FREE CONCESSIONARY TRAVELAre smart cards going to help?

Chris Brown

Managing Director

MCL

MCL

• First UK Smartcard scheme for concessionary fares in Milton Keynes

• Wide range of consultancy work projects• Design/development of schemes• Scheme management/administration under

outsource contract (9 counties, 1 million concession holders, 200 bus operators, £60m)

• Pioneered use of ETM data• A number of Smartcard evaluations undertaken

and/or underway

Travel Concessions

• Two basic types:

– Pass (proving entitlement to a discount)

– Cash value (fixed contribution eg in the form of tokens or vouchers)

• Passes are the basic statutory entitlement;

• Discretion exists to enhance the statutory minimum or offer a cash value alternative.

The “big” change

• The current statutory minimum is a pass to provide local travel at no more than half-fare;

• From 1 April 2006 this will change to local travel, free of charge;

Scale Impacts

• Financial scale increases by 2.5 to 3 times;

• 25% to 45% more passholders;

• 45% to 70% more concessionary journeys;

• Current discretion remains to enhance the statutory scheme or offer alternatives.

Other Impacts

• Reduced accuracy of journey count data recorded manually on Electronic Ticket Machines (ETMs);

• Difficulty in measuring the value of each journey;

• Increased scope for “exploitation” (eg fare scales);

• Need for more monitoring and audit.

Why do these impacts bother us?

Reimbursement

• There is a duty to reimburse transport operators for the revenue they forego;

• To measure this we need to know as accurately as possible:– The number of journeys– The fare for each journey– The value of generated travel

Smart Concessions

Potential Evolution

• Pass > Smart Card

(entitlement and data transfer)

• Cash Value > Smart Card

(stored travel value)

• Pass and/or Cash value > Smart Card

(entitlement, data, stored value and cash?)

Costs Generators

• System Design (ITSO)

• Issuing system and cards

• On-vehicle card reading hardware:– Conventional buses (ETMs)– Community Transport, Taxis, etc (handhelds)

• Back office system

Benefit Streams

• Users

• Scheme Administrators

• Transport Operators

User Benefits

• Single LA Interface (intangible);

• Less cash handling (now irrelevant with free travel);

• Much simpler than token/vouchers (intangible and only applies to a relative few);

• Keeping pace with technology (intangible)

Administrator Benefits

• More information (but not much more if you are already using ETM data);

• Improved accuracy of journey count (but still a danger of under-counting);

• Greater control of misuse;

• Keeping pace with technology;

• Issuing efficiency and savings (dubious except for tokens/vouchers).

We lose the one big benefit – the virtual elimination of surveys

which are now still needed for free travel

Operator Benefits

• Removes the need for driver to select ticket class and prevents mis-coding;

• More detailed information;

• Possible commercial spin-off (but not a high priority);

• More accurate reimbursement (BUT some win, some lose).

Is there a Business Case?

Typical county scheme:

• 8-year evaluation period (ITSO life-span)

• Set-up costs: £1m

• 8-year benefits: £0.1m

• Conclusion: Concessionary Travel alone cannot justify the set-up investment

Main Issues

• High initial capital costs to equip the public transport fleet;

• This is a huge cost “hurdle” compared with “static” smart card applications and there seems to be failure to recognise this;

• Free travel undermines the business case;

• Transport operators are generally unenthusiastic.

What is needed?

• Share with other LA users to extend benefits and share costs;

• Persuade operators to share costs;

• Place a higher value on the “smart cards are good” argument;

• Persuade Government to fund the card-reading infrastructure on the passenger transport network.