New mobilities in GCC cities. PTAs and private players can better work together to develop new mobility solutions

By Sebastien Plessis
March 2019

To improve their mobility offering, Public Transport Authorities need to consider innovative solutions to build complementary and coherent ecosystems and eventually ensure the best experience to residents and visitors.
Those new services are key levers to break free from the dominance of the personal car.

With their constant appetite for innovation, GCC cities should arguably be among the most dynamic playgrounds for new transportation and mobility solutions. Ride-hailing has indeed been very successful in the region, as illustrated by the success story of Careem, which emerged as the regional leader and the first Emirati company to reach Unicorn status. Flagship projects such as the Hyperloop One or flying taxis illustrate the ambition of the region to be at the forefront of transport innovation. Yet GCC cities still lag significantly behind their American, European and Chinese counterparts for the penetration of ‘new mobility’ offers, in particular in the first and last mile segment.

This is expected to change fast however, driven both by Public Transport Authorities (PTAs) and private sector initiatives. Historically, the public transport strategy in the region has consisted in building massive transport infrastructure from scratch, in cities that did not have any mass-transit networks. Now that these works are completed or in progress, PTAs and private sector companies are contemplating the next step: develop a multi-modal ecosystem, with alternative transport modes that could unclog road infrastructure.


What opportunities do GCC cities present for private operators and new mobility champions? What are the needs in terms of mobility of GCC city dwellers, and what existing mobility offers best address the local needs?

How do PTAs structure the market and how can they facilitate the emergence of new mobility solutions? How could private operators and PTAs better work together to develop new mobility services at scale?


1. Why GCC Cities are increasingly an attractive market for ‘new mobility’ players

There are five key reasons that make the GCC region an increasingly attractive market for ‘new mobility’ players:

a.The GCC population is growing fast, with diverse mobility needs

Figure 1. Comparison of population of selected GCC cities with European and American peers


The GCC population has been booming, nearly doubling since 1990, partly due to high immigration, and is increasingly urban. It is also extremely connected and tech-savvy: most of the Gulf countries have a mobile penetration over 150%, which is a great enabler to launch mobile app-based services. This, combined with a strong growth in GDP per capita have made the major cities in the area high potential markets to capture, comparable to large western cities such as Amsterdam, Milan or Seattle.

Another distinctive characteristic of the GCC region is the high diversity of preferences and needs in terms of mobility. The GCC population is more diverse than most other regions of the world, with three main segments to distinguish: the working-class immigrants (e.g. maids, construction workers), the white-collar expatriates, and the nationals. A fairly large portion of the population has high price sensitivity (e.g. 65% in Dubai).

b. Diversifying the mobility offer is becoming central to the public authorities’ agendas

Historically, transportation in the region was based on the predominance of the personal car. In a culture close to the ‘American way of life’, the lack of mass transit infrastructure and the low oil prices make personal car and ride-hailing the two ultra-dominant transport modes, except for Dubai where the metro has been widely used since its inauguration in 2009.

The dominance of the personal car has led to very high levels of congestion, made worse by the fact that GCC cities still have less dense road networks than their Western or Asian counterparts and are often dominated by a few corridors that get easily congested at peak hours. A good example of this phenomenon can be witnessed in Doha on large ring roads such as Jawaan Street, Al Bustan Street or the B Ring Road.

In this context, the ‘one person-one car’ model is increasingly considered unsustainable, and only a radical change in the transportation modal splits will help decrease congestion durably. A good motivation for public authorities to encourage those changes is that those alternatives generally require substantially lower capital expenditure.

The example of Dubai shows that cities in the region are not doomed to only rely on car-based solutions. The arrival of the metro in 2009 was a huge success and it is now a dominant transport mode, widely used by all segments of the population.

Figure 2. Modal split of public transportation trips in Dubai

Source: interviews, Emerton analysis

c.Huge public investments are planned in transport infrastructure

Traditionally, the GCC region is an area where governments play a significant role in the development of the private sector. Large and long-term master plans provide official guidelines for the future evolution of the GCC in the mobility sector. To illustrate, in the context of Saudi Vision 2030 master plan, Saudi Arabia allocated a ~$140B budget to mobility over a 10-year period: the current focus is on boosting mass transportation infrastructures, such as the Riyadh metro or the Haramain high-speed railway connecting Mecca to Medina. In Qatar, the Doha metro, that will be fully operational by 2020, is expected to bring similar benefits to the city than witnessed in Dubai.

