Australia / Analyst Insights
Out of Service: The COVID-19 Pandemic Brings Transport to a Stop

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by Arthur Kyriakopoulos
Oct 19 2020

Decline in Movement

The COVID-19 pandemic has significantly disrupted people’s travel patterns. Lockdown restrictions implemented at various stages throughout 2020 have forced people to stay at home, reducing demand for transport services. In addition, social distancing measures have encouraged people to avoid crowded places, reducing the use of shared transportation services. Two industries that have been significantly affected are the:

Ridesharing

The Ridesharing Services industry has been significantly affected by the COVID-19 pandemic. The industry’s revenue is projected to contract substantially across 2019-20 and 2020-21, with declines of 19.2% and 6.6% respectively. These results are in stark contrast to the industry’s performance over the past decade, where it had never previously experienced a revenue fall. Lockdown restrictions and social distancing measures have encouraged people to stay at home, severely inhibiting the use of ridesharing services. The restrictions placed on operators in the Pubs, Bars and Nightclubs industry to prevent the spread of the virus have also hindered demand for ridesharing operators, as less people require these services to get home after a night out. In addition, a decline in discretionary income over the two years through 2020-21, has further reduced demand for ridesharing, as people seek cheaper forms of transport.

Uber Australia Pty Ltd is the largest company in the ridesharing market, and has been strongly affected by the pandemic. During April 2020, when lockdown measures were first implemented across Australia, demand for the company’s services fell by approximately 80%. As a result, the company’s ridesharing revenue is forecast to contract by 16.5% during 2020. As Uber dominates the Australian market, controlling just over 85% of the industry, their struggles throughout the pandemic have been reflected in the industry’s performance. Uber has made approximately 100 staff redundant due to COVID-19 difficulties in 2020, reducing industry employment. Furthermore, industry competitors have also felt the strain of falling demand, with Bolt ceasing operations in Australia.

Public Transport Decline

Public transport (PT) use has also been unable to avoid the effects of the COVID-19 crisis. Across 2019-20 and 2020-21, the Public Transport industry is expected to suffer revenue declines of 7.8% and 4.9% respectively. Similar to the Ridesharing Services industry, restrictions implemented by the Federal and state governments have directly affected public transport services. Individuals’ travel patterns have changed, particularly due to most people working from home, contributing to a sharp decline in the use of PT. For example, PT use in Victoria fell by over 70% during their first COVID-19 wave. PT trips fell to 9% of pre-COVID levels during Victoria’s second wave. As a result of declining PT use, the frequency of PT services has been reduced to save costs.

The negative effects of the pandemic on PT use are evident through how severely the virus has affected different states. PT in states with greater case numbers and tighter restrictions are likely to suffer greater revenue losses. For example, the Public Transport Development Authority, operating as Public Transport Victoria (PTV), has faced greater revenue declines than the Department of Transport NSW (DOTNSW) and the Department of Transport and Main Roads Queensland (DOTQLD). In 2019-20 and 2020-21, PTV’s revenue is expected to fall by 3.5% and 7.0% respectively, while DOTNSW is expected to decline by 1.0% and 6.1%, and DOTQLD by 2.5% and rise by 1.9%. These trends indicate that greater exposure to the COVID-19 pandemic is likely to lead to a greater reduction in PT use.

Outlook

Both ridesharing and PT services are projected to strongly rebound from the COVID-19 pandemic. Over the five years through 2025-26, revenue derived from ridesharing services is forecast to rise at an annualised 13.6% to $1.3 billion, while revenue from PT services is anticipated to increase at an annualised 4.6% to $31.7 billion. However, recovery for both of these industries is highly dependent on the effective containment of COVID-19, which is expected to occur during 2021. Furthermore, PT services are forecast to have a weaker revenue recovery compared with ridesharing services. This trend is likely to stem from a change in working patterns, as more people continue to work from home over the period, reducing their need to travel for work. Fear over congested PT services could also potentially drive people to other transport methods, such as cars and bicycles, limiting PT demand.

 

IBISWorld reports mentioned in this release:

Ridesharing Services industry
Public Transport industry
Pubs, Bars and Nightclubs industry
Department of Transport NSW
Public Transport Development Authority
Uber Australia Holdings Pty Ltd