Is it time for the on-demand mobility services?

The on-demand strategy mobility services aims to provide a better transport service in areas with low demand, and so with a reduced offer, while guaranteeing greater efficiency in the use of resources.

The on-demand transport passengers must give prior notice of the intention to use the service, so that it adapts to the route. Collective on-demand transport services are emerging as a solution for rural areas with low population density, which tend to be in deficit due to the low level and volatility of demand. Usually, a significant part of the population in rural areas is elderly and with limited transportation options, so it is necessary to provide them with a transportation service that guarantees access to basic services: health centers, consumption centers and nodes of transport located in larger populations. There are different modes of transport on demand:

  • Pure on-demand transport service: in this model, there are predefined routes and schedules. However, the routes may vary depending on the received stop requests, not having to circulate the vehicle through a branch of the route in the event that a reservation has not been received. The main characteristic of this model is that the service will only be executed when there is a reservation at one of the stops on the route.
  • Blended on-demand transport service: this model is based on regular transport lines that can vary their route when there is a request for on-demand transport at one of the previously defined stops. In the event that a reservation has not been received for a certain stop, the vehicle will continue its regular route.
  • Door-to-door on-demand transportation, through subsidized taxi services for previously identified users
  • Variants of the previous modalities with more or less flexibility in the route and schedules of the transport service

On-demand transport services are widespread:

  • In Spain Castilla y León has been betting on demand transport since 2004, currently serving more than 5,000 centers through 1,950 routes and serving more than 250,000 reservations (2018), which is equivalent to about 130 reservations per route per year

In Catalonia there are 12 regions with Transport on Demand. In February 2020, the AMTU (Association of Municipalities for Mobility and Urban Transport) launched the “TADCAT” app with 18 routes in various municipalities and 2,400 passengers per year. This app is integrated with other existing mobility platforms and WhatsApp for reservation, planning etc…

  • In Denmark is working FlexDanmark platform. This Danish service platform buys resources from private providers (hours of taxi vehicles or buses) and rewards user satisfaction. The services are adjusted to the needs to encourage or discourage the use of the platform, optimizing the business model and combining the planned trips through modules used by the different regional authorities

Although on-demand services is very advantageous in some contexts and it has some many success stories, there are also some failures on the way. In Sidney, three on-demand buses will be cancelled or expired during last year due to its higher cost (150-180% more expensive to operate than fixed-route buses) after 18 months of operation.

Development of autonomous vehicles, a more intense offer of these services and full integration with other public transport platforms will be key to improve the on-demand mobility financial profitability.

At ALG, we believe that these demand models have high potential and should be analyzed in the current context of collaborative business models (i.e. integration of public policies with private initiative) and Maas initiatives (Mobility as a service).

About the authors
César Valero holds a MSc. In Civil Engineering and an MBA, and is a Partner at ALG
Patricia Chica holds a MSc. In Civil Engineering and an MBA and is a Manager at ALG
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