Significant public investments in mobility are also accelerated by upcoming international events that will be hosted by GCC cities, such as the 2022 World Cup in Qatar or the Dubai Expo2020.

d.A strategic intent exists to position the region at the forefront of the mobility revolution

In addition to this massive investment effort by governments across the region, there has also been recently a clear strategic intent to position the GCC at the forefront of the transport revolution.

This is particularly evident in the UAE, where public authorities are actively promoting futuristic projects that exist nowhere else in the world, such as the Hyperloop One pilot between Dubai and Abu Dhabi, the Ehang flying taxis in Dubai, or the Miral / SkyTran project to develop a personal rapid transport system based on magnetic levitation in Yas Island in Abu Dhabi. These initiatives are part of a broader vision to foster a vibrant innovation ecosystem in the country, as underlined by the ambitious 10X initiative of the Dubai Future Foundation, which aims to make Dubai ‘10 years ahead of the other world cities’.

GCC cities aim to position themselves on the global stage as test-beds for the large-scale rollout of autonomous vehicles in an urban environment. Multiple pilots are underway (for example, EasyMile’s shuttle trial or driverless RTA taxis in Dubai, Navya’s shuttle at Masdar city in Abu Dhabi). Beyond these pilots, the major GCC cities are competing to attract tech behemoths involved in this field such as Tesla, Uber and Alphabet’s Waymo. In this context Dubai has already set a long-term target for driverless mobility: by 2030, it must account for 25% of the city’s trips.

e.‘Soft mobility’, while significantly underdeveloped, is becoming increasingly relevant

Soft mobility is significantly underdeveloped in GCC cities versus their American, European or Asian counterparts. However there are multiple reasons to believe that this segment could flourish soon.

A first one is that the climate could facilitate the take-up of electric bikes and kickscooters. High summer temperatures make it very challenging to use unmotorized transportation such as bikes during roughly five months of the year, and this has clearly hindered the development of conventional bike-sharing services. However electric bikes and kickscooters do not require any significant physical effort, and are a great alternative to painful walks under a scorching sun for all those daily trips that are too short to be done with cars. During the winter months the very few number of rainy days is also a positive factor for such services.

Another reason is that the vast majority of PTAs in the region have announced plans to substantially increase the density of their cycle lanes network. To illustrate, Qatar announced in early 2018 that the cycle lanes will be developed to reach 2,000km by 2020. Road mortality is currently very high (e.g. ~27 per 100k inhabitants in KSA vs ~5 in France or ~6 in Canada), especially for pedestrians, but the safety of soft mobility users should drastically improve as adequate infrastructure is developed over the coming years.

Finally a key structural tailwind for soft mobility in the region will be the completion of mass transit infrastructures. As public transport modes like metros and buses develop in the region, ‘soft mobility’ will become increasingly relevant as a first and last mile solution, as seen clearly in other markets across the world.

Consequently, bikesharing players have recently shown interest in the region, with global leaders nextbike and Motivate (through its subsidiary 8D Technologies) taking part in the Dubai ‘Byky’ and Abu Dhabi ‘Cyacle’ schemes. Moreover, multiple e-scooter sharing start-ups exist in the region, such as Scootari or Qwikly in Dubai, and global leaders may also launch in GCC cities in the coming months.

2. Which new mobility solutions exist in GCC cities, and which ones best fit market needs

We can derive four main observations about the new mobility market in the GCC, based on our market research and detailed interviews with market players:


a.Dubai is leading the regional trend towards smart mobility services

Dubai has the most developed and integrated transportation ecosystem. It has the widest portfolio of innovative mobility services in the region, and multiple agreements in place with a wide range of international organizations to trial futuristic transportation modes. It also has an efficient metro network, which has quickly become the main transportation mode in the city.


Figure 3. Mapping of the new mobility solutions currently available in selected GCC cities

The RTA in Dubai is very proactive to ensure that the residents and visitors of the Emirate can benefit from a multimodal ‘Mobility as a Service’ (MaaS) offer, which focuses on data integration and digitalization. All mobility service providers in the Emirate must be integrated in the S’Hail application. To date, it aggregates the different services and compares them for a given journey. The RTA also announced that a payment system will be integrated in the app to book and pay for all the services by February 2019.


