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Travel & Mobility Tech Newsletter

Dear Readers

We cover A LOT of ground in today's edition. Let's jump in right away. I'll see you at the bottom of the newsletter. Enjoy.

Lennart Dobravsky
Trend & Market Research Analyst

Trend Radar

The New Face of Corporate Venture Capital

Corporations are increasingly confronting the need to remain agile and relevant by investing in technology startups. 

In our Travel & Mobility Tech sector, the participation of corporates in VC deals most recently surpassed most other sectors (even Fin-tech and Health-tech). 

More than 40% of all Travel & Mobility Tech VC deals in 2018 had at least one corporation (or their respective venture capital vehicle) among the respective group of investors.

Our Intelligence Analyst Oswin dove into the most recent corporate venture capital (CVC) trends in more detail to better understand how corporates are deploying their capital.
 Read the full analysis on Medium

Why Airlines Need To Look Beyond Flying

While regulation in Germany still prevents ride-hailing services (such as Uber) to fully leverage all their potential, inner-city transportation in the U.S. and large parts of Asia has already been massively disrupted by these new on-demand ground-transportation providers.

Why do we believe that ride-hailing and other new mobility modes (e.g. car-sharing) also affect the airline business?

Because taking a plane from A to B is only one component of the entire door-to-door travel experience – even though the most breathtaking one, of course.

New mobility services that transport travelers to and from the airport as well as within their travel destination are equally relevant in shaping the overall travel experience.

And there are more arguments for airlines to take urban-mobility providers seriously: for instance, business travelers – a highly lucrative segment for airlines – already choose ride-hailing over taxis and rental cars as their preferred mode of inner-city transportation.


Management software company Certify – which analyzed millions of receipts and expense reports by business travelers in the U.S. – has some stunning data points on this:

Furthermore, out of all transactions along the increasingly fragmented traveler journey, the share of ride-hailers is quickly growing – with Uber and co. possessing more customer touchpoints than airlines have with their travelers, according to this report by Epsilon & Conversant:
 

What does this mean?

It will become more and more challenging for airlines to keep up with the high-frequency brand exposure that ride-hailers (and other urban mobility providers) are enjoying throughout the traveler lifecycle. Airlines can't sit on the sideline and watch their brand relevance gradually shrink.

Hence, it's high time that airlines look beyond flying!
And if you’re wondering what our Lufthansa Innovation Hub attempt is to address the diminishing share of customer touchpoints that also holds true for our parent company?

Well, we have built an app that rewards users for trips made by all kinds of mobility services incl. public transit, car-sharing, and ride-hailing. Check out RYDES.
Airline Radar

Let's Talk About How Digital You Are

Airlines are no exception when it comes to the challenge of digital innovation. 

In our newsletter edition two weeks ago, we shared our extensive analysis of 60 earning calls from multiple airlines to better understand how major carriers plan to adapt to emerging technologies. Read the full analysis here.

As it turned out, companies and banking analysts rarely mention digital innovation on these calls and instead focus on classic financial analysis. 

A meager 2% of the total time spent in earnings calls discussed emerging technology themes, and statements were almost exclusively made by airline executives themselves.

Wall Street doesn't seem to care.

Our analysis got picked up by industry-leading media outlets (e.g. Phocuswire) and we received a lot of valid feedback from our community! Thanks for sharing your thoughts.

One very interesting and thought-provoking piece of feedback came from Daniel Röska – Senior Research Analyst at Wall Street’s premier research and brokerage firm Bernstein – who extensively covers the airline sector (read his 2019 industry outlook here).

Daniel argues that airlines themselves need to develop their own equity story and convince capital markets on how their digital innovation efforts impact their financial performance. Otherwise, capital markets (rightfully) just won’t care.

Valid point! Especially since research by the Harvard Business Review indicates that financial markets only reward those companies for investment in digital technology that are perceived as “growth companies”. More mature, steadily profitable firms without such a perceived “growth story” are actively punished for digital investments.

We conclude: Airlines (and industry incumbents in other industries as well) need to actively build their company story around being innovative and digital-oriented to actually get rewarded for their digital investments.

This leads us to today’s edition of the Airline Digital Index (ADiX).

We identified at exactly those airlines which have done the best job in crafting a company story about being digitally leading. How did we do this? Keep on reading and find out.

The Airline Digital Index (ADiX)

Our journey to quantify digitalization amongst major Western airlines continues. If you missed past editions, you can check our metric repository here: New metrics will be announced every two weeks in this newsletter, before releasing final results this summer. 

This week, we turn our gaze onto an airline's press coverage discussing digital and innovation.
Metric #4: DIGITAL NARRATIVE

Definition: Share of media mentions alongside keywords "digital" OR "innovation"

The metric picks up the share of all media stories in 2018 that included the name of the respective airline AND the words "digital" OR "innovation". 

The variable is derived in cooperation with our data partner Quid. Queries were limited to medium and top-tier media outlets only (think Financial Times, Economist, etc.), ensuring sources were reputable. 

Find the top 10 airlines with strongest Digital Narrative below:
We are happy to congratulate SAS, and our very own SWISS and Lufthansa colleagues for their strong digital public narrative.

This is arguably a less concrete but all-encompassing metric of digitalization. Why?

