(Unedited) Podcast Transcript 425: Fixing Mobility as a Service

This week we’re joined by David Hensher, Director of the Institute of Transport and Logistics Studies at the University of Sydney. David chats about how to fix Mobility as a Service and proposes a new way to reduce travel and emissions called  Mobility as a Feature.

You can listen to this episode at Streetsblog USA or our hosting archive.

Below is a full unedited AI generated transcript:

Jeff Wood (2m 18s):
Well, professor David Hensher, welcome to the Talking Headways podcast.

David Hensher‬ (2m 28s):
Thanks, Jeffrey. Great to be here.

Jeff Wood (2m 30s):
Well, great to have you. Before we get started, can you tell us a little bit about yourself?

David Hensher‬ (2m 34s):
Yes. I’m a director, in fact the founding director of the Institute of Transport Logistics Studies at the University of Sydney Business School, which is now 32 years old. We’re involved in transport logistics, supply chain and we’re fairly global. In fact, we’re ranked 10th in the world, which is great, and we focus mainly on postgraduate education, masters and PhDs as well as doing a lot of research in just about any area that’s relevant to transportation. So it’s a good mix. I have about 30 staff, we have 30 PhDs as well and about 180 post-grads at the moment in the space. So a pretty busy active place. And dare I say, I’m very proud of the fact that in January I was given an order of Australia, which is pretty prestigious.

David Hensher‬ (3m 16s):
That was a really a recognition of my contribution to transport and supply chain over many years, both in Australia and elsewhere.

Jeff Wood (3m 26s):
That’s awesome. It sounds really exciting, exciting time to be part of transportation as well. I’m wondering where did this love of transportation come from when you were growing up? Was it something that you’d always thought about or was it something that came on later in life?

David Hensher‬ (3m 40s):
Not really. In fact, all I was born in England and spent early years and then we went to Kenya, so I was very much brought up in Kenya and East Africa, but went back to the UK in boarding school and I was always interested in economics and engineering. And later on, both in Australia and in the uk I’ve studied in the University of New South Wales, Oxford, I met a professor, Michael Beasley from the London Business School, who’s since passed, became a very great friend and a colleague mentor of mine. And he told me one day as an economist, he thought that transportation was a great application of microeconomics. But at that time I was gonna do work in economic development because that was my interest for Africa and I’d started looking at transportation.

David Hensher‬ (4m 21s):
I found it fascinating and, and I did some undergraduate research on parking of all things. And when he said, oh, well maybe you know, you should look at the economics of parking, I thought, well, do you mean when I have a date or when I’m, you know, actually seriously thinking about what role it might play. And anyway, that was the beginning and through Michael Beasley, I got a fascinated interest and I’ve, I’ve never looked back and I thought being a transport economist as then I became, it opened up opportunities that maybe were easier to gain reputation than say being a monetary economist when there were time a dozen.

Jeff Wood (4m 52s):
That’s funny. I guess that’s true, huh? You can make waves, you can be as popular as Donald sch here in the United States.

David Hensher‬ (4m 59s):
Absolutely. I, I know Donald very well. In fact, I’m just, for the record, I am now ranked as number one transfer economist in the world in all these rankings that academics seem to listen to, which is really good. And then we’ve got people from Berkeley and m i t after me, so I’m really proud of that. I’ve managed that for the last few years. But you know, I’ve also spent time at U crv, I and a lot of time in the usa. So we’re all very much a family of committed academics around the world. And I think that’s the great thing. And I suppose what I’m proud of more than anything else, even though I wasn’t born in Australia, I think I’ve put Australia on the mat in this area and a lot of academics from the USA and from the UK have been attracted to Australia. And they credit me with providing the pathway, if you’d like to say it’s a good place to go to and live.

David Hensher‬ (5m 44s):
And I think that’s right, you know,

Jeff Wood (5m 46s):
Well David Levinson is there too. Indeed. We know David,

David Hensher‬ (5m 49s):
He’s at Sydney. Yeah, he joined us about five years ago and Martin Hickman from Arizona is now at University of Queensland and I’ve attracted people from Imperial College, Mike Bell Del Bleemer, and from Cranfield Reco Mur. So we’ve built up quite a good international team of people who of course bring their networks with them, don’t they? And if you know David, of course he has a wonderful network as well.

Jeff Wood (6m 11s):
Yeah, absolutely. Well, so you’re in Sydney. What is the transportation landscape there? What interests you most about the local activities that happen?

David Hensher‬ (6m 20s):
Well, it’s very broad interest, not only in passing but also in in freight. I mean only about 20% of all trips pre covid were by public transport. But the moment we’ve only had a return of about 65 to 75% back to public transport and the cars are getting back onto the roads and cause and congestion and depending on where you are, it’s worse than pre covid, but it’s actually better in some areas. What we’re generally finding and what interests me is that the peaks have dropped a bit and the off peaks have increased in terms of the amount of activity we’re seeing. But possibly the most exciting thing, Jeff, is the work we’ve been, we’ve been doing, as have many on working from home over the last few years, to show that that’s really changed the landscape.