Figure 4. The three pillars of the digital mobility ecosystem in Dubai


b.Smart mobility services are still significantly underdeveloped, except for ride-hailing

It is no surprise that the most successful ‘new mobility’ service in the region by far is ride-hailing. Local specificities reinforce the penetration of this solution in the region. As a car-based solution, it fits well with the existing infrastructure, but it also has specific local enablers: as an example, ride-hailing growth in Saudi Arabia has been partly fueled by the large market of women without a driving license. In Dubai and Abu Dhabi, the large proportion of tourists and visitors has also been a tailwind for ride-hailing. This industry still has a subsequent growth potential, as shown by the difficulty to find a taxi at peak hours in cities like Dubai.


Figure 5. Advancement levels of new mobility services in GCC area

Source: interviews, Emerton analysis                   


The appeal of ride-hailing services in the GCC to customers is reflected in the success story of local champion Careem, which has managed to keep its leadership over Uber. Careem was the first GCC start-up to reach Unicorn status in June 2017, which was a key milestone for the development of the Tech industry in the region.


Figure 6. Careem’s growth in figures

Source: Careem, Crunchbase, Emerton analysis


c.Micro-transit and electric kick-scooters have strong potential for growth

Among the services yet to be implemented, market interviews performed have shown that the most likely to grow are electric kick-scooters (Bird & Lime-like solutions) and micro-transit (‘bus on demand’). Indeed, first and last mile trips remain huge challenges to solve in those cities, as solutions like bicycles are irrelevant during a large part of the year due to the climate constraint.


Figure 7. Typical trip length by mode of transportation

Source: interviews, Emerton analysis

Electric kick-scooters in free-floating services can combine both door to door and first and last mile trips. These micro-mobility solutions are considered increasingly strategic by ride-hailing players in other geographies, where they have recently entered this market through sizeable acquisitions. It is very likely that a similar scenario will happen in the GCC.

Many of the GCC cities have special areas such as freezones, often outside city center, that cannot be easily accessed through public transport: this represents a perfect use case for micro-transit services, that can allow an adaptative coverage of those areas without requiring vast investments in fixed bus lines. The adaptation of the route also allows to minimize journeys on foot travel and eases to solve the first and last mile challenge.


Figure 8. Relevancy of the new mobility services in GCC countries

Source: interviews, Emerton analysis

Among all the possible new mobility services with high potential, micro-transit may be the most interesting mode for public transport companies, as they allow them to extend into the last mile market. In other geographies public transport players have been pioneers in this segment. As an example, Deutsche Bahn’s subsidiary Arriva partnered with micro-transit global leader Via to launch ArrivaClick, a last mile solution in Sittingbourne. RATP Dev developed a pilot in Bristol, that has now been extended citywide and may scale up in a near future. GCC public transport companies are likely to replicate this strategy, and cross-sell micro-transit offers to complement their mass transport infrastructure (e.g. the Doha metro project, assigned to RATP Dev and Keolis in December 2017).


d.A key question mark remains the ability to reach critical scale for profitability

Though the GCC region has a clear success story with Careem and real potential, the market constraints may still be too strong for now to affirm that these new mobility players will be able to reach profitability. Even Careem is reportedly still burning cash. Key difficulties that private market players will face to reach profitability is the fragmentation of the overall GCC market between multiple local markets with different rules and regulations, as well as the diversity of the GCC population which makes it difficult to define a single service which can address the needs of a large section of the population. The need for highly differentiated offers between income segments may limit the economies of scale.


3.Key success factors and enablers for new mobility activities in the GCC

Key success factors in the region for PTAs to leverage new mobility solutions to improve their transportation ecosystem

An optimized process of approval and governance to accelerate the emergence of new entrants and go more rapidly from pilot to larger scale.

Even if local authorities aim to play a supportive role in fostering innovative solutions, administrative difficulties was clearly one of the main pain points reported in our market interviews. In order to get a license to operate, a new service provider must typically be approved in terms of financial viability, usefulness, feasibility and non-cannibalization with already-existing offers. Regulatory oversight by PTAs tends to be tighter in the GCC than in other geographies, and related fees can be a significant barrier for start-ups. A particularly strong ‘pain point’ reported by private players is the fragmentation of the interaction process with authorities: a new entrant will often need to deal with multiple stakeholders and departments within the PTAs, on top of having to deal with multiple local authorities due to the prevalence of freezones with their own regulations and rules.

