3 Overview of the Current Position

3 Overview of the Current Position

3.1 Introduction

3.1.1 This chapter is written by PwC in order to provide the context of Smart and Integrated Ticketing in relation to:

  • The Scottish landscape in terms of modes of travel, public transport demand, public transport operator models;
  • Current operator models in Scotland;
  • An overview of current ticketing practice in Scotland, the UK and other parts of the world;
  • Other factors which would influence any potential smart and integrated ticketing solution in terms of technology and fares;
  • Future developments such as Department for Transport strategy and delivery, industry trends and technological developments;
  • Ticketing at multi-sport events;
  • Existing and planned infrastructure; and
  • Operators’ view of smart and integrated ticketing in Scotland.

3.1.2 At the end of the chapter, an analysis of the key issues for consideration in determining the way forward for smart and integrated ticketing is given.

3.2 The Public Sector Transport Landscape

3.2.1 The Scottish landscape for public transport, and hence ticketing, is characterised by a number of key features that affect the potential success of Smart and Integrated Ticketing.

  • The preferred mode of travel in Scotland by trip volume is by car with 67% of commuters using the car to travel to work19. This is in contrast to many other case studies on travel ticketing, where public transport is already the preferred mode of travel and where the intended strategy is to seek a critical mass to adopt Smart Ticketing i.e. the issue is to move existing passengers to a different public transport ticket type, rather than to generate more public transport passengers. This already indicates the nature of the challenge facing Scotland with a need for modal shift from cars to public transport being a key element of transport policy and also a crucial requirement to create critical mass for a sustainable business model for Smart and Integrated Ticketing;
  • Only in Glasgow and Edinburgh is use of public transport of significant volume (accounting for over 80% of public transport trips in Scotland20), and even in these conurbations there is significant choice of modes or operators. As a result, though there may be certain demand for Integrated Ticketing in rural areas, it may only achieve significant volumes in Glasgow and Edinburgh. Most ticketing case studies to date have focussed on the benefits of Smart and Integrated Ticketing in urban environments – previous case studies and an available case for a national ticketing strategy which includes rural areas is less clear. This may mean that the stated aim for full national coverage of Smart and Integrated Ticketing may not be deliverable in the near term albeit this could remain as the ultimate goal;
  • The predominant public transport mode in Scotland is bus travel (accounting for approximately 80% of public transport trips). This means that addressing bus ticketing is a key component of any strategy for Scotland; and
  • Bus services in Scotland are deregulated, meaning that operators can determine their fares and ticketing solutions. A key challenge will be to identify how a strategy may be affected when Scottish Government does not have direct control over bus fares and ticketing approaches and pricing. Rail ticketing is subject to rail industry agreements and the terms of the franchise agreement which is specified by Scottish Government.

Demand for Public Transport in Scotland

3.2.2 Current demand for transport ticketing in Scotland is concentrated in the major cities of Glasgow and Edinburgh. In total there are some 563 million trips (excluding air and non-local coach/bus services) per year on public transport (Scottish Transport Survey for 2009, Scottish Government, December 2010) for which a ticket or pass would be required. These trips were analysed as follows:

Table 3.1: Public Transport Usage Distribution

Mode

Passenger Trips In Year (2009) Million

Percentage of Trips

Ticket Revenue £ Million

Percentage of Known Revenue

Local Bus Services

467

82.8%

62621

67%

Rail

7722

13.7%

30723

33%

Subway

14

2.5%

Not available

-

Ferry

6

1.1%

Not available

-

Total

565

100%

933

 

Source: Scottish Government STS2009, published December 2010.

3.2.3 For the purposes of developing the approach to Smart and Integrated Ticketing, passenger trips would need to be analysed by region in order to determine whether there is the sufficient public demand. On the basis that Glasgow and Edinburgh account for over 80% of passenger trips, these areas would be the most viable in the short term.

3.3 The Operators

Operator Models

3.3.1 The key current modes of public transport in Scotland are subway, rail, ferry and bus. Each operates in a different environment as follows:

  • Subway: the only subway system in Scotland is in Glasgow and is operated by Strathclyde Passenger Transport. The subway carries some 14 million passengers per annum24;
  • Rail: rail services are operated by First ScotRail through a franchise agreement managed by Transport Scotland on behalf of Scottish Ministers. It was awarded by SRA, with rail powers transferred after the award. In addition there are the following cross-border operators: East Coast, Virgin, Arriva and First Trans Pennine;
  • Ferries: most ferries operate on the basis of contracts awarded by Scottish Government; and
  • Bus: the bus industry is de-regulated with multiple operators operating in direct competition throughout Scotland.

3.4 Overview of current ticketing practice

Paper-Based Tickets

3.4.1 Transport ticketing has traditionally used paper-based media. Paper tickets are inexpensive to issue, their printed nature means they can be understood easily by travellers and inspectors without complex equipment and they can be processed through an automated gate where a magnetic stripe is also printed on the paper ticket. The terms and conditions can also be incorporated onto the ticket. This type of ticket has been in use for over 20 years in the UK and many other countries.

3.4.2 Transport ticketing in Scotland relies primarily on magnetic stripe paper tickets which are accepted on buses, rail and the subway. Very few railway stations are gated and the primary means of ticket inspection is manual. Any move away from paper based tickets will require investment in infrastructure on rail and some enhancement to the already deployed bus ticketing infrastructure.

Smart Ticketing

3.4.3 Smart card tickets are essentially plastic cards with a "chip" embedded – the "chip card". They have evolved from the first "chip card" designed in 1968 through a series of parallel market developments in channel automation, access control and improved payment security.

3.4.4 A key difference for the transport customer is that smart cards rely on an electronic reader to check the account balance and usage, or on the customer being able to view usage and the remaining balance on the web or a paper statement. To date, there has been limited investment in Scotland in platforms of this nature. As a result, the smart cards in use in Scotland are used primarily for simple fare products such as season tickets and fixed passes such as Lothian Buses proprietary smartcard system for season tickets which has been operational since 2002 and has some 60,000 customers with cards; and the concessionary fares scheme which has issued smart cards to 1.2 million customers.

3.4.5 There are many potential benefits of a smart card in comparison with a paper-based ticket. Appendix 2 provides a more detailed statement of benefits, but they include:

  • Faster processing of customer transactions;
  • The ticket is more robust;
  • The value on the ticket can be more secure. If the card is lost it can be deactivated and the stored value transferred;
  • The ticket has the potential to store more complex information such as information about trips. However, a reader or web-based account is needed for the customer to be able to access the information gathered;
  • The smart card can transact in an automated way reducing the need for staff to view the ticket; and
  • Because plastic cards are less prone to becoming caught in machines, they increase life of the infrastructure thereby reducing maintenance costs.

Integrated Ticketing

3.4.6 Integrated ticketing, in a general sense, refers to ticketing that is valid on more than one operator