Utilisation And The Motor Car

It’s a while since any of us have been spending a lot of the time up in the air. That is to say, on board commercial aircraft, as opposed to practicing the art of levitation.

Prior to the pandemic, the modern aircraft and airline was a perfect example of a business squeezing every last drop of value out of an expensive asset. Once the pandemic has finally ended and life is back to whatever counts for normal these days, expect airlines to pick up where they left off. On the ground turnaround times become shorter and shorter as loading processes and turnaround procedures become slicker.

This all happened because companies refocused on their key business truth: airplanes on the ground aren't earning money. Which meant the pandemic was especially painful for them. To the point where many airlines were flying their passenger aircraft as freight carriers through most of 2020. Pandemic aside though, the key lesson for the airlines was that every minute spent on the ground was minimised and keeping planes in the air and earning was the priority.

It’s a lesson which many of us can learn in our everyday lives.

As consumers we have a very specific set of high utilisation devices - for most people a smartphone and possibly a tablet, from which we derive a pretty good return against the purchase price. Then there are the items from which we derive benefit for lesser parts of the day. Your laptop might only get brought out for specific tasks. You might even have wholly replaced it with your tablet or smartphone. Home appliances don’t necessarily have the same high level of utilisation, but we cook and clean on a regular enough basis, and the buy in for these devices is low enough, that they still make good sense to own.

But we also have one asset which gets very little use at all whilst being one of the most expensive assets we'll acquire. 

Our cars.

In terms of utilisation owning a car makes little or no sense. Most people commute in their cars and then don't go out in them again during the working week. We might use our cars a little bit more at the weekends, but generally each and every one of us owns a vehicle which spends maybe 75% of its time doing nothing to earn its hefty keep. Even beyond the purchase price of the vehicle, there are all the costs associated with running it - from fuel and maintenance, to insurance and parking. 

If we replace our cars on a three yearly basis the costs are eye-opening. The small family car costs around £20,000 to buy, losing half of that in depreciation. Road tax and maintenance could add another £2,000 to that and insurance another £3,000. A car owner is spending over £8,000 a year just to own a car, never mind fueling costs.

For a car that spends most of its time idle.

Here is where the quality of mass transit systems makes a real difference to people's lives. In a city like London with excellent tube, bus, rail and water links; getting around without a car is a breeze. Other capital cities (in Europe at least) offer a similarly fluid experience. You could, with very little compromise, live your life without ever owning a car.

For those times when you must have a car, taxis or short term hire easily fill the gap. Even with all these costs added up, you’re still likely to be much better off than the average car owner.

For years now we have been listening to concerns about the impact of growing wealth in highly populated developing nations resukting in massive increases in motor vehicle ownership. We’ve seen this in action in China over the last decade. 

In the Western World we have decades of bad habits to unlearn and looking to improve the quality, availability, reliability and value in public transport systems would be an important step in achieving this.

In the meantime Google, Uber and now Apple have identified an opportunity to deliver a paradigm shift in vehicle utilisation and ownership. The cost of a taxi service is significantly reduced if the driver is removed from the equation. A self driving car which arrives when you need it and charges you only when you use it promises to disrupt our lives in ways that go beyond just car ownership.

Turns out high utilisation is just as beneficial on the ground as in the air.