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The future of online Asian travel isn’t up in the air; it’s buses, taxis, ferries, and trains

taiwan taipei taxi

Travel involves more than flights and hotels. It’s about the journey from the airport to your lodging. It’s about making the ride as smooth as possible: knowing which cabs to book, where and when to book them, and how much to pay. That’s why hotels double as concierges. Transportation in cities is complex.

And transportation isn’t getting simpler. Cabbing involves a series of complex decisions. You decide where you’re going, the best route to take, and how long it takes to get there without being late. Supply and demand mismatches can mess you up. Cabs may not be around when you need them to be.

The situation gets hairier if you’re a hapless foreigner: now you have to deal with language barriers, new environments, and unfamiliar, often unfriendly, taxi operators. This friction erases the joy out of travel. Railway and subway in Taipei, for instance, run on separate ticketing systems. Auto-rickshaws, or tuk-tuks as they’re called, need you to know obscure locations in the city and pronounce them correctly. Showing drivers the map doesn’t work; some can’t read, and some can’t afford prescription glasses.

Fixing these problems is hard, but the solution is easy to articulate. It’s called networked travel, where old-fashioned motor-and-wheels pair up with computing, mobile, cloud, and software technologies. The goal: to make travel as seamless as possible through the use of both individual and operator data.

Unfortunately, folks think of networked travel too narrowly. Within the online travel industry, everyone wants to crack hotel and flight bookings, turning that segment into a highly competitive field inhabited by naive entrepreneurs and carcasses of broken dreams.

But internet companies are wising up. They are realizing that travelers don’t just care about the lowest prices and best deals, but about making the entire process of getting from home to hotel room painless. Part of the answer lies in ground transport.

Budget air travel is a luxury

It’s more than just catering to cosmopolitan travelers after they touch down. Another huge opportunity is ripe for the taking. While budget air travel has taken off in the past decade, it’s still expensive. A trip to a nearby holiday destination and back will set a person back about US$300, not including hotel stay. The cost to ride on a tuk-tuk, by contrast, is loose change.

By fixating on flights, internet companies missed out on a huge segment of travelers: the intra-country tourists in land-wealthy China and India, the intrepid Malaysian braving the traffic jam between Johor and Singapore for work each weekend, and the unhurried urban dweller seeking a cheap getaway. Entrepreneurs can make money not just from these travelers, but also the bus, taxi, ferry, and train operators that move people by the truckloads. Non-flight travel has a lower barrier to entry for consumers, which is why they do it day after day.

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So, unless true airline innovation happens, non-flight travel can make even further inroads into consumers’ lives. Telepresence technology could lessen the need for business trips, while driverless vehicles can make ground travel pleasurable and productive. Think of how cruise ships became popular despite sea travel fading with affordable flight. Similarly, as robots take over the wheel, manufacturers could put a higher premium on in-car entertainment. Apple and Google know this is the future, which is why they’re focusing on customizing iOS and Android for cars.

The money is pouring in. A PhocusWright report observes that in Asia, online travel companies focused on ground transportation have collectively raised US$605 million between 2005 to 2013 – the highest of all travel categories. The investments could accelerate in 2014. Witness Uber’s US$1.2 billion fundraise in June. With its recent expansion, the company’s Asian operations seems likely to receive a sizable chunk of that investment. Also, local players are taking the fight to Uber and raising money of their own. GrabTaxi in Southeast Asia, TaxiForSure and Olacabs in India, as well as Didi Dache in China come to mind. And where opportunity beckons, you can guarantee Rocket Internet is there – its EasyTaxi is available in many major Asian cities.

See more: 10 taxi apps you can use across Asia

Now, here’s an important segway: transporting people shares similarities with transporting goods. Networked travel can fix the problems faced by both. Mobile technology, big data, and GPS can help drivers find optimal routes despite ever-changing traffic. Software can improve fleet management, while algorithms could balance supply and demand. Robots are probably 10 years away from taking drivers out of the equation. The implication is this: once a consumer-oriented ground travel startup scales up, it could remodel itself to do logistics and delivery.

It’s starting to happen. Uber is thinking about it, but startups like Easyvan and Gogovan have already hit the ground running in Hong Kong. But we may not need to wait long for Uber to saunter into logistics. With its resources, it doesn’t need to be the first-mover and can afford to wait, observe, and absorb the lessons made by smaller competitors.

Uniting thousands of little tribes

The massive shift towards ground travel is caused by necessity as the online air and lodging bookings industry have become overcrowded, PhocusWright analyst Chetan Kapoor tells Tech in Asia. He adds that the “largely unorganized nature of the taxi, ferries, and bus transportation modes across Asia makes it ripe for intermediaries to enter, innovate and apply technologies to benefit customers.”

Nowhere is the chaos more serious than in India. While Singapore has a small and tightly regulated taxi industry run by a handful of players, TaxiForSure co-founder Raghunandan G says that Bangalore, the tech capital of India, has about 3,000 cab companies, while Delhi has 4,000. Most are tiny firms with a few dozen taxis running in limited areas.