David Hensher‬ (7m 3s):
And I regard working from home as the greatest unintended positive consequence of Covid. And it’s created one of the strongest transport policy opportunities that we’ve ever had in terms of taking pressure off the CBDs, but also more importantly, growing the interest in living locally and the interest in active travel, especially walking and cycling. So what interests me is really how these all interact through a system-wide approach to actually improve society in terms of accessibility, decarbonization benefits as well that are happening. We’re doing a lot of work actually on alternative fuels. And I think it’s fascinating. One of the things I often tell all those people that love electric vehicles is that, you know, they’re great at the end to reduce the emissions of the tailpipe.

David Hensher‬ (7m 50s):
That’s not the whole story. Of course there’s still 30% more somewhere else looking around. But of course if you don’t change the pricing model, as these vehicles become generally more acceptable, the price drops and the cost of using them is lower. We’re gonna have worse congestion we’ve ever had before. And in terms of sustainability, while the car might be delivering sustainability on a reduced emissions, it’s not helping public transport because people will tend to stay or increase their use of the car. You know, my old adage a car is a car is a car, whether it’s electric, petrol, diesel or autonomous, is that a good story for the future? I’m not sure.

Jeff Wood (8m 28s):
I’ve often wondered, you know, the, the car has a specific shape and design to it and you know, because we’re going off into these new ideas about what transportation is, well, we continue to have this inertia of car design and you know, the size of it a as you said, a car is, a car is a car. And so it begs to almost be changed because times are changing, it feels like.

David Hensher‬ (8m 50s):
Absolutely. And one of the things that I’ve been promoting almost since the seventies when I first first got interest in transportation is road pricing reform, which we know is politically is just not on. I mean, we need to move away from fixed registration charges to distance based charges. And we did some really interesting work a few years ago that showed that if you were to have the registration charge in Sydney for cars have a 5 cents a kilometer distance based charge only in the peaks morning and afternoon, but not in the off peaks, you would reduce peak hour traffic by 6% and nobody would be financially worse off. And you only have to do the calculation on tip of the kilometers in the peak and the saving and registration to prove that.

David Hensher‬ (9m 31s):
But of course people don’t do the calculation and they say, Hench, you, you’re an idiot. What are you trying to do? Give us more expenses, including trucking guys that have always been very negative towards my views on, on this, because they will benefit by having less trapping on the roads and they don’t get it. But having said all that, 6% reduction in Sydney, I’m sure this is in some other cities in the us, is almost returning you to school holiday periods. And people normally say, isn’t the traffic great during the vacation periods, but awful in the other periods, you know, that’s the cell. And one of the TV stations picked that up and said, oh yeah, that’s the magical statement. You know, let’s return the traffic to school holidays and just come up with a suggestion that makes sense.

Jeff Wood (10m 14s):
That’s what we talk about here in San Francisco is, is when everybody goes to Burning Man, it clears up a bunch.

David Hensher‬ (10m 20s):
Yes. And you know, I’ve got another comment from a politician who’s now a friend, he’s retired from politics, he said when he was a minister of transport, he said, Henshaw, wash your mouth out. And now that he’s not a politician, he actually agrees with me. That’s laugh isn’t

Jeff Wood (10m 34s):
That’s, that’s politics isn’t it? I guess that’s how, how it unfortunately works sometimes. Do you think work from home is sticky? Do you think it it’s gonna stick around and and permanent change?

David Hensher‬ (10m 45s):
Well, we’ve been doing surveys since March, 2020 and we’re still doing them and I think we started pretty early to capture the sense. And it’s quite similar to what people have found in the usa. I think we’re gonna be talking about in Sydney, an average of just over one or two days a week for particular occupations. And although it might be more a Monday or a Friday too much, it’s fairly evenly spread through the week, which is encouraging because that has impacts on transport, network performance. It will. And I think flexibility is here to stay and, and just in the USA from the work that was done from Stanford, which I follow with guys I know over there, one of the great surprises and the great delights is that employers were as supportive as employees.

David Hensher‬ (11m 27s):
Putting aside the fact that quite a lot of employers have reduced their office space, which is a saving, they’re starting to now realize that work-life balance for an employees is really important and that if they want to maintain a good workforce, they need to recognize that. And even we are seeing increasingly employment contracts having that built in where people are saying, we like the flexibility and if they’re gonna stay in an organization, they need to honor it. Now of course it, it doesn’t apply to everybody. There are those that are essential workers that have to be face-to-face, which does raise equity issues in the future about this issue. But on balance, I think it’s been a good outcome and it’s here to stay.

Jeff Wood (12m 5s):
There was an article yesterday in the Atlantic, there was a re research study showing that it worked from home actually is contributed to a baby bump in the United States. You had a crash in 2020, but in 2021, in 2022 you’re seeing more babies being born. And that’s partially because of the flexibility of the work from home situation. And I found that really interesting too. I mean there’s all these connections economically and socially to this work from home kind of movement for like you said, folks that can work from home.

