Transportation service bundling – for whose benefit?: Consumer valuation of pure bundling in the passenger transportation market

Abstract

Novel approaches to service bundling in the passenger transportation market are enabled by technology driven innovations and give rise to so called “Mobility as a Service” (MaaS) concepts. These approaches promise to increase service quality of existing public transportation, decrease car ownership, reduce private vehicle miles and lower the environmental burden of the transportation system. However, the potential effects of service bundles in the passenger transportation market are still largely unclear. In a competitive market, the potential success of transportation service bundles follows consumer valuation of the bundles as compared to valuation of stand-alone services. Thus, the difference between the bundle and sum-of-parts willingness to pay (WTP) is an indicator of service integration valuation, which effects the competitiveness of the service bundles. In this study, several discrete choice experiments were conducted to indirectly estimate consumers’ WTP and service integration valuation. The results indicate that public transportation, car-sharing, and park and ride services are valuated significantly higher when offered in a bundle instead of as a stand-alone service. Bicycle-sharing, electrical bicycle (e-bike) sharing and taxi services are valuated lower. Potential consumers also exhibit a high WTP for a smartphone application that integrates the services and manages ticketing and payment. Consequently, pure bundles for all transportation modes may not the optimal strategy for mobility providers. Instead, it may be better to bundle public transportation with car-sharing and park and ride to exploit the higher WTP and offer (electric) bicycle-sharing and taxi services on a pay-as-you-go basis. In this way, profitability of a public transportation system could be increased.