A couple of years ago I released my list of factors by which robotaxi companies might compete. Many people wonder if there will be a natural monopoly, limiting us to one or two companies per city, or if we might get more.

I don't think there will be much competition for the first several years. Companies will take over the world one city at a time. Nobody has the management bandwidth to deploy in every city in the USA, Europe or Asia all at once, or even in just a few years -- and few have the money to do that. So if a company wants to deploy in a new city, and they can choose to compete in a city that's already got another player, or go to a virgin city and completely own the business -- which will they choose most of the time?

Still, in some places they will compete, and eventually they will compete everywhere.

Air travel is of course very different from robotaxi travel. Trips are very long, and there are usually no alternatives but air travel. There's 2 hours of wasted time on the ground, if not more. Space is at a super premium and the cost is high. It's almost always public transportation, private jets are for the elite. But it's still transportation, and a reasonably competitive market on many routes.

Clearly with air travel the biggest differentiating factors are schedule and price. Prices are incredibly variable -- sometimes one flight can be 3x or 4x as much as another, and there are many types of passengers (tourists, business, etc.) with very different needs and budgets. But in those cases where two airlines have roughly similar offerings in terms of schedule, what makes the competitive edge?

Comfort

Most planes have 2 or 3 different seat sizes, with radically different prices. On long-haul, the business class seats are where most of the airline's profits come from, and the coach passengers are just there to fill the part of the plane (at lower profit) that couldn't be filled with biz class passengers. There is surprising variation in the form and comfort of business class seats, and regular evolution as well. Of course, these are seats you will spend 8-12 hours in, and want to sleep in. People care a lot less on short-haul flights, and people who would never book a long-haul coach flight will take an hour flight that way.

Customer service

Airlines work (or don't work) very hard on the non-flight aspect of their service. While the central aspect of a business class seat is how many square feet it takes up, they win customers by trying or failing to treat them well on the phone, on the web, in their app, in the terminal and on the ground. A big differentiator can be how well they treat you when something goes wrong. This suggests that even if robotaxi rides are seen as commodity travel from A to B, the win may come not from the ride but how passengers are treated.

In the case of Uber vs. Lyft, where the drivers are the "customers" from the point of view of the App, Lyft took the approach of working harder on good driver relations, believing that would lead to more drivers and better treatment of customers.

Loyalty

Airlines are the most extensive users of loyalty programs. It's ridiculous compared to other industries. I've done silly things to maintain my 100,000 mile status on airlines, because they treat me a lot better when I do. Many people do "mileage runs" where they deliberately take a quick-turnaround round-trip for no other reason than to get loyalty miles. Loyal customers are rewarded with discounts, free trips, upgrades and most of all better service. It works, especially for business flyers who are spending company money, not their own.

Uber and Lyft have loyalty programs for their drivers, giving them better rates the more they devote to one company. They only do limited loyalty offerings for passengers but this may change. Uber gets an automatic benefit from its size -- when I go to a foreign city, it's much easier for me to just use my existing Uber account than to download and set up an account on the local TNC. The local TNC has to have a lot of advantages over Uber to win the business. The largest robotaxi company will get the big share of the tourist/visitor business. Loyalty programs will make that even stronger.

Food and Entertainment

While people write a lot about the varying quality of food and in-flight entertainment systems, I don't think many people select their airline based on these. Of course, food is not likely to come with short robotaxi rides, and they may not even want you to eat inside at all.

When it comes to entertainment, we all know that most in-flight-entertainment (IFE) systems are dreadful. Turns out there's a reason: Screens in headsets must be tested for crash safety -- you could smash your head one them -- and that's expensive, so systems are rarely updated.

Many airlines have stopped putting IFE into short-haul planes, expecting passengers will just use their own device. In some cases, they hand out loaner tablets. This is even happening on long haul flights. I often use my own phone rather than the IFE because I get to pick the movies, and it doesn't pause when they announce that duty free shopping is now open in 3 languages.

I've seen many companies talk about their plans for the "in car experience" including entertainment. Except for tourists, who want a tour guide, I suspect there will be no "in car experience" other than having your phone drive the in-car screen and speakers.

Regulatory support and competition

Airlines work to use and abuse regulations all the time. They get monopolies within their country, they get control of gates at airports. The airline that keeps the best relations with the government is sometimes the airline that wins.

The usuals: Brand, marketing, etc.

Like most companies, airlines compete using marketing and brand. At present, TNCs like Uber and Lyft do very little marketing to consumers, but they definitely have strong brands and reputations (good and bad.) Because TNCs don't own their cars, branding on the cars is minor (a small sign, or in early days for Lyft, a mustache on the front of the car.) Robotaxis may have a much more obvious livery to build brand, and they will also have their distinctive sensors and designs.

Complex pricing models

Airlines compete on price, and have perhaps the most complex pricing models of any consumer service. The price of an airline seat will vary immensely during its sale period. Airlines build complex models to predict demand and load as well as customer tolerance for prices. They place complex rules on use of tickets to create different price classes.

Taxis have government regulated pricing. TNCs started with fairly simple pricing, with the addition of "surge" pricing at busy times. More recently, they have moved to taking the destination and pre-calculating a price, with much less transparency into pricing.

Prices on airlines, as the photo above shows, often vary greatly to different locations. It is not uncommon for a flight to one destination is much cheaper than a flight to the intermediate city you change planes at.

Might robotaxi rides get complex pricing models? They are not normally bought in advance like airline rides. We hope that riders will be able to comparison shop based on price. My personal experience is I try one company, and if the price is normal, I use it, but if it's surging, I check the other company. Right now, TNC companies resist letting you use a "shopping engine" which will compare prices for you. Often the big player will refuse to participate in the shopping engine, but the smaller players will band together and use it.

Any other lessons from airlines which might make their way into the robotaxi world? Most other forms of transportation (other than car rental) have very simple pricing.

I have updated my article on competition to include some of these factors.