David Hensher‬ (12m 31s):
It could be right and but of course I haven’t heard that one in Australia. That’s rather interesting. I always relate that one to whenever there’s electricity failure in India nine months later there’s a growth in babies being born. But no, that’s a fascinating one, Jeff, I’ll, I’ll look into that. But we certainly also know, and it’s important to mention that some have said there’d been some negative mental health impacts on working from home, which to some extent was true during the lockdown periods. But really I’m referring to out of lockdown even in areas which are no longer what we would be concerned about with voluntary lockdown because people are still concerned to go out and about. But now with vaccination rates being reasonably high, people are generally not wearing masks and getting out and about and trying to live the next normal.

David Hensher‬ (13m 12s):
But what I, what I will say is that a lot of the mental health issues were there before Covid. And we’ve done a lot of work on wellbeing and happiness and we are convinced that there’s been a net positive because the stress of Commuting’s been quite high and the flexibility of being able to undertake a mix of leisure at times at sui better when you’re working from home, you know about half of the saving commuting time and commuting time is typically seven or eight hours and a week in a, in Sydney by working from home on the average and people only worked from home to some extent has been converted in a roughly half of that’s been additional work productivity gains and the employer and the other half has been roughly leisure, which roughly 20% of the leisure is out, out of home, walking, cycling, relaxing, going to the shops when the rest is in home.

David Hensher‬ (14m 1s):
That’s really good evidence to suggest that working from home, you know, I can’t find many negatives on working from home in terms of people that do it to some extent it’s not a all on nothing and used to annoy me in the beginning when people said they work from home or they don’t what the devil does that mean one day, two days. And I think we’ve gotta get the language correct and I think it’s been a good outcome in western societies. It seems to be stabilizing and the recent evidence in Sydney says we’ve almost got the number where I think it’ll be in the future, which is gonna help transport planners in forecasting reprioritizing infrastructure and so on.

Jeff Wood (14m 39s):
I found that when I started, I started working from home in 2014, so way before the pandemic, I was actually already ready for it I guess when it got here. But I did find that for me it actually improved my health outlook. I felt like I was healthier, I felt like I could sleep longer and those types of things which I needed. But then on, on the other hand of it, you know, I, I missed my colleagues that I had before and you know, the people water cooler discussions and things like that. But that wasn’t a, a partial work from home or anything like that. I just started working for myself and working in my office here at my house. Yeah. And so I think that might be a different situation than partial, you know, like you were mentioning Absolutely. You know, day here, day there, which you still get those social interactions but you’re also, you know, being able to have some of that family time as well.

David Hensher‬ (15m 19s):
That’s a very powerful point because we often say people don’t go to work to work, they go to work to socially interact and Absolutely right, but how much do you need? I mean we, we generally work on a Tuesday and a Thursday and that’s about right. It’s really enjoyable and as a result most colleagues go in on those days. It’s interesting in Australia with public service, which of course is huge, they, they basically have a view that the team coordinator decides when everybody should be in the office and when they’re not. And transport for New South Wales, most of those people are at home three days a week looks like continuing. Which I, I find fascinating and I wasn’t surprised. I thought they’d, the bosses would be saying you need to be in there more often, but they’re saying no.

Jeff Wood (15m 59s):
Huh. Interesting. Well let’s chat about mobility as a feature. Mobility as a service. Yes. First off, let’s kind of define mobility as a service first. The moss as I’ll call it I guess the rest of the show use the acronym instead of the whole phrase, but what is mobility as a service? At least in theory,

David Hensher‬ (16m 16s):
In very simple terms, it’s an integrative process to develop an ecosystem where you can integrate in a very simple way through a an a digital platform. Information that gives you about a number of ways in which you could travel and it provides hence a one-stop convenience solution to where you can find information about traveling. But on top of that it also provides incentives to maybe get you to consider more sustainable modes of transportation in your overall travel patterns. I have to say it is more than a trip planning app because a trip planning act basically give you information which is great, like Googled as well.

David Hensher‬ (16m 57s):
It’s designed to really change travel behavior in a sustainable way that’s aligned with societal goals like reducing emissions and reducing congestion so on. And if it doesn’t do that, then we’re suggesting that maas as a digital platform may not be of great value to bring the sort of outcomes that we might aspire to as a society.

Jeff Wood (17m 19s):
And that brings up kind of the idea of like what are the limitations, what are the limitations of Moss as it’s being implemented now or as kind of how it’s controlled through transportation companies and through that side of the business.

David Hensher‬ (17m 32s):
Oh it’s huge. We just had a advice giving to transport main roads in Queensland the other day where we’re suggesting one of the great problems we’re finding is it’s become more of what Samon from whim says is an ecosystem rather than ecosystem. I like that because I think think that the, the suppliers of transportation just as showing such limited interest cause they don’t think there’s any financial attractiveness when it comes to, you know, the ride share guys, the, the bicycle guys and all that sort of people when it comes to government who’s mainly the provider of public transport, they seem to be sorted with the idea that somehow mass is going to change travel behavior and get lots of people using public transport.

David Hensher‬ (18m 12s):
But by the way, we’re not gonna subsidize it anymore than we do at the moment through ma. So we’re not convinced that having an apt to to know what’s going on is necessarily gonna be enough to make a difference, to change your behavior because many people are creatures of habit and the changes in service levels that are gonna be required are not enough to make them go variety seeking and change their behavior. It will at the margin but it won’t make much of a difference. But the biggest issue is who’s going to be the aggregator or the broker in making this happen and who’s gonna provide the financial incentives to support switching behavior. I have to say that in transportation, and you would know this Jeffrey, that it’s levels of service that really determine your choices, not how much you pay.

