How UK travel preferences are evolving since COVID-19

Dramatic changes in travelling behaviours by UK consumers present both opportunities and challenges for service providers and Government.

The last year has seen significant changes in the UK population’s work-related travel patterns, where COVID-19 impacts have coincided with an expansion of travel options. Where three distinct user segments defined pre-COVID-19 travel, we are now observing five fragmented segments of travelling behaviour. The resulting customer landscape presents interesting opportunities, as well as material challenges, for both private and public sector providers of transport services.

The insights in this article are based on the 2021 EY Mobility Consumer Index (MCI), which provides unique insights on the shifts being witnessed in journey patterns, modal choices, vehicle buying and transition to electric mobility in the post-COVID-19 world. Based on a global survey of more than 9,000 consumers across 13 countries (Australia, Canada, China, Germany, India, Italy, Japan, New Zealand, Singapore, South Korea, Sweden, the UK, and the US), including 1,000 from the UK, during June 2021, MCI aims to assess the consumers’ car buying journey while offering insights around their attitudes towards mobility choices and sustainability. The results from UK respondents led to several noteworthy conclusions, with complex implications for key stakeholders, from which we have developed six primary calls to action.

Travelling in simpler times: pre-COVID-19 UK consumer segments

The MCI asked about travel habits before COVID-19, and how they had subsequently changed. Pre-COVID-19, MCI survey responses separated UK travellers into three distinct segments of roughly equivalent size:

1. Car Traditionalists - this group strongly favoured the personal car and had a negative attitude towards all other transport modes, even taxis. They walked and cycled 75% less than average.
2. Public Transport Advocates - they strongly disliked cars (but still occasionally used them), preferring public transport and other shared transport modes. This segment placed greater importance on environmental impact than other groups.
3. Travel Pragmatists - these consumers selected travel modes more for their practical benefits on any given journey than ideological preference. Although they drove almost as much as Car Traditionalists, they were far more open to other options.

These segments were intuitive and neatly aligned to historical mainstream travel options which generally centre on either cars or public transport. Travel Pragmatists were not particularly well served but in the previous market environment this was not seen as a big problem.

Analysis from EY’s MCI survey data now suggests that these three consumer segments have fragmented into smaller, distinct, yet still sizeable groups. 

The chart below shows UK travel consumers have evolved from three segments before COVID-19 to five segments today. At the same time, overall travel is reduced.

These segments were intuitive and neatly aligned to historical mainstream travel options which generally centre on either cars or public transport. Travel Pragmatists were not particularly well served but in the previous market environment this was not seen as a big problem.

Analysis from EY’s MCI survey data now suggests that these three consumer segments have fragmented into smaller, distinct, yet still sizeable groups. 

The chart below shows UK travel consumers have evolved from three segments before COVID-19 to five segments today. At the same time, overall travel is reduced.

A brave new world: the fragmentation of UK customer segments and behaviours

Driven by COVID-19-triggered changes to work and travel patterns, the five UK groups we now observe are:

1. Car Traditionalists - This segment appears stable from pre-COVID-19. The car remains their primary means of transport, with a small shift towards walking, cycling and motorcycles.
2. Public Transport Advocates - This group is smaller after COVID-19 but continues to be enthusiastic about public transport, walking and cycling.
3. Public Transport Doubters - These former Public Transport Advocates are the second oldest segment and the least wealthy. They have fallen out of love with buses, trains and trams, partly because of COVID-19-related safety concerns but also through a desire for more control over their journeys. Seeking a replacement for public transport that delivers on these needs, they have increased taxi and car usage. They remain the second most frequent users of public transport.
4. New School Pragmatists - This cohort, the youngest segment, is dominated by Millennials and Generation Z. Their travel patterns have barely shifted as a result of COVID-19; they are the only group to show an increased interest in public transport. They are far more open on average to all modes of travel covered in the survey, perhaps reflecting their comfort with buying services, rather than products, for commodities from phones to films.
5. Old School Pragmatists - This second group of former Travel Pragmatists are the oldest segment, 75% are over 40, and are far less interested in public transport and shared services. Their future travel plans have shifted closer to Car Traditionalists, except that they plan on walking about five times as much. They are less receptive to new technologies and business models than the New School Pragmatists and seek more independence. As a result, driving is becoming their default choice, winning market share from public transport.

This fragmentation has significant consequences. The automotive industry, public transport services, mobility service providers and Government all have a clear interest in understanding the impacts of this new market dynamic.

What happens next? The implications of market fragmentation

EY’s research suggests that Car Traditionalists and Public Transport Advocates will continue to act in much the same way as they always have. However, as these two segments only represent around 40% of the market, this leaves product and service providers with substantial opportunities and challenges in serving the needs of the remaining three segments.

Collectively, Public Transport Doubters, Old and New School Pragmatists are interested in almost all major forms of transport and will likely be receptive to innovative offerings that meet their needs.

