We haven’t heard much about progress on the implementation of Auckland’s integrated ticketing system recently, although I have been assured by ARTA that things are “coming along”. The winning tenderer, Thales, has set up an office in Auckland and it seems that things are slowly grinding into action. It would seem as though there will be a big push to get as much as possible of the integrated ticketing system operational by the time of the Rugby World Cup next year. This is utterly essential in my opinion, as our current fragmented ticketing system is an absolute joke that will make us the laughing stock of the world (along with our continuously breaking down trains).
However, perhaps what it even more important than implementation of the actual integrated ticketing system is the design of an integrated fare system for Auckland. What’s the difference between the two? Well the fare system will establish what kind of fares are available, whether we continue to have a “stage-based” system or shift to a “zone-based” system like there is in cities such as Melbourne and London, whether we have fare capping, what kinds of unlimited travel passes will be available and so forth. All the integrated ticketing part of this is getting the right software and hardware in place to implement the fare system.
I’m quite curious to explore what an integrated fare system would look like in Auckland. I have outlined my thoughts on this matter a few times in the past, as well as the matters what will need to be considered when putting together the fare system. It might be worthwhile stepping back from the end-point of coming up with various different types of tickets that should be available to answer some more fundamental questions, and then to examine possible options that would help achieve what the fundamental goals are. So let’s have a look first at what I think should/would be the aims of any integrated fare system in Auckland:
- Complete multi-modal and multi-operator integration (same ticket can be used on any bus, train or ferry in the Auckland region.
- The fare system should be designed to increase patronage and encourage more people to use public transport.
- The fare system should, in particular, make it easier for people to transfer between one service and another.
- The fare system should be generally revenue neutral compared to the current system, or if possible generate even more revenue.
- The fare system should seek to maximise the efficiency of the public transport resource.
- The fare system should ensure riders get ‘the best deal’.
Let’s look at each of these matters in turn in more detail:
Multi-modal, multi-operator integration:
To me this aspect is fundamental to creating an integrated ticketing system. Unless you can use your particular ticket on any bus, train or ferry then you don’t have an integrated ticketing system. However, in a way I don’t think it’s enough to simply say that there must be a ticketing option that works on all possible transport options, as we actually already have that in the form of the Discovery Pass (just that nobody uses it because it’s really expensive and incredibly poorly marketed). The point is that whether I buy a multi-journey pass, a monthly pass, a weekly pass or use a stored value system it needs to be valid on all buses, trains and ferries in the Auckland region.
I have a worry that what we could end up with is having an integrated stored value system, but any other ticketing options will remain in the disjointed mess they currently are. This would be similar to the situation where you can call a Telecom cellphone from a Vodafone one, but many of the special deals apply to the people you’re calling being with the same company as you. I wouldn’t want to see NZ Bus offering their own ticketing passes alongside a citywide integrated fare system as that would be incredibly confusing and not much better than where we are at the moment.
Increasing patronage:
Increasing patronage levels and encouraging more people to use public transport is, of course, the ultimate goal of any improvements made, and it will be a complex process to achieve this outcome. However, there are a few things that I think would encourage more people to use public transport, but perhaps even more specifically, to encourage those who do use public transport to use it more often. To get those who catch the bus or train to work during the week also catching them to shopping malls on the weekend. Or to get school kids using public transport to visit their friends after school and so forth.
There are a few ways I think a fare system could help achieve this goal. The first is to get as many people as possible purchasing “unlimited travel” weekly and monthly passes. Customers who purchase these passes are precious, in the same way as subscribers are precious to those who publish magazines and newspapers – because they are your core base. These people will want to get the best value for money out of their pass so they will want to use them as often as possible. This means that they might use public transport more at the weekends or in the evenings than they would otherwise, because they’ve effectively already paid for the trip. At the moment in Auckland it’s only really worthwhile purchasing a monthly pass if you live three stages or more from your destination, as otherwise the numbers stack up. If we had more options for unlimited travel passes then I think more people would use them (unlimited travel within a particular number of zones if we’re using a zone system for example.
Another way of boosting patronage is through time-based rather than trip-based fares. This links in with the point below about making transfers easier, because if one ticket effectively bought you two hours of travel, rather than one entry onto a bus or train, then the public transport system would become that much more useful to you as connecting services would effectively act as simple the second part to your trip, rather than another trip entirely. As I explained a few weeks back, this brings the network effect into play, which potentially hugely improves the attractiveness of public transport. Which leads to higher patronage.