David Hensher‬ (18m 60s):
And MA can only offer financial incentives. It can’t offer unique ride share services or unique transport, public transport to people who subscribe to mass. So at the moment it’s stuck in a hole, it’s niche, it’s not likely to be scalable as it’s being interpreted at the moment. So the question is what do we need to do to break that nexus so it has a chance? And I think it’s been pretty much doom and gloom to date with a lot of people getting excited about it but not much being delivered. And if I could just finish my comment by way of Samoan, who was my co-author in my middle as a feature who was really the pioneer in this stuff through whim in Finland, he’s basically said it’s just not working.

David Hensher‬ (19m 47s):
You know, he’s relied on venture capital for a long time and then he’s run out and he still hasn’t developed a a profitable market. So we started asking ourselves and I’m happy to share other things beyond math as to what we need to do to give it a chance.

Jeff Wood (20m 3s):
Yeah, I read a piece that he just recently wrote in I t s and I was stung by this quote, you know, if Moss cannot get money used for car ownership, it will struggle to be sustainable. Liberate the money used for car ownership. Yeah it will struggle to be sustainable.

David Hensher‬ (20m 17s):
So I’m gonna share a really interesting way of solving that problem with you this morning, which we didn’t talk about in math, but it’s linked to math. And both of us sort of started off with the view that we’ve gotta think outside of transport suppliers to give this a chance.

Jeff Wood (20m 30s):
I just find that really fascinating and I, you know, when I first read the math article mobility’s a feature, I was really fascinated and it just reminded me of a couple of things and I’m wondering if this is actually the case, but like reverse airline miles. So you know with airline miles you travel a bunch and you get points that can turn into cash and rewards, but for this you have goods and services that you’re trying to get and maybe they give you travel rewards on the opposite side. It feels like a reversing of some of the standard operating procedures for some companies, travel companies.

David Hensher‬ (20m 59s):
Well it does, but it’s, it’s challenging and often when people say Maz is like Netflix, I’d said, I don’t quite get that. I, I guess let me give you a couple of points which I think are, are really important. Sure. First of all, multimodal has to be much broadly interpreted than it has been to date. And I think we’ve gotta bring the car, be it a private car or car sharing into the mix in a serious way in order to find a way of getting the V K km reduced the offers of transport services within the current mass framework that most of the app developers get excited about are just too limited to achieve that. So what we are proposing is that maybe the problem is that we’ve got the wrong broker i e government and even though they, they sort of have a sense that they should lead this exercise, well they’ve not done anything to convince me that they’ve made a difference to date.

David Hensher‬ (21m 52s):
And so I believe that what we need to do is as follows, and this isn’t new. I think I upset some government people yesterday who didn’t quite like the idea cuz it wasn’t aligned with their control. I said stop the word control, let’s work on partnership. So here it goes really is the story. The way I think it should happen is that we, we have a competitive tendering framework and we invite a range of anybody that wants to deliver mass through what they call a consortium. You can set up a consortium and you can be government or you can be a private company like an insurance company or a bank and you can invite the transport suppliers with their own apps. And this is really important cuz these guys don’t wanna share, they don’t wanna share a lot of the data that comes out of their own apps.

David Hensher‬ (22m 38s):
I’ll tell you what you can share in a minute to put in tenders, right? And then what we do, we might select six of them in a location, but we wanna make sure those six have full coverage of all the modes including the car because we’re trying to really change travel behavior and we’ve gotta make the car, we’ve gotta have an incentive directly hitting the car rather than because to change the car you have to make it less attractive or the reward to make you want to reduce car use. So supposedly we’ve got six winners now they have to agree in the bidding process to join what we call a common framework. The common framework is the way in which their apps are connected into a common framework that delivers information to users to be able to make choices.

David Hensher‬ (23m 22s):
Users can choose one or more apps to subscribe to, but in order for the app developers or the consortium to get some rewards that are attractive for them to participate, they’ve gotta share certain amounts of data back to the common framework, which is either owned by a private company or owned by government to show that if they can reduce B K T of cars for example, or reduce emissions, then they will be given some financial rewards which will be not only delivered back to the users of your app but also to the suppliers into the app. And this is the way of making sure there’s a competitive market and to make sure that all the modes are delivering on sustainable outcomes.

David Hensher‬ (24m 7s):
Now if it turns out that any of these consortium dealers cannot deliver on the KPIs related to the societal goals, they don’t get any rewards, right? The users do not get any rewards either. And so it has no value in terms of the ecosystem that we’re trying to develop. Now the beauty of this Jeffrey, since one of the greatest problems has been data sharing is that many of these consortium only need to share aggregate data through to the common platform in order to be eligible to get the rewards, the financial rewards or the non-financial rewards could be points. Now on top of that layer, what’s great about an insurance company is they’re multi-service, they’re not multi motored, they essentially don’t own modes, they deliver services to the market and those services can be reduced insurance premiums, lower costs on maintenance of your car, direct incentives through even buying a car.

