June 16, 2021

Ride on time

It's taken a back seat but should travel buyers now be paying more attention to that 'last mile'? Bev Fearis investigates

“Let’s face it, it’s not that sexy,” is the brutally-honest observation of a key player in ground transport, and if that’s the opinion of someone working within the sector imagine what outsiders must think. Up against airlines and hotels, generally regarded the more glamorous side of business travel, the ‘last mile’ element of a business trip is frequently overlooked in corporate travel programmes.

But with social distancing, working from home and the transformation of the office to a place to meet, some believe that taxis, chauffer-drive and rental cars will tick more boxes as we emerge from Covid lockdowns, at least in the early days. “Until we are all feeling more comfortable about getting back on planes, the tube and on busy trains, these personal modes of transport will be more in demand,” says one neutral observer.

Suppliers are already adapting their businesses accordingly. Pre-pandemic, for example, the shiny Mercedes-Benz fleet of German start-up Blacklane whisked executives to and from airports for their intercity flights but are now picking them up from their offices or homes and driving them directly to those cities for their meetings. Its website homepage lists flat chauffeur-drive fares for the key intercity routes – Birmingham-London for £99 each way or Amsterdam-Brussels for €289 – and urges business travellers: “Free yourself from crowded spaces with private, discreet rides that prioritise your safety.”

According to a recent report from ridehailing app FREENOW, half of European travel managers say their company has changed its policies toward ground transportation as a result of the pandemic. Its survey of 175 travel managers found 57% say their company is now less likely to allow or encourage the use of public transport while 37% say it is more likely to allow or encourage rental cars. Meanwhile, 27% say they are more likely to allow or encourage traditional taxis – higher than the share that are less likely to permit them. But while the majority (78%) of corporate travel programmes have a formal agreement with a car rental company, only half have one with a ride-hailing vendor and only 47% with a limo/chauffeured car company.

The benefits, says FREENOW, are worth the effort: saving money, streamlining payment and invoicing, and receiving data and reporting. A formal agreement also allows corporates to vet the safety practices of their providers and use travel data – destinations, driver names, and licence plate numbers – for contact tracing if required, all even more crucial in these Covid times. It seems the message is finally getting through, with one third of buyers saying they expect their programme will begin a formal relationship with a ride-hailing company within the next year.

Many of them will be looking to their TMC to set the servicing landscape. “But this poses some challenges at the moment,” says Paul Tilstone, Partner at Festive Road. He believes that in the current climate TMCs might not have the right people or platforms to develop new partnerships, particularly as they might not be perceived as an immediate revenue driver.

“Until we are all feeling more comfortable about getting back on planes, the tube and on busy trains, these personal modes of transport will be more in demand”

Those that decide to take the plunge won’t be short of options, with an ever-growing number of ‘last mile’ products – many from well-funded start-ups – aimed at the corporate market: FREENOW for Business, Bolt Business, Uber for Business, Ola Corporate, Rolzo Business, the list goes on. For corporates, however, the proliferation of choice is one of the main problems.

“The market is too fragmented,” says Mark Avery, Global Business Services and Travel Leader at PricewaterhouseCoopers. “When you’ve got people travelling globally, there are so many small, fragmented companies it’s hard to get a service partner. I think that’s why many smaller companies don’t even attempt to touch ground.”

The rise of aggregators – some not only attempting to bring together taxis and transfers but also car rental, car share, e-scooters, and rail – is helping to alleviate this problem. But while their technology is impressive, Avery says most still fail to bring the service support that corporates require.

“For me as a corporate travel manager, one of the challenges I’ve got is that I don’t want travellers phoning me because they’ve got a problem with their invoice or because they’re querying taxi waiting times,” he explains. “Many companies will provide back-end data and there have been improvements in the technology, but without the service offering it’s not an end-to-end solution.”

Those that decide to take the plunge won’t be short of options, with an ever-growing number of ‘last mile’ products – many from well-funded start-ups – aimed at the corporate marketJust before the pandemic hit, PwC partnered in the UK with an undisclosed ground transport provider to pilot technology that not only plugs directly into the company’s online booking tool but also comes with the crucial service support. However, due to the low levels of business travel it hasn’t yet been fully put to the test.

Even within the UK domestic market the fragmented sector makes it more difficult for smaller companies to properly control their taxi and transfer spend, says Sixt Global Sales Director Stuart Donnelly. “If you travel around the UK there are cities and towns with different taxi operators. Because of this fragmentation of the spend and the low transactions involved, many companies don’t manage it,” he explains. Most payments are still made by credit card and reimbursed by the employer. “There’s no real visibility beyond spend, no management information,” adds Donnelly, who says the real numbers are “significant”.

To tackle these issues, and recognising the need for a more interconnected approach to ground transport, two years ago Sixt launched a Mobility-as-a-Service (MaaS) platform, offering rental, car sharing and taxi/ride hailing, all bookable through a TMC, OBT, or app. It has since also added e-scooters in Germany, thanks to a partnership with Tier. Before Covid it was about to add rail to the mix in Germany and the Netherlands. “This is currently on hold but it will happen,” says Donnelly.

Launching this summer is a brand new player, Jyrney, which claims to be taking the MaaS concept to a new level. Billing itself instead as ‘Mobility on Demand’, Jyrney is promising clients the ability to book a whole suite of mobility products – even coaches – through any business travel platform. It uses algorithms to manage the supply base to ensure users get the most suitable providers. The company says it is already in talks with several TMCs who are looking to offer their clients a managed ground transport solution, and with some corporates too. “We are also prioritising green fleets, such as hybrid, hydrogen and electric vehicles,” says Founder and CEO Daniel Price.

Sustainability is an area where the ground transport sector has previously fallen short. Almost half of European travel managers (46%) in the FREENOW poll say sustainability is one of the greatest pain points with their ground transportation programme – and the report predicts Covid will make sustainability an even greater challenge. But the sector is responding.

At the end of last year FREE NOW for Business introduced an electric-only booking option and is also launching an emissions calculator so clients can see how much they can lower their emissions if they switch to EV-only vehicles. In February, Rolzo launched a fleet of electric vehicles in more than 100 cities worldwide. In fact, most of the major players are now making the switch to electric, ticking yet another of the boxes and giving corporate travel managers no excuse not to join the ‘last mile’ club – however unsexy.