Making transfers easier:
As noted above, one of the most important tasks of a new fare system will be to make the process of transfering easier. ARTA’s long term plans for public transport in Auckland do rely upon transfering between trunk and feeder services a lot more than we see at the moment, which is definitely the right approach so that resources can be used far more efficiently. However, as Paul Mees has said: “…from the passenger’s point of view, transferring between services is an inconvenience: requiring an extra fare for the disservice is like adding insult to injury”.
Having time-based ticketing, based around a zone system where the city is divided into chunks and passengers pay according to how many zones their trip passes through in a 2 hour, daily or whatever time period regardless of how many times they get on or off a bus or train is absolutely critical here. Unless our future fares system makes transfering dramatically easier then it will be a failure, no doubt about that.
Revenue neutral or better:
While ideally we would all like a new ticketing system to make our trips cheaper, I think it has to be recognised that ARTA does not have a huge pile of funding available to make up for any loss of revenue, so therefore the changes will have to be revenue neutral at worst.
Now this does not necessarily mean that fares have to go up. Mobile phone companies do not need to raise the per-minute rates for calling in order to make more money – what they do is try to offer options that will get people calling more often or using their phone for more stuff that is valuable enough to the user for them to be charged. The same sort of thinking should apply to public transport I think, in that there is a need to think cleverly about ways to increase revenue. For example, if you have 30 people willing to pay $5 for a particular trip, but 50 people would take the trip if it cost $4, then you’re actually pretty stupid to keep charging $5 for the trip as you’re effectively giving away $50 in revenue. I’m no expert of the price elasticity of public transport patronage in Auckland, but I expect that in the outer areas in particular big rises or falls in fares could make a big difference to possible patronage more than outweighing any benefit gained from increasing fares.
Another aspect to look at is what I hinted at earlier, in getting more people to buy weekly and monthly passes. Most people in Auckland at the moment who use public transport seem to use multi-journey passes or stored value passes, often because weekly or monthly passes don’t make sense. Many of these people will simply not bother using public transport at the slightest provocation (a bit of rain etc.) because they realise they can simply use that trip next time around. With more people using weekly or monthly passes they will feel as though they ought to catch the bus or train each and every day to make the most of their pass. This means that you’re getting full-time revenue out of that user rather than just occasional trips.
Maximise efficiency:
Just like all transportation resources, the demand for public transport is hugely higher at two points of the day than it is at any other times – namely the morning and evening peak hour. This is an incredibly inefficient use of resources in two senses. Firstly, it means that during peak times you need a lot of rolling stock, and in the case of trains you may need a lot of track capacity. If you’re running peak hour services at close to capacity and you attract another 100 people to use the service, then you’re going to need to buy two new buses to serve those people – even though you’re not going to need to use those buses at any other time of the day. The second way the peak spikes are inefficient is that during off-peak hours most of the stock rolls around fairly empty, meaning that fares really struggle to cover the costs of operating that service – leading to expensive subsidies being required.
The solution is to somehow spread those peaks a bit. Of course many people simply have to be at work by 9am, or at school or at university by a certain hour of the day. But a certain number of people probably would travel off-peak if there were incentives for them to do so. Unfortunately, at the moment on most routes the only time a decent frequency service is offered is during the peak hour so even those who don’t have to travel then are encouraged to do so, making the peak even more extreme. In terms of service provision, one can try to spread the peak by offering higher frequencies during the “shoulder-peak” periods of just before and just after peak hour, rather than buying another bus to operate at peak time. From a ticketing point of view, the solution in my opinion is to make a distinction between fares charged during peak hour and fares charged outside of peak hours. Perhaps fares between 7am and 9am, and 4pm and 6pm go up by 10%, while those outside those times are decreased by 20% (as more people travel during peak times the revenue might balance).
This would enable a far more efficient use of existing transport resources such as buses and trains.
Ensuring riders get the best deal:
There’s nothing more annoying that taking a few trips on public transport throughout a day and then discovering you would have been better off getting a day-pass. Or buying a day pass but then working out you would have been better off simply paying separate fares for each trip. Somehow you feel ripped off.
The solution to this is called “fare capping”, where you pay as you got up to a certain daily rate, and then you stop being charged for further trips. This is used on London’s Oyster Cards and is a fantastic idea that must form a part of Auckland’s future integrated fare system.
I’m keen for some feedback on these “overarching principles” for what our integrated fare system should look like. Perhaps in a future post or two I will try to put this into action and come up with something of a proposal for how ARTA should implement the future system.
