In 100 years, will anyone own cars? Will the rise of ride-sharing and autonomous driving make personal car ownership obsolete? Those were some of the questions posed by John Zimmer, president and co-founder of U.S. rideshare firm Lyft, at the recent Rakuten Optimism 2019 conference in Yokohama, Japan.
Lyft became the first ridesharing company to go public earlier this year when it completed an IPO with a valuation of $24 billion. It has also been pursuing autonomous driving technology: in partnership with Aptiv, Lyft recently notched 50,000 rides in Las Vegas in just a year, and has recently launched Waymo autonomous vehicles on the Lyft platform in Phoenix, Arizona. Against that background, Zimmer spoke about the future of transport with Mickey Mikitani, CEO of early Lyft investor, Rakuten.
From owning to sharing
“We have to think about what is the right infrastructure to support (the future of transport),” Zimmer said during his second appearance at Optimism since speaking at the inaugural conference last year in San Francisco. “We’ve designed streets and parking lots with the idea that everyone owns a car. In the future, when I don’t believe that will be true, you won’t need all that space. So you can have more efficient roads, less or no parking, or roads only for pedestrians, cars, bikes or scooters.”
“I believe we’re in the early stages of what is going to be a fundamental economic shift and change to how we live in our cities.”John Zimmer
Americans only use their cars 54% of the time and young people are increasingly interested in ride-sharing over vehicle ownership, said Zimmer, adding that transport will become less costly and stressful as cities are redesigned for new forms of mobility. Lyft is already working with municipalities like New York City to improve mobility through its CitiBike bike sharing program.
“If you look back at history, transportation has been a fundamental part of any economic change,” said Zimmer, responding to a comment by Mikitani about Japan’s cautious stance toward ride-sharing.
“It’s the responsibility of companies and governments to create the right policies and infrastructure and make sure the system is developed in a fair, equitable and safe way,” Zimmer added. “I believe we’re in the early stages of what is going to be a fundamental economic shift and change to how we live in our cities.”
Disrupting air travel
Transport isn’t only being disrupted on land, but in the skies as well. Over the past few decades, low-cost carriers have opened up the market to a wider demographic of passengers through cost-cutting innovations. Tony Fernandes, Group CEO at AirAsia, joined Mikitani on stage for a retrospective on how he built AirAsia into the 13th-largest airline in the world after buying it for just 25 cents in 2001.
The Southeast Asia-based carrier now serves major Japanese cities, including domestic routes, and over 150 other destinations with its fleet of 265 planes.
Fernandes described how AirAsia keeps costs down with a flat structure and by focusing on efficiency and finding new ways of earning revenue, such as selling financial products. In 2018, it launched its fintech venture BigPay, billed as an “everyday digital alternative to bank accounts.” With Japan hosting the 2019 Rugby World Cup and 2020 Olympic and Paralympic Games, Fernandes said he sees a lot more upside to the recent surge in inbound tourism, as well as a big role for low-cost carriers.
“Low-cost tourism can bring tourism to areas that have never seen it.”Tony Fernandes
“Japan’s potential is limitless,” Fernandes told attendees. “Japan will only benefit by liberalizing and opening up more gateways. I really hope Tokyo opens a new airport and that Japan embraces low-cost travel because there are many great airports around that are empty. Low-cost tourism can bring tourism to areas that have never seen it. What we’ve done in Southeast Asia, we can do in Japan.”
The airline industry can also innovate by embracing ultrafast 5G mobile networks to better showcase potential destinations to passengers, Fernandes said in an interview on the sidelines of the conference. Procedures such as check-in and immigration can be streamlined with face-recognition apps and other recent technologies, he said.
“If you look at the check-in process, it’s been the same for 100 years,” Fernandes added. “We’re beginning to see some airlines have permanent bag tags. I think the airport experience should be better. I think there’s a reality that air travel will become more like buses, where space is a premium, and we’re beginning to see some of the sharing economy with private jets.”
To stay competitive, however, airlines have to focus on cost structure and think about what market segments they want to serve, Fernandes said, adding that AirAsia aims to increase its offerings by capitalizing on its experience with passengers.
“We have an enormous amount of data and the biggest challenge is how to monetize it,” Fernandes said. “That’s the journey. I believe Rakuten is one of the standout companies that have shown the way in terms of what can be done when you have a good relationship with your customers.”
Learn more about the Rakuten Optimism event held in Japan from July 31-August 3 here.
For more information about the upcoming Rakuten Optimism event in San Francisco on October 23, please visit this site.