FREE CONCESSIONARY TRAVEL Are smart cards going to help?

2. FREE CONCESSIONARY TRAVELAre smart cards going to help? Chris Brown Managing Director MCL

3. 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

4. Travel Concessions • Two basic types: • Pass (proving entitlement to a discount) • Cash value (fixed contribution eg in theform of tokens or vouchers) • Passes are the basic statutory entitlement; • Discretion exists to enhance the statutory minimum or offer a cash value alternative.

5. 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;

6. 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.

7. 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.

8. Why do these impacts bother us?

9. 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

10. Smart Concessions

11. 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?)

12. 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

13. Benefit Streams • Users • Scheme Administrators • Transport Operators

14. 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)

15. 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).

16. We lose the one big benefit – the virtual elimination of surveys which are now still needed for free travel

17. 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).

18. 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

19. 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.

20. 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.