There is an over-arching challenge: of the three segments, only New School Pragmatists currently have a favourable view of new technologies, yet newly created digital interfaces and customer journeys may be the best way to serve the future needs of all three groups. Across transport modes, from cars to e-Scooters, digitalisation is increasing. Service design must consider customers who lack confidence in technology; providers need to educate them about the benefits.

We believe these groups offer real opportunities for value creation and expansion, but the challenge for industry and Government alike is ensuring that this wave of consumer sentiment translates into economically viable business models. 

The chart below shows UK travel consumers in emerging segments have overlapping but distinct opinions of different transport types.

Impacts on UK car sales

Some consumers now appear more interested in car ownership than before COVID-19. Hygiene concerns, previously relatively trivial, are now an important criterion in determining travel patterns, especially for Old School Pragmatists. Public Transport Doubters have similar needs but are generally less wealthy and more environmentally conscious. New School Pragmatists are open to cars, but they are also open to everything else.

The challenge for the automotive industry is to adapt to serve these three emerging segments of Public Transport Doubters and Old and New School Pragmatists: they value flexibility and are unlikely to use cars as often, or be as loyal, as Car Traditionalists. Business models with fewer commitments, incorporating electric and used cars to reduce costs and burnish environmental credentials, may appeal to them. The industry must discover how offerings can become broader and take care of many of unwanted ownership headaches, especially those newly created by electric vehicles.

Challenges for public transport

Both Public Transport Doubters and Old School Pragmatists plan to reduce their work-related public transport usage by around 30% and 55% respectively. Whilst New School Pragmatists remain receptive, public transport rarely provides integration with other transport modes they frequently use. Overall, UK public transport use for all journey types is expected to decrease by 12%, through a combination of reduced work-related travel and hygiene concerns. The normal remedies to falling revenues are unpalatable: increased subsidies and price rises.

Although carnet-like flexible season tickets loaded to smart cards make life easier for customers, they do not fix operational problems such as the viability of scheduled services where high capacity utilisation is key to efficiency. They may also be insufficiently flexible if they are prescriptive about the quantity of trips within a given period or have fixed destinations.

To solve these problems, operators must first understand how demand has changed, and compensate through a review of existing timetables and improved efficiency, for example real-time capacity planning, at an individual train level, using movement and other data to augment live ticket sales in dynamically predicting demand before passengers arrive on the platform. The longer-term outlook is unclear: will COVID-19 concerns fade away in a few years? Will capacity reduction result in a smaller yet still viable sector? Or, does public transport need to integrate with other services, perhaps as part of a multi-modal ecosystem, to remain relevant?

The rise of mobility-as-a-service operators

The term mobility-as-a-service covers a new breed of service operators ranging from ride-hailing companies to electric scooter rental firms and even some existing players who are repackaging established products, such as car leasing and insurance, into all-inclusive offerings combined with more flexible payment terms. Often, they combine transport modes to cater for a variety of journeys.

New School Pragmatists are clearly open to mobility-as-a-service. This ready-made group of potential early adopters want flexibility and are happy to experiment. They are also relatively rich, so successful products do not necessarily have to be cheap. Public Transport Doubters and Old School Pragmatists are wary of technology and must be persuaded to trust it; their travel profiles suggest they should be interested in mobility services.

What are the implications for government policy?

Government’s strategy for ever-expanding bus, train and tram usage is being challenged, as consumers choose alternatives. Reductions in public transport usage triggered by COVID-19 threaten environmental policies and potentially increase the need for subsidies to keep operators viable. Although public transport will remain a key part of travel mix, the Public Transport Doubters and Old School Pragmatists are seeking alternatives that deliver greater flexibility. Perspectives do appear to be changing with the wider acceptance of electric vehicles and broader use of clean energy to build and power cars. As a result, private cars can arguably be positioned as a more environmentally friendly choice. This should force a fundamental rethink about the ideal transport mix, and how to encourage it.

Some government initiatives already fit the trend indicated by the consumer data. For instance, the highway code is being rewritten to give more priority to pedestrians and cyclists -- travel choices which appeal to all consumers, except Car Traditionalists. Some problems are substantial: if intercity public transport loses popularity, an additional alternative to private cars is required.

A call to action for transport providers and policymakers

Through our analysis of the consumer trends identified in the MCI data, we have developed six calls to action for transport product and service providers and government:

1. Build integrated travel demand models, with incentives that actively align demand and supply across the future travel service portfolio
2. Develop data analysis tools to assess and manage the full travel needs of customers in terms of usage and geography
3. Build formal coalitions of the critical industries (automotive, energy, finance, infrastructure and technology) to create new services that deliver flexibility for customers and fairly align responsibilities and revenues
4. Test the different service alternatives in pilot trials with representative customers to pick winning solutions
5. Build platforms that can be deployed at scale and tailored to different geographic and social situations
6. Educate customers and policymakers about the options and benefits of the new transport services