This situation is highly unfavorable for consumers and operators alike. Locals and especially foreigners are overwhelmed by the choices and they have a hard time figuring out which companies are trustworthy. Meanwhile, smaller cab firms are failing to gain traction since Indian consumers call for cabs rather than hail them on the streets. Yet, even though taxis are still considered expensive to many Indians in the cities who prefer riding tuk-tuks or their own scooters, the demand still outstrips supply. Taxi call centers become a bottleneck as they struggle to keep up.

The massive inefficiency proved perfect for an internet company like TaxiForSure. With its expertise in web and mobile apps as well as digital marketing, the company has became a channel to drive customers to cab companies. It gives consumers one platform to engage different operators, reducing clogging on the call centers. It uses a demand prediction algorithm to create heat maps which drivers can access.

By uniting all these little kingdoms with a layer of technology, TaxiForSure uplifts the entire industry. Unlike Singapore, where taxi companies are wary of GrabTaxi for pocketing booking fees that would have gone to them, Raghu claims that cab firms in India are happy to work with TaxiForSure.

See: Why GrabTaxi is giving Singapore’s largest taxi operator a run for its money

“A wife of a taxi driver we’re working with wanted to meet us. We didn’t understand why. But when she did, she started crying and thanked us. She told us that her husband used to work for someone else, and the little money he got was used to get drunk. He would beat the wife and kids, and he would have no savings,” he tells Tech in Asia.

“But after working with TaxiForSure, we were giving him so much business that he would spend 10 hours outside. He’d be tired by the end of the day. So instead of going to the liquor store, he goes home, eats and sleeps, and cleans the car the next morning. The kids join in. He earned more money and spent on a television and refrigerator. The kids started going to school. We didn’t know we were making that kind of impact.”

Raghu has seen cab drivers who were earning less than IDR40,000 (US$819) a month start making more than IDR50,000 (US$1,023) after working with TaxiForSure. Meanwhile, cab operators who earned IDR50,000 a month have tripled or quadrupled their revenues.

All shapes and sizes

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Taxi apps are hogging the limelight, but they aren’t the only play. Another Bangalore company RedBus has left its mark in the tech world in Asia with ticketing reservation software for bus operators that syncs with a website for people to find and book bus tickets. While the company was sold and went through internal turmoil, its business model has been replicated across Asia.

In Singapore, companies like BusOnlineTicket and Easibook are using software to replace pen-and-paper records for bus operators plying the Singapore and Malaysia route. The Philippines has PinoyTravel, which signed deals with the two largest bus companies in the country. VeXeRe is doing something similar in Vietnam, where instead of calling to book a bus, Vietnamese can now do the same thing online. While Asia’s geographical and cultural diversity serves as barriers to startups, it could also help by making cheap, cross-border getaways by bus or ferry enticing. For example, Batam island in Indonesia is a short boat ride from Singapore.

Kapoor believes Asia is at an early stage where traditional transportation services are just starting to come online. Startups in this space are tackling local opportunities rather than going regional. He has some thoughts about what the next step might look like:

“We can expect some companies to offer a full-suite of transportation services under one platform. Australia-based Rome2rio is an interesting multi-modal metasearch startup doing something on those lines by aggregating feeds from multiple providers.”

Rome2rio sees itself as a Google for transport data. It wants to organize the world’s transportation information to give users a full itinerary combining various forms of travel. It eases the traveler’s dilemma of choosing alternate transport modes and routes by displaying all the options side-by-side and including pricing. It integrates open-source data, APIs, and its own manual data entries, and it even supplies its own API for app developers to access search results. It shows what open data exchange can create – a single platform to make travel planning and booking easy.

Working on a slightly different approach is 12go.asia, a website launched in 2012 that offers a different sort of data integration. Based in Singapore and Bangkok, 12go runs like RedBus but incorporates ferry tickets too. It’s now selling in Singapore, Thailand, Cambodia, Malaysia, and Brunei, and hopes to offer minivan, rail, and flight tickets in the future.

“We’re not really only about selling a bus ticket […] the goal is to create a pan-regional clearinghouse and data standard to allow people to pay for any travel needs from a single source,” says founder and CEO Alexey Abolmasov, who secured US$300,000 in seed funding to kickstart his project.

Eventually, 12go hopes to roll all the trips you need to take from one place to another into one standard ticket – an ambitious undertaking that could save consumers a lot of pain. It even hopes to integrate with cab booking services like EasyTaxi.

All these signs point to one thing: We’re not too far from a revolution in how people move within and across borders, as many of the pieces are already in place. As these online services grow in popularity and consolidate, we could reach a state of intelligent travel where all you need to do is key in a travel date and destination, and a whole cohort of cloud services would go to work crafting an optimized itinerary for you. Then, it’s just one click to book all your tickets at one go. The journey itself could be just as seamless: an app notifies you of the flight details. You get a Yo from a cab company, signaling that your ride – sans driver – is waiting at the doorstep to whisk you to your destination.

Editing by J.T. Quigley, images by Connie Ma, Didier Baertschiger, and George Ruiz

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