David Hensher‬ (25m 3s):
Or even we are willing to give you points if you switch your vkt into public transport because they have the ability to cross subsidize and still maintain profits. I can tell you, and I’m sure you would agree, that a public transport authority does not have that capability. They do not have any control of a huge amount of the market which is driven by car choices. Multi-service or math is well aligned with this idea because even the insurance companies can go to people which they already go to. And if you insure with us, you’ll get discounts at the shops, at the cinemas on holidays, you name it. A government agency has no capability of doing that even though they always tell me they’re talking to people about it.

David Hensher‬ (25m 48s):
And I said, well where, where’s the outcome mate? You know how we’re working on it.

Jeff Wood (25m 54s):
I find it really interesting because I feel like you’re right, the insurance companies do have a connection into a broader world and it’s something that, you know, the transit agencies here in the United States at least and I’m imagine around the world are cast strapped always. They’re always, you know, trying to just barely provide service. And so reaching outside of the one box they have control of is really important. And so I’m wondering how this connection to broader business banks or insurance companies or anything like that, you know, they have an incentive obviously if you’re a car insurer, right, to reduce vehicle miles, travel V K T, but how do you get them to kind of get over that hump to where we’re not just an insurance company, we’re trying to have a sustainable outcome?

David Hensher‬ (26m 33s):
Well first of all, banks are getting very much involved of course in account based payment systems and they are becoming a really central feature of Mars. You know, you have, we could reach the stage as one of our colleagues who’s now the minister of transport and Chile said, well why do I need to join Mass? I’ve got an American Express account, you know, and I can go and pay on the bus, on the train and ride share. I, as long as I can do that, I don’t see the point of all this and it’s a valid point. But having said that, do you know there is a thing, I’m not sure what you’d call it in the usa it’s called the social license. And the social license is a concept to do with being a good citizen. And many of these big companies have a set of rules that they work with and like they want to tick a box that says, yeah we are supporting sustainable travel for our staff and things like this or we are supporting sustainable outcomes for society as a whole by providing incentives and so on.

David Hensher‬ (27m 27s):
So if you, if you come and insure with us or bank with us, we’ll give you some reward points. Of course this is the competitive market which enables provided you use it in a sustainable way and here’s a list of what you need to do. And so the social license has become something that many big companies have been wondering about. Well what do we have to do to tick that box? Well hang on guys, is a ticketable solution

Jeff Wood (27m 51s):
That’s getting harder here in the United States as we talked about earlier, it’s very political. People on the right are, you know, attacking companies who are trying to fill out their, as you mentioned, a social license here, I think it’s called E S G or something along those lines.

David Hensher‬ (28m 5s):
It’s in linked to that stuff. Yeah, it’s stuff. Yeah,

Jeff Wood (28m 8s):
Right, exactly. And so it’s, it’s interesting to see how the politics get in the way of these things, but if they want, if the companies wanna do it, they think they make money. I don’t see why, why they shouldn’t. But it is becoming somewhat political from that perspective and I, I hate it because it’s really annoying.

David Hensher‬ (28m 23s):
Well, well I’m totally in agreement with you, but I’m, I’m suggesting that these are different pathways that might give Maz a future. And in fact it’s interesting with Samo when, what was the connection that got him excited, even though he and I are on the same wavelength for many years now, was when he had an insurance company in Italy that was willing to be put in some money into whim, which we mentioned in the, in the paper. And that led to him thinking, well you know, this might be the way to go. And then, and then off the record it might be in the public domain. Now I’m not sure that LAN, and I think they read chapter eight of our book on mobility, which was we published a few years ago.

David Hensher‬ (29m 3s):
They put out to tender and I think they was gonna choose eight providers of MAs products and as long as they delivered on certain criteria to do with sustainability, then they can go and play in the market and the, the government would, would actually provide some funding to them but they had to deliver appropriate outcomes. It just winning the tender didn’t guarantee you’ve got all that money. They’re willing to offer them a minimum but they had to, that wouldn’t be enough to make a profit.

Jeff Wood (29m 31s):
Could companies do this on their own without being part of a, a larger consortium?

David Hensher‬ (29m 36s):
Sure you can. Absolutely. I mean the actual consortium could be one player. I mean by the way, all the insurance companies, they could either be the common framework, tendering authority if you like, or they could be a consortium bidding if the government wants to control the tendering authority. So it could go either way. And in fact the, we’re currently writing the new book, which we decided cuz VE wanted us to do a second edition of our MAs book. I’m not sure if you saw it, but we decided we’d sooner write a book on the future of MA in terms of all the challenges, call it MA version two. And we’ve started developing what we call the new utopian framework. I sort of hinted at it today when I spoke to you.

David Hensher‬ (30m 16s):
It’s a framework in which we think we had been around long enough to learn the lessons about how this thing may or may not work. And you know, it does come down to trusting partnerships and a whole bunch of things like that. And I think one of the issues we’re suffering from at the moment is that there’s too many people in this business that develop an app and they call it MAs. And that’s so misleading and it’s just nonsense. There are trip planners, nothing more, nothing less. And all the other aspects need to be built in in terms of the, the common framework, the incentive structures, the coverage of all the modes, the integration of non transport suppliers from multi-service who are gonna provide across subsidy solution.

