Three areas transport operators can capitalise on smart ticketing systems

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Throughout the past decade, transport ticketing has seen a monumental shift in focus and subsequently, become an industry in its own right. Ticketing systems are moving from proprietary owned fare collection systems, to partnerships  between transport operators and smart ticketing system providers. These partnerships open up a world of benefits to stakeholders. But what exactly do these benefits mean to transport operators? We’ve heard at length what these improvements mean from the perspective of the traveller, but how does this translate to tangible improvements for the transport operators and government authorities?

Operators who have implemented smart ticketing schemes have been capitalising on three key areas, made possible by ticketing’s new role within the transport industry: reduced cost of fare collection, increased ridership and continuous improvement.

Reduced cost of fare collection

Many operators that have implemented smart ticketing schemes are seeing a reduction in costs associated with fare collection. Moving to a model that allows passengers to self-serve has reduced the need for ticket offices, vending machines and staff required to enforce fare payment. Transport for London recorded a decrease in fare collection costs from 14.3% of revenue to 8.8% from 2006 to 2013, due to a combination of restructuring commercial agreements with their suppliers and initiatives enabled by their smart ticketing system. TfL benchmarked their goals against the cities of Paris and New York, where no smart ticketing scheme was available, and fare collection costs were 15% and 20% respectively.

Whilst some areas for possible cost reduction are obvious, some are subtler.  What may initially seem like small numbers, can equate to substantial savings. Transport operators are seeing this in cities where smart ticketing has reduced dwell times by facilitating faster boarding and disembarking of passengers. In Auckland New Zealand, a reduction in dwell time of only 30 seconds is estimated to reduce running costs on the city’s rail network by $5.68 million per annum.

As well as the cost benefit after implementation, some transport operators are seeing financial benefit in collaboration across transport operators and regions in procuring new systems. Rather than operating in silos, operators of different transport modes are working together and, as a result, sharing the cost of new technology as well as infrastructure.

Increased ridership and revenue

In order to truly understand the impact that smart ticketing has on ridership levels, we need to look at the whole package, and not just the one action of purchasing a ticket (or more to the point, not having to purchase a ticket). Smart ticketing not only facilitates a seamless fare collection experience, but also begins to build a platform on which to better offer the mix of incentives that research has found will encourage an increase in ridership:

– Make it easier to buy a ticket – smart ticketing systems make a buying a ticket a seamless, and in some cases delightful experience due to the shift in focus from fare enforcement to designing products for real humans

– Make it more reliable – new technology has allowed far greater access to information and data. Operators have been able to use this information to plan services that better meet the needs of travellers with smart ticketing also reducing the number of delays caused by on-boarding issues

– Make it easier to use – the NTA in Dublin partially attribute their increase in ridership to journey planning apps which make information accessible to passengers in the palm of their hands

–  Make it faster – the reduction in dwell times that smart ticketing achieves is just one of the ways that travel times can be improved. A reduction of 30 seconds per stop over 20 stops adds up to a 10-minute faster trip

–  Make it work around the traveller – smart ticketing facilitates the collection of in-depth data on the behaviour of travellers, enabling operators to better define their services to suit the needs of customers

–  Deliver information in real-time – the use of open data and APIs is allowing data-sharing meaning that information provided to developers is faster, and more reliable.

It’s also important to recognise that increased ridership figures experienced by operators running a smart ticketing service can be attributed to the reduction in fare evasion and fraud. It’s almost impossible to quantify the exact revenue that this represents however.

Continuous improvement 

Implementing a smart ticketing service for the here and now is only a small part of a very large picture. Over the past decade, we’ve seen change right across the transport sector. Economic and environmental forces have put pressure on already strained public transport networks and innovations in technology have re-shaped customer behaviour and expectations. Governments and transport operators are under more pressure than ever before to make cities accessible to citizens, as well as meeting the needs of all stakeholders.

With new transport modes entering the industry, market demands call for more integrated networks, which in turn requires an integrated ticketing system. Smart ticketing, with its ability to scale and integrate, is making travel across multiple modes with one payment method, the way of the future. Many cities across the globe are now realising the benefit of this model, with strategies now outlining bold moves to multi-modal networks. As new modes enter, both public and privately funded they can now be easily integrated into the network without the need for large capital investment.

Continuous improvement doesn’t stop at just integrating more choices of modes. The sharing of open data and APIs across an entire city’s infrastructure means that public transport networks are able to develop a efficiently tackle the city’s key transport challenges.To learn more about how TfL are achieving continuous improvement, take a look at our on-demand webinar, co-presented by TfL’s Simon Reed.
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Now that smart ticketing has evolved far beyond the idea of simply creating an easy way to pay for public transport, cities are discovering more ways to capitalise on this digital platform. This digital revolution has the transport industry well-positioned to tackle the challenges that it faces as it moves through one of the most exciting phases.

For a more in-depth look at the role of ticketing within the transport industry, take a look at our ‘Changing role of ticketing’ resources including whitepaper and on-demand webinar.


Download the white paper

Watch the webinar