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4. Revenue neutral or better: One of the touted benefits of these systems is lower collection costs a bit like the new toll roads. So guards on trains could move to a more service focus than necessarily collecting tickets, much like checking in with kiosks at airports, the staff are there to help rather than to “check you in”.
6. Ensuring riders get the best deal: In Tokyo, PASMO card users are able to purchase commuter zones loaded onto their cards so for a length of time (e.g. 1 month) any travel within/through their purchased commuter zone is not charged automatically as already covered by the pass component. Travel outside the zone is charged from a stored value balance.
Sydney, two good points there. Costs should be reduced quite significantly by not having to have so many staff aboard the trains. Of course you would still want one or two to keep an eye on things, but not the 4-5 you see on many trains at the moment.
I should look into how that PASMO card works, the idea of having both a monthly pass and the ability to pay as you go on top of that for unusual trips is an excellent one.
In terms of having a revenue neutral system there is a distinction to be made between short terms and long term revenue neutrality.
Any simplification of fares would result in a revenue drop on day one as those who transferred between services will no longer be penalised for this. Ie someone who catches a train from the suburbs, then a bus to midtown would no longer pay a fare for the bus journey.
In the longer term the extra revenue from simplification, as well as some cost cuts from less need for ticket collectors etc would outweigh these costs, but it may take a year or two for these benefits to start to kick in.
That means the farebox recovery would drop in at least the first year of having integrated ticketing.
I worry that with NZTA pushing their awful farebox policy that pressure will be on to ensure the scheme is revenue neutral from the start. This will lead to higher fares, or an inferior, complicated system that we will be stuck with for years to come.
The effects of the revenue drop will be even worse for the superior time based systems that are common in Europe, so unfortunately I dont think we will see those.
Marketing and distribution is everything. I have used the Discovery Pass on previous visits to Auckland; I like it, even though I think a better price point for it would be around $12. The product has very good coverage and it’s simple to use – so it could be used during the RWC.
The problem is getting it to people! Bus drivers don’t like selling them because of the time it can take when you are loading a bus – much better to sort out a distribution mechanism through the shops, like buying phonecards and topup cards for a mobile. (Also, a scratchcard system whereby you pick out the date you are using it on).
Other ideas – developing a weekly pass product. I used one when I was in Budapest recently – it’s a paper ticket, no more complicated than that – but on it you could go just about everywhere. Perfect for the tourist market, sell it through backpackers and hotels.
I use a monthly pass on the train and it makes things much easier, I can think of two examples in the last month where it has been useful.
1. I needed to pick something up from Newmarket on the way home, I was only going to be there for 10 mins or so but without the pass that would have cost me an extra fare.
2. We went to the cricket on Saturday and neither of us wanted to drive so the train was the best option, having the monthly pass meant there was no extra cost for us to do this.
SyndeyHAT – last time I used the Oyster (’05-’06), it also had the zone pass for a period + topped up money on top of that if you strayed outside of your chosen zones. V. handy.
“This is utterly essential in my opinion, as our current fragmented ticketing system is an absolute joke that will make us the laughing stock of the world”
The rest of your post is a pretty good summary of what is needed. But I don’t think the implementation should be hurried for one special event. In terms of the number of people who use public transport on a regular basis, the added number visiting from elsewhere for a few rugby games is insignificant. Being a laughing stock (which I’m not convinced is true) isn’t a good reason to risk a rushed and botched implementation, or to drive up costs because you need to throw bodies at a quick implementation. The project is too important to be risked like that.
Myki has been running for six years now (since tender) and it still has problems. Can Auckland do it in two? Maybe, but is it worth the risk?
I should add I actually think the cost of train and bus tickets for RWC should be included in the cost of the match ticket. That was train or bus normal operational use
Certainly we don’t want to rush things obi, but some sort of integrated ticketing system for the RWC. That may not have to be the full smart-card system we’ll eventually end up with.
Matt L: “I should add I actually think the cost of train and bus tickets for RWC should be included in the cost of the match ticket.”
What would be the cost of making trains and buses free to everyone on match days? You could paint it as an act of contrition for poor performance in the past, as was discussed a few days ago here.
When I read this ARTA website:
http://www.arta.co.nz/publications-projects/projects/auckland-integrated-ticketing-system.html
It doesn’t give me a lot of confidence that a true integrated fare system is going to be established. Aspects of an integrated fare system are alluded to, but it is pretty non-committal. I guess it will come down to negotiation with the private operators.
Am I being too pessimistic??