David Hensher‬ (30m 58s):
And that’s why we’ve suddenly realized that wow, insurance companies have that anyway. They don’t need to be transport suppliers, but they need to encourage transport suppliers to join their consortium and get a value out of it because we can provide you with a profit line. So unless that happens, and that’s why tendering is good as well because then you still have competition in the market because many of the people say, oh we want to, we want to do our own thing and compete. Well it might, you can compete, but there’s some protection here by saying that, that the rewards will be limited only to a few competitors

Jeff Wood (31m 31s):
Outside of insurance companies and banks. Do you see other opportunities with companies? I went to CES a number of years ago, the consumer electronic show in in, in Las Vegas where they, you know, they try to wow you with all of these fantastical technological advances that aren’t actually quite here yet. But you know, I was invited by HEAR Technologies, which is a mapping company and one of their things they’re trying to sell is like they get all these telematics and data from the roads, from the cars that drive that use their mapping technologies. And they were saying like, oh well we can partner with a Starbucks, you know, if it’s just your phone, not even a car, you walk in front of the Starbucks and they can, you know, basically give you a discount right as you’re walking by the store.

Jeff Wood (32m 13s):
And so they wanna use their, their real-time mapping, you know, software to do this kind of benefits program for people so that they can partner and use advertising in their systems. And I’m wondering like outside of like insurance companies, banks and those things, if there’s like a larger ecosystem and or maybe you’re already thinking of the larger ecosystem and I just have, you know, quarantined it myself.

David Hensher‬ (32m 36s):
Fair point. In fact I think the ecosystem should invite anybody that believes they can get value out of it. I should also mention that in order to be able to provide some of the rewards through things like reduced V K T vehicle miles traveled, then you need and then all users must capture that data back to the common framework or to the apps that they belong to through this smartphones that this has to be a condition. In fact, if they turn their phone off, they can’t get the rewards because we’re not capturing any change in their vehicle. We need to agree on a time period as well. This is an important point that, you know, you need a starting point of vehicle kilometers and you need a point at which you can see a change to know if that’s actually changing. And we need to work that through very carefully.

David Hensher‬ (33m 18s):
And the common framework will make sure there’s no double dipping because you, if you subscribe to two app or consortium, they could be capturing all vehicle miles, travel twice and you don’t wanna be, the common framework’s not gonna reward you twice. But to be honest, anywhere where you can capture a a value that someone is willing to offer financial discounts into the common framework is great. But once we’ve got a common framework and I love the language that we’re trying to develop and you’ve got consortia contributing through a tendering process to get started, we need to demonstrate that there’s this thing’s got legs right And I think that’s the problem at the moment. We’ve all done trials and I think the Sydney trial is the best, but they haven’t delivered an an outstandingly strong idea that even with subscription fees and discounts and all that, that you’re actually going to make super profits anywhere.

David Hensher‬ (34m 10s):
They’re pretty marginal. They’re not changing travel behavior at all. And I always say Jeffrey, and this is a really important point, all these people say, I’m doing MAs on LinkedIn and Hench gets himself into trouble all the time. I say, can you please tell me whether this has changed travel behavior or not in sustainable ways or they either don’t reply or they dunno,

Jeff Wood (34m 30s):
Right? It’s just an app or an idea to them. I find that interesting too is another thing you mentioned was, you know, transportation companies are a hard, you know, kind of thing to crack, but also it’s not just the public transit agencies, it’s also these private kind of walled garden groups. I imagine like Uber, the lifts of the world, those types of organizations, they kind of want to control it too and they wanna call themselves moss but they’re, they’re not, they’re just providing a service inside of their app to get bike share or you know, whatever modes of transportation they control.

David Hensher‬ (35m 1s):
Absolutely right. In fact, you know, when we first worked with Uber on our Sydney trial, they didn’t wanna be involved because they wanted the app to be called Uber. They didn’t want it to be called this multimodal generic one that we developed, which turned out to be trip working with scapegoat, one of the platform developers who, I mean they misuse the language as well. And Uber said to us, which was rather interesting because if you wanna see the effectiveness of mass, you’ve got an identified travel behavior change that’s consequence on not only those modal changes occurring within the modes of the app but also outside. So for example, if you don’t have in the app all all the modes of transportation you or you don’t have a mechanism of tracking all the travel that people do outside the app, you don’t know whether there’s been a good outcome from societal point of view and that’s what government should be interested in.

David Hensher‬ (35m 48s):
Not in oh we’ve just got a new Wang app. Uber told us that they wouldn’t join if did he or owner joined. And then it turned out that the discounts that we were able to offer through Uber in the in MAs were not as attractive as the the base fair for did OLA outside the app. So people who were joined our subscription program were using outside services more than the ones inside MAs. But we didn’t know that until we did some follow-ups with them. So how would you have known, unless you’re tracking this jolly stuff, to know if MA’s worked? You know, I think that too many organizations now are simply thinking that if they provide a transport service they’re providing MA if they link two modes together.

