Max Claps (Research Director, IDC Government Insights)

COVID-19 has negatively impacted passenger transportation. The industry was one of the most affected in terms of revenue losses. The transit systems in many European cities have seen 70% to 90% ridership losses and airline passenger load factors dropped dramatically in 2020, according to IATA. Railways have lost 40% to 70% of passengers in many European countries, according to Eurostat.

COVID-19 has accelerated the need for transportation policymakers and operators to fundamentally reimagine the sustainability of the current business model by:

  • Embracing demand-responsive transport services that better match capacity with demand, striking a better balance between coverage and ridership
  • Offering services that recognise that post-vaccine, people are returning to offices but will also maintain the option to remote/hybrid work
  • Redesigning urban neighbourhoods to promote active mobility options, such as walking, cycling and micromobility
  • Promoting the transition to hybrid, electric and hydrogen vehicles and optimisation of fuel efficiency to reduce carbon emissions

Transportation policymakers and operators need to do all this but also continuously improve operational efficiency and passenger experience and safety.

We conducted an in-depth survey to investigate the strategic business priorities and key action plans for European passenger transportation companies. We also looked at the technology solution areas they are investing in to support the execution of their strategy and action plans, and the challenges they face in their strategic technology innovation investments.

Passenger Transportation Ecosystem Business and Technology Priorities

The 200 European passenger transportation executives that we interviewed said:

  • They want to improve operational efficiency, transform passenger experience and improve safety and security. However, passenger experience transformation is lagging behind operational efficiency and safety and security, in terms of execution of the strategy.
  • Public transit, railways and airlines are focused on passenger experience transformation. Airports and stations, along with airlines, have been the hardest hit by COVID-19, and need to make operational efficiency savings. Transport network companies (TNCs) are disrupting the market through service innovation.
  • They are investing to align the full architecture of core and horizontal capabilities and emerging technologies. For instance, they are already using core business solutions such as ticketing, journey planning, EAM and driver management. In the next two years, they plan to grow investments in V2X, real-time passenger count and remote vehicle diagnostics.
  • They will invest in data management and analytics capabilities to support their strategic business priorities. Airlines, public transit companies and railways are the most advanced in terms of current uptake of data management and analytics solutions.
  • Public cloud and multicloud deployments are the preferred way to deploy and run those business capabilities, but there is still a large legacy of core solutions sitting on premises or in managed and hosted private clouds.
  • Key challenges to be resolved to fully leverage the benefits of technology-enabled business innovation include legacy IT, privacy concerns, organisational resistance, security of IT and OT systems, and finding sustainable sources of funding, given that their main source — ticket revenues — has dropped dramatically during the pandemic.

What Will Success Look Like in the Next Normal?

European regulators, orchestrators and operators of passenger transportation services that fully embrace data- and technology-enabled innovation will deliver on the promise of people-centric mobility, which is convenient, affordable, safe and environmentally sustainable. They will be able to do all this while also implementing successful business and operating models.

Passenger transportation executives who do not innovate will struggle to match new demand patterns, reduce carbon emissions and regain their operational efficiency after the COVID-19 crisis.

To know more about the path to the next normal of passenger transportation in Europe read the following IDC studies (subscription required):

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