FREE CONCESSIONARY TRAVEL Are smart cards going to help? Chris Brown Managing Director 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.