One thing that must be considered is the fact that any ticketing system no matter how modern or technological is at the end of the day simply a revenue collection mechanism.
Buying tickets in any form has absolutely no benefit to the user, it is always an inconvenience not an aid. So a ticketing sytem can only be measured in how small or large that inconvenience is. Really any talk about increasing patronage and transfers relates to how much less a ticketing system prevents people from travelling or transferring. I.e. an itegrated ticket won’t promote people to use public transport or transfer between services so much as it will dissaude them from doing so to a lesser degree.
The only beneficiary of ticketing is the operator and the state, the ease of collecting there fares is a core part of business efficiency while ticketing policy can be used to manage demand…. however right now in Auckland arguably the goal should be to grow demand in any form.
“I.e. an itegrated ticket won’t promote people to use public transport or transfer between services so much as it will dissaude them from doing so to a lesser degree.”
Still, it (integrated ticketing) has a lot of power for benefiting patronage. Whether you remove an impediment or provide an incentive is, at the end of the day, almost irrelevant, as the two things can both work equally powerfully.
And from a more corporate viewpoint, making it as easy as possible for the customer to part with his money (in this case to buy PT services) was always a smart marketing thing.
I think simpilicity is key, anyone should be able to understand how to buy tickets to use any form of PT in Auckland to get anywhere in under a minute…
Max, I would argue that there is a vital difference between providing incentives and removing impediments.
To get people to use something it needs to be both attractive to them (i.e. have those incentives) and be low on impediments (i.e. not difficult to use). You can make something very simple to use but if it still isn’t attractive to people and doesn’t meet their needs they aren’t going to use it.
In the case of Auckland, there will be some patronage growth if the financial penalty to tranferring is removed. There are plenty of people around the central area particularly who could make an easy connection to improve their trip. Say someone coming in from the suburbs who is heading to Newmarket or Ponsonby rather than Queen St, right now they might baulk at paying a couple of extra bucks to go a few more kilometres.
However for the most part having a penalty-free transfer ticket isn’t going to make connections magically work for people, it’s not going to co-ordinate the timetables, it’s not going to make the routes link up at the same stop, it’s not going to improve the frequencies so people don’t have to stand at the bus stop for twenty minutes. A few people might be a bit more willing to overlook these problems with a free transfer, so it is an incentive in that regard, but on the whole just removing the financial impediment to transferring isn’t going to make connecting significantly more attractive on most routes.
So getting rid of the transfer penalty is the first step and a very worthwhile one, but unless they back it up with the right routes and timetabling it isn’t going to make a revolutionary change.
Josh
Great post. I think you’ve nailed the key elements
A couple of thoughts on it
1. There is a tension between public transport capacity at peak and the revenue neutral argument you made. In short, the telcos are able to run different usage deals to shift traffic off the peaks as the networks are build for the peak. In effect at off peak, the capacity is still there and getting people to use it in off peak also drives up higher margin calls at peak. Also be careful of comparing the two. At peak in a mobile network you just press send again if your call didn’t get through due to congestion. Missing your bus hurts a lot more than that. In a PT scenario you have significant variable costs in operating your services at ‘peak’ for the whole day – in particular salaries and fuel – so I don’t think you’ll end up with your full capacity to use to make these off peak type deals. Personally, being able to tell someone intelligently that if they chose some other options than their regular service, they’d end up with better connections, shorter transit times or even a better chance of a seat, might be more appealing.
2. Revenue neutral or better – this is a major for Auckland. The current RPTP predicts a deficit of $60m despite government funding, increased fares and increased patronage. Its going to be hard for ARTA to manage transfer discounts, capping etc unless they charge more, which will obviously not help increased patronage. Somewhere either subsidies for operators are going to drop, services will need to be cut or more funding sought from the government. Given NZTA’s signal that it wants to increase farebox recovery. Luke’s point is a good one – there needs to be a path towards this. The problem is that the current plan says that over 10 years it won’t happen.
3. Risk management – we made submissions on the RPTP on this. You have to nail down your future fare policy as fast as possible prior to implementing a new system. Our understanding of the current plan is that ARTA will simplify the existing stage based policy (basically remove some products), implement the new system, sort out a zone based system as you have described, and then reshape the technology to cope with this. It goes against good IT project deployment practices which are simple – get your scope sorted out, build it once, build it right. From talking to the TTA last year who deployed Myki in Melbourne they were very clear – this was the number 1 reason why they were so late and overspent so much. In effect they had to build their system twice.
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