David Hensher‬ (36m 32s):
So Transport for New South Wales started off by offering discounts on parking your car at the station if you used the train and if you didn’t use and if you parked at the station didn’t use the train, you paid the full fair, the full parking costs, how they call that mass Bad news is people were then driving their car to the station to park instead of catching the bus. Is that a sustainable solution?

Jeff Wood (36m 59s):
I wouldn’t say so. I wouldn’t say so

David Hensher‬ (37m 2s):
There’s a lot of contradiction between all these multimodal service providers that actually not necessarily delivering the good sustainable outcome cause they’re into another mode that might not be as good as the one that’s you were using before.

Jeff Wood (37m 15s):
So when you go and present this idea to folks, their reaction was negative you said, but what were they saying? Like why couldn’t it work for them?

David Hensher‬ (37m 22s):
Well you know, deep down I think they still have a sense that they want to control. Again we got a presentation yesterday from Transport of Main Roads Queensland through a consultant who they’ve hired to co-design and I just didn’t agree with it because it was all about how we can have in the center, the government agency running the show. And I think that’s a problem and they kept using the word control and I thought well that ain’t gonna, the private sector guys don’t like that. They want to partner with you but they don’t trust you. And where are the financial incentives? Oh they haven’t got an answer. You know, the thing is that you can provide financial incentives through a trial because you put them aside. But when the trial’s finished, who’s gonna fund the financial incentives?

David Hensher‬ (38m 2s):
And that’s what led us to move away from relying on government because they’ve not shown any appetite for that into the private sector, which has got the wherewithal to cross subsidize to make this thing attractive but still make a profit. And that’s our point.

Jeff Wood (38m 16s):
So what’s this look like in your mind at the moment? Like what’s the structural framework? Like let’s say we’re 10 years in the future and this is working and there’s an organization or a group that’s providing these services. How does it work exactly? Like what is the, what is the way that it works where it’s the perfect implementation idea?

David Hensher‬ (38m 31s):
It’s a great point. We, we’ve almost written this up, we’re working on it in 10 years, years time. Let’s just work on an insurance company has committed and they have a tendering authority. In other words they invited consortium which could be made of modal and and other non modal service providers to get together and they have their own app that feeds all their services into it. They bid and they’re a successful winner amongst six. The common framework has made sure that they get a good spread of consortia that actually are covering all the modes of transport and the ones that would be particularly interested when they were interested in those that are actually able to at least recognize the use of the car and track the car in their app in order to be able to be eligible for getting lots of interesting reward cause they’re doing good things, right?

David Hensher‬ (39m 20s):
If you don’t have those modes in your app, you’re at a great disadvantage or they don’t need to be in the app, but you need to capture non MAs services that a person are utilizing. So the insurance company has, as has said, well we’re going to the public transport authorities have agreed to still continue to provide the subsidized fairs, which they currently do. They’re not giving anything extra. If they can, that’s a bonus, but I doubt they’re gonna give the same fairs that you get outside of mass. But the insurance company is going to say if, if you, if you join us through the common platform and subscribe through one of these apps, we will give you certain immediate discounts on insurance premiums or maintenance of your car or other whatever you want.

David Hensher‬ (40m 5s):
But we’ll also give, we’ll also give additional rewards to not only you as a user but also the consortium. If through tracking we see major changes in your travel behavior that aligns with good societal outcomes, eg reduced car use. And even if it’s an electric car, that’s still a good societal outcome because it reduces congestion even if it doesn’t reduce emissions at the tailpipe. That’s the model. And what we’ve been struggling with is finding a subsidy model because we need one, but it’s a cross subsidy model in the claims of the insurance companies and it still has a profitable bottle line for their business cuz it grows their business if government is running it.

David Hensher‬ (40m 49s):
I don’t think they could deliver on that.

Jeff Wood (40m 51s):
I find it really fascinating because I think that it’s something that these insurance companies are already doing. Like for example, I, I have non-auto operating insurance, so if I’m walking on the street or if I’m biking and I get hit by a car, I, I still have insurance that’s focused on travel. But they also, you know, what they do is they have good driver discounts where basically if you don’t get in a collision, you get a discount during the year. They’re starting to think about discounts for reduced vmt already. Like if you only have a, a limited amount of driving that you do a year, they’ll give you a discount for that too. There’s also pay as you go per mile insurance that some companies are offering here in California, I know and they offer rental car discounts and things like that already. You can go onto usa.com and you get discount on Avis and Hertz and all those other companies that do this.

Jeff Wood (41m 35s):
So it seems like they’re already set up for it. And so I can see where it would actually work out, you know, really well because it’s something that almost they’re already doing to a certain extent.

David Hensher‬ (41m 45s):
Absolutely. And the same in Australia. I a g who did the trial with us to own N rma, the major motoring association owned a bunch of rental car companies like Hertz for example, do that already. And that’s what’s great about it because it’s just another product in their set and it’s one that they can see some value in adding it in without taking the risk, the whole financial exercise dependent on, on the mass product alone. And I think trying to put the mass product on an island without all that cross subsidy capability and the right set of incentives to get people to change their behaviors, doomed, we’re gonna have awful difficulties with government agencies who think they run the show. I mean transport for New South Wales, I’ve introduced, they’ve got a thing called Opal that’s our electronic cloud, you know, travel, it’s very good.