Overall, a common denominator in the region is the ‘pilot project’ culture. A clear majority of the projects are first launched at a small scale and scale up if successful. This pilot culture It is a way for authorities to avoid chaos and protect customers, and it can also create a lean environment that favors the emergence of local champions. However, the transition from the pilot phase to a full launch should not be too long, as start-ups need to be able to build momentum and scale up fast.

A fast-moving regulatory framework – In such a dynamic industry, new services appear very suddenly and often have very aggressive growth strategies. An unprepared arrival of a new player can generate issues: for instance, free-floating bikes and kick-scooters have crowded the sidewalks of many cities across the world and can be left in problematic locations.

Nevertheless, PTAs should not discourage new entrants and therefore regulation must evolve very quickly. A good example of this good practice is Austin, Texas. In the 2018 summer, faced with the proliferation of free-floating vehicles, those were banned during a month. This allowed to run a pilot, and after a month, operations were allowed to resume if operators were licensed and used ‘lock-to’ technology (meaning that all vehicles should be able to urban infrastructure, e.g. bike racks). The quick reaction of authorities allowed to have a very fast implementation of the service without the associated disagreements. This is the sort of timeframe for regulatory decisions that GCC cities should target if they want to among global best practices for the adoption of new mobility services.

A frequent benchmarking of other cities – In general, mobility trends have been evolving faster than ever recently. Hence, a frequent benchmarking of some worldwide hubs of innovation is critical. Cities that have similar constraints (e.g. historic dominance of personal car, rough weather conditions, fast growth etc.) and a dynamic mobility environment can provide insights and best practices, in order to identify which services to prioritize.

Improve security for soft mobility solutions with for example specific lanes


Figure 9. Effect of bike lanes works on cycling use and risk – Percent change, 2006-2013

Source: NACTO – Aggregate data from 7 major US bikesharing schemes

Key success factors in the region for mobility operators and main implications to develop at larger scale mobility solutions in the region

Launching a new mobility business in the GCC region requires some essential prerequisites for private players. The ability to work with local authorities will be the main key success factor in our opinion to succeed in the region, as wild predatory approaches (as seen in other geographies) are unlikely to be accepted by GCC authorities.

A close relationship with PTAs – The GCC being a very government-driven market, a private player willing to establish a business needs to work very closely with local transport authorities.

A first step is to convince PTAs that the new service could add value to the city’s current transportation offering. If not performed efficiently enough, two risks can jeopardize the project before operations even begun. Firstly, the local authority can undervalue the benefit of the solution itself, e.g. considering that a carpooling service is an unfair competitor to taxis. Secondly, that can result in long delays to get authorizations to operate in the city (up to a couple of years as we could notice through our market interviews.

To overcome these obstacles, creating a joint venture with a local entity is a solution that turned out to be efficient for foreign private companies. For instance, RATP Dev partnered with SAPTCO for the recently awarded Riyadh Metro operations and maintenance contract. A similar approach could be replicated for new mobility offers.

These regulatory obligations, that could seem heavy at first, can also translate into an opportunity later on for companies that get approved and licensed, as they act somewhat as a barrier to entry and tend to limit further competition. As an example, Udrive is currently the only player allowed to offer free-floating carsharing, and competitors’ solutions must be based on Udrive’s platform and use a station-based system.

Substantial financial capabilities – In the GCC region, providing grants or public subsidies to launch a business is not yet in the local PTAs’ culture. The current practice is more for transport companies to have to pay substantial fees to be licensed and allowed to operate. This is unlikely to change in the near future, as external cyclical elements (in particular oil prices) have a decisive influence on cities’ budgets. Consequently, business models of new mobility solutions cannot rely on partially on public funding to achieve profitability.

A fine understanding of local needs – In a market like the GCC where the transport needs of the population are as diverse as they are between the different segments of the population, a ‘one size fits all’ model imported from foreign markets has very limited chances of success. The services must be highly differentiated to address the different income segments. As an example, the local carsharing player Udrive is planning to diversify its offer with luxury cars. Similarly, Careem’s success has been fostered by innovative solutions targeting the local needs. One key success factor is to estimate well the addressable market at a very detailed level, as the critical scale required to break-even will not always be achievable for services with a lower take-up rate than ride-hailing.