1) It captures public information about an airline's efforts and initiatives around digitalization and innovation (whether positive or negative) that reputable newspapers deem press-worthy

2) It measures an airline's ability to influence its digital public narrative, which is part of its long-term equity story 
We chose to only include the words "digital" and "innovation" for a reason – we could have queried for a whole host of other digital keywords (i.e mobile, cloud, online, etc). Our reasoning: we wanted a metric that illustrates an airline's digital strategy. Other keywords would pick up product or performance aspects, yet the chosen two really illustrate the extent to which an airline is focusing on digital and innovation at a macro level, whether through investment commitments in digital or setting up new digital units, for instance. 
Disclaimer: This metric is based on tens of thousands of data points and as such might include some (most likely random) bad apples. Some stories could, for instance, discuss both a given airline and the chosen keywords but without actually creating a link between the two. Stories could also criticize the digital innovation efforts of an airline. Overall, we are convinced that the press articles captured in our benchmarking do present a clear link between digitalization and airlines that is indicative of their digital strategy and initiatives.

We noticed that our top 10 list does not include any of the American airlines. A possible reason could be that our analysis only looks at English-speaking press. Media stories discussing the regular business of airlines (new routes, plane orders, flight cancellations, etc.), which might arguably not be considered newsworthy on an international press level, would only appear in the local language of an airline's base. As a result, these stories would be included for the English-speaking airlines but partly excluded for the rest. This would create a bias towards airlines from non-English speaking regions when measuring the share of Digital Narrative.
Press Radar

Our Recommended Must Reads 

BOEING INVESTS IN SUPERSONIC STARTUP – Boeing’s announcement in February of a “significant investment” in Aerion vaulted the supersonic business-jet developer from struggling startup to serious contender. Of the companies hoping to field a new-generation supersonic transport by the mid-2020s, Aerion looks most likely to be first.
 Read more in ATW
UBER ACQUIRES CAREEM – It’s finally been confirmed that ride-hailing giant Uber is picking up its Middle East rival Careem in an acquisition deal worth $3.1 billion. Uber says it will acquire all of Careem’s mobility, delivery, and payments businesses across the greater Middle East region. The transaction is expected to close in Q1 2020.
 Read more in TechCrunch
THE TRAIN (R)EVOLUTION – The train sector has been just as impacted in recent years by changes in consumer behavior and the drive for digitalization as any other travel sector. But, rail also has its unique share of challenges – commercial, technological, political – to overcome.
 Read more in PhocusWire
Funding Radar

Most Recent Venture Capital Deals

 = Exit Alert (Startup listed at 
 = Unicorn Alert (post-deal company valuation at >$1B) stock exchange or acquired)

 

 Careem – the Dubai-based provider of a car-booking platform was acquired by Uber for $3.10B. Uber will pay $1.40B in cash and $1.70B in notes that convert to Uber equity at $55 a share, marking this the company’s biggest acquisition to date.

Beijing Borgward Automobile– a Chinese manufacturer of automobiles was acquired by chauffeured car service provider UCAR for $610M. 

Ola – the Indian developer of a ride-hailing mobile application raised $300M in strategic funding from Korean automakers Hyundai and Kia as part of the ongoing series J round. 


Drivezy – a Bangalore-based provider of a vehicle rental platform raised $100M in funding from undisclosed investors. 

Lola – a Boston-based developer of a travel booking application raised $37M in funding from General Catalyst, Accel, CRV, Tenaya Capital, and GV.

Guesty – an American developer of a cloud-based property management software raised $35M in funding from Vertex Ventures, Journey Ventures, Kingfisher Investment Advisors, La Maison Compagnie d'Investissement, and existing investors TLV Partners and Magma Ventures. 

The Plum Guide – a British operator of a travel-based platform raised $18.25M in funding from Talis Capital, Octopus Ventures, Latitude Investments, and Hearst Ventures. 

Miles Mobility – a Berlin-based provider of a car-sharing service raised $5.83M in funding from Redspher, WestTech Ventures, InVenture Partners, Mavericks Founders, Team Europe Management, and a private investor. 

Welcome Pickups – a British provider of an online in-destination travel community raised $3.84M in funding from OpenFund, VentureFriends, Market One Capital, Jabbar Internet Group, and HOWZAT Partners. 

Zuzu Hospitality Solutions – a Singapore-based operator of a hotel price comparison platform raised $3.70M in funding from Wavemaker Partners, Golden Gate Ventures, Convergence Ventures, Alpha JWC Ventures, and further investors. 

Timeshifter – an American developer of an application created to provide jet lag solutions raised $1.45M in seed funding from private investors. 

FlexClub – a South African ride-hailing startup raised $1.20M in funding from CRE Venture Capital and Savannah Fund. 

Hostfully – a San Francisco-based provider of a guest communications platform raised $1M in funding from Backstage Capital, Right Side Capital Management and further undisclosed investors. 

Tribe Theory – a Singapore-based hostel startup raised $1M in funding from Superangel, Aurum Investments, and Reapra. 

misterb&b – a Paris-based provider of a property rental marketplace raised $500K in funding from undisclosed angel investors.

bookingkit – a Berlin-based provider of a SaaS-based booking platform raised an undisclosed amount in funding from High-Tech Gruenderfonds and Mueller Medien.

Guiddoo World – an Indian provider of a tourism guidance platform raised an undisclosed amount in funding from SOSV and Artesian.  

Shohoz – a Bangladesh-based provider of online travel services raised an undisclosed amount in funding from Vostok New Ventures, Partech Ventures, Heritas Venture Funds, Cypress Capital, and further investors. 

Vntrip – a Vietnamese online travel agency raised an undisclosed amount in funding from Hendale Capital.

30SecondsToFly – an American developer of a travel management software raised an undisclosed amount in funding from the travel agency Flight Centre Travel Group.

Sam – a Barcelona based developer of a virtual travel assistant was acquired by the travel agency Flight Centre Travel Group for an undisclosed amount. 

ICM Airport Technics – an Australian provider of airport management services was acquired by Amadeus IT Group for an undisclosed amount. 

You made it all the way to the end. See you again in two weeks!

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