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As featured on BusinessMirror: The future of public transport

The traditional model of public transport service delivery is being challenged as never before.

Public transport has traditionally been provided by heavily subsidized public-sector bodies operating discrete/siloed transportation modes. This approach made sense from an asset-management perspective, but it led to journey options for citizens when timetables, ticketing, and customer service were not always aligned to expedite travel across various transit systems. Additionally, agencies typically took a monopoly mindset to protect revenue and market share.

Today, new market entrants are changing the last-mile equation through enhanced services and convenient new offerings. Disruptive transport technologies are on the horizon. Frictionless service interactions in other sectors have raised customer expectations of public transport. Joined-up services, seamless payments, and enhanced customer experiences are the way forward for mature transport systems.

In the Philippines, transportation has always been a relevant and, at times, heated discussion among stakeholders. Especially so when the Department of Transportation issued Department Order 2017-011 (PUV Modernization Program in 2017), which is legislation that calls for the eradication of obsolete jeepney models that are not only hazardous to the environment but also entail threats to the safety and security of the riding public.

KPMG in the Philippines Head of Deal Advisory and Transportation and Logistics Sector Head Michael Arcatomy H. Guarin shared that the efforts of the government to modernize the transport system are aimed at bringing convenient, safe, and climate-friendly options to the masses. “For the past years, the government, alongside its relevant agencies, has been trying to put in place legislation and policies to aid public transportation groups with their transition towards modernization,” Guarin explained.

“This includes provisions for loans and subsidies to purchase new PUV units and providing other options of livelihood,” Guarin added.

Priorities are shifting as decision-makers listen to the voice of their constituents and look beyond the operation of transport infrastructure, fleets, and workforce to fully consider the advantages of a connected, 21st-century ecosystem. The signals of change, covered in detail in Section 1, are powerful and unmistakable:

  • Customer
    Evolving customer and community expectations for connected personalized services will require organizations to be even more responsive.
  • Political and Economy
    Public transport can be a key enabler of sustainable economic growth and equitable access to opportunity.
  • Environmental
    The need to minimize environmental impacts and urban congestion is becoming central to future planning.
  • Technology
    New public transport modes, entrants, and enabling technologies such as autonomous vehicles, air taxis, and hyperloops are poised to change how services are delivered.
  • Competitive
    Mobility-as-a-Service and autonomous vehicles have the potential to be cost-competitive with public transport services and more convenient in servicing the last mile of customer journeys.
  • Regulatory
    The pace of innovation is accelerating and exceeding the rate at which regulatory systems can adapt. Regulation will need to be dynamic amidst ongoing innovation.

In addition to these signals, the profound impact of the global pandemic has reshaped workforces, lifestyles, and reliance on public transportation systems. It remains to be seen how demand for services may evolve as many citizens embrace hybrid work models or replace urban lifestyles with more-affordable suburban settings.

The future of public transport is here

Public transport agencies must become smarter and more agile. They should aim to focus on the essential core of public transport operations to evolve networks, service patterns, fare policy, investment strategy, and asset custodianship. In their role as market stewards, agencies should direct modern ecosystems in partnership with the private sector to meet cost pressures, public expectations, and environmental goals. Agencies should position themselves to meet these challenges by:

• Considering if their operating model enables multi-modal planning.

• Redefining their role as commissioner of markets within new regulatory frameworks.

• Deploying policy and behavioral change initiatives to meet net-zero targets.

• Implementing new funding models and revenue sources to help ensure financial sustainability.

• Understanding how planned investments can drive social and economic opportunity.

As change unfolds and the pace of change accelerates, we present seven thought-provoking predictions on the future of public transport:

1. Political influence over public transport is expected to grow as it is increasingly seen as a lever to drive social and economic opportunity.

2. Agencies will likely become the commissioner of markets rather than the deliverer of services.

3. Future transport algorithms will likely nudge customers through the network, balancing individual preferences with network and social requirements.

4. Decarbonization of transport operations will likely become a strategic business priority.

5. Public transport is expected to be free for some citizens and communities and funded in innovative new ways.

6. Agencies will likely require more in-house technology and digital transformation. Automation will likely result in a reskilled and redeployed workforce.

7. Outcome and risk-based regulation are expected to be required to embed flexibility.

Customers will likely continue to demand safe, integrated, on-time performance. This is expected to remain non-negotiable. Transport authorities may face increased focus on the need to reduce environmental impacts and act on decarbonization goals. As modes and partners are added to networks, authorities should implement greater, more-robust operational management capabilities, underpinned by automation and enhanced decision-making tools.

The excerpt was taken from the KPMG Thought Leadership publication https://home.kpmg/xx/en/home/insights/2022/11/the-future-of-public-transport.html.