The transportation sector is undergoing seismic changes due to advancements in automation and artificial intelligence.
One transition that has mostly gone unnoticed by the travel industry is autonomous vehicles scaling up as a shared consumer service, commonly referred to as robotaxis.
Perhaps the most immediate impact to be felt will be at the airport. In late August, Baidu announced the expansion of its Apollo Go autonomous ride-hailing platform to offer rides to Wuhan Tianhe International Airport. Apollo Go says it has recorded more than 3.3 million cumulative orders as of June 30, and that it provided more than 700,000 rides in the second quarter of 2023.
And since December Waymo, a subsidiary of Alphabet, has been offering fully autonomous vehicle transfers between downtown Phoenix and Phoenix Sky Harbor International Airport.
Beyond the airport, the commercial scale-up has also started. Cruise, a collaborative effort of General Motors, Microsoft, Honda and Walmart, is now testing in 15 cities in 10 states across the United States. Apollo Go is available in 11 cities in China, Waymo is in San Francisco, Los Angeles, Phoenix and Austin, Texas, and Zoox from Amazon is prepping its imminent launch in Las Vegas followed by San Francisco and Seattle.
Baidu Apollo Go Wuhan Tianhe International Airport
This is now mostly a scaling problem rather than a driving technology problem. It is one thing knowing that this disruption is coming – as I discussed in a PhocusWire article in 2018 when I first flagged this as a red alert for the sector - but knowing what to do about it is a different question.
Subscribe to our newsletter below
Now, here in 2023, what are the considerations that need to be taken into account to take advantage of this new driving capability, or defend existing business lines? What could incumbent airport transfer operators do?
- Buying autonomous robotaxi vehicles isn't an option, as they won't have the economies of scale of the larger robotaxi platforms.
- Competing on "vehicle as the experience" rather than "vehicle as the mobility" - e.g., more personalized, more specialized - is a possibility, but this naturally implies lower scale than today.
Even if competing on "vehicle as the experience," it is inevitable that airport transfers will be a highly competitive, commoditized market dominated by autonomous vehicles (in markets where they are present). Likely, the only viable long-term play is to develop their own autonomous vehicle, addressing a specialized subset of the market that can't be addressed by the robotaxi platforms. This is multi-year, high budget work, and the incumbents may have left it too late to get started in early robotaxi markets such as the U.S. or China.
What should OTAs be considering?
- Will the robotaxi-enabled airport transfer product be more like Uber/Lyft where the ride-hailing platforms want to control the retail experience as they want to combine retail digital UX with delivery UX, all in one app? Or will the airport transfer product be more like airport transfers today - commodity product that can be distributed and booked in many places?
- Will Waymo give OTA retailers commissionable distribution? What about non-commissionable distribution as a compromise?
- If this leads to consumers booking journeys by going from Google to an OTA retailer and then back to Google, that doesn't seem a workable flow, at least in the long term. What can OTAs bring to the table that makes Google say, "Yes, your OTA can distribute our airport transfers"?
GetYourGuide says 1 in 5 of its local experiences include a hotel pickup (to take you to your tour or attraction), so there are strategic considerations for leisure travel, beyond the business travel-dominated airport transfer sector.
What about super apps?
Super app players have a problem as the companies scaling the robotaxi services are themselves major digital players. Will these digital companies like Amazon, Baidu, Google, Microsoft, etc. want to facilitate the growth of mobility and travel super apps beyond their own in-house digital super app strategies?
The impending showdown between Web 2.0's digital retail giants and the next-generation AI platforms operating real-world services is set to be the clash of the era.