David Hensher‬ (42m 31s):
But they’ve introduced Opal Plus and what Opal Plus is a whole bunch of, you go online and you indicate your typical travel and they’ll tell you this is a good subscription program for you because it’ll save you some money and it’s convenient because you then, you know, tap and go, we can do it anyway. Anyway, we, we went through all their possibilities. I’ve got a post-doc to look at them and not one of them saved any money except one of them on a ferry, $2 a week. And to make it worse, Jeffrey, I said, oh, well isn’t it great because if you subscribe, we’ll give you discounts on parking your car at certain parking stations. What? Okay, so some people are saying, well I don’t wanna use public transport mate, but I will subscribe to get my parking discount. They’ll continue to drive my car.

Jeff Wood (43m 12s):
Yeah. So there’s a, there’s a negative incentive almost.

David Hensher‬ (43m 15s):
Yeah. And there’s a failure to look at the full multimodal implications of a system-wide solution to deliver sustainability. Unfortunately people in government, as good friends as they are, they don’t wanna know because they, they want to control the thing, you know, that’s why we need insurance companies to step and say, hang on, we’re gonna move into this space and we’re gonna show you how to do it.

Jeff Wood (43m 36s):
And this should work in not just urban areas too, but rural areas and areas outside of cities. There’s a lot of folks that don’t have cars that are still in need of transportation. They need to get to doctor’s appointments, they need to get to other engagements that they have, but they, they don’t have transportation necessarily, so this could benefit them as well.

David Hensher‬ (43m 52s):
Absolutely. In fact, when you say they don’t have cars and the current ownership right in our rural regional areas is quite high. And this, it’s poor public transport, but we’ve come up with another idea that’s interesting, which we haven’t linked called a car mobility club. And this is not your, this is not your car next door, whatever. So basically how it works is, and this is where you have a platform and you develop an algorithm that people who want to say disadvantaged people who want to travel long distances, they register for free. Those who are traveling long distances by car have a sort of a, an interesting in allowing someone to travel with them from time to time will register for free. The membership is, is the way of checking and screening that people are safe, secure, the cars are up, scratch and so on and so on.

David Hensher‬ (44m 32s):
And then when someone wants to go from A to B, they log in and say, I’d like to go from A to B a certain time of the day. And someone who’s got a car gets told that, you know, this person wants to travel. Yes, I’m happy to take them. And then we have a donation scheme bec membership free. Say, okay, how much are you willing to contribute to the driver, say $20. Okay, well how about we take $20 and give the driver 10 and 10 to run the membership program Nito? Yeah, we can test this soon. It’s an idea we’ve been developing in a, in a project which we call regional town and rural henzel and mass.

Jeff Wood (45m 4s):
Nice. I really like all these ideas. You must come up with lots of ideas all the time that you know, some work, some don’t, I’m sure, but absolutely. I find it fun and fascinating

David Hensher‬ (45m 14s):
And at the end of the day it all comes down to institutional issues, governance and trust.

Jeff Wood (45m 19s):
Those are the three things. That’s it. Igp, let’s solve, let’s solve those, let’s solve those. Then it’ll be easy, right?

David Hensher‬ (45m 26s):
We’re working on it. We’re working on it. You know, you’ve just gotta keep at it, Jeffrey, and you win some, you lose some. But we think we’ve got a model that actually has legs as long as we don’t get government trying to run it.

Jeff Wood (45m 40s):
Well, you know, here in the United States, I wanna go back to that quote Samos quote of liberating money from private car ownership. I think there’s so much money being spent, people buying 20, 30, 40, $50,000 cars, they spend $10,000 a year on operating expenses, on everything else. There’s gotta be a way to figure out how we can take that money that’s being misappropriated to a certain extent, especially in cities and use it for the greater good. And I, I think that’s where you’re headed.

David Hensher‬ (46m 8s):
We’re trying our best, in fact, we hope in the longer term to move from personal car use to car sharing where the insurance companies can offer an even better incentive in terms of your vkt if you take it up through a car sharing program rather than your personal vehicle. So the, these are all extensions along the way, but you know, the, the challenges that most people when they make travel choices based on the marginal costs and they don’t consider the ownership costs and you know, at the end of the day, a little bit of road price, this is where government could contribute. The distance based charging could help because they do have control over that, but they’re not interested.

Jeff Wood (46m 44s):
Yeah. Well I’m gonna host the, the paper in the show notes when the podcast is released, but where can folks find your work if they wanna learn more about what you’re doing?

David Hensher‬ (46m 51s):
I guess really they should just email me initially on the itts web. We do have a section under projects and research, which is mobility as a service. There’s a, there’s a link there, but this new stuff that I’m talking about is not out there yet. Yep. You are the first of two people that have seen it, heard about it. And yesterday I just sent a draft. I don’t mind sending it to you, but it’s not for wide distribution if you like.

Jeff Wood (47m 14s):
Sure, that sounds great. Well, David Henrick, thanks so much for joining us. We really appreciate your time.

David Hensher‬ (47m 19s):
Thank you, Jeffrey. I’ve really enjoyed the journey of conversation