHV operator to build a business plan and ensure the service is economically sustainable.

“So while preparing for the post-COVID life, the taxi and PHV operators can analyse the business potential of providing the intermodal service to their customers. This way, they can ensure they are ready to capture the new demand effectively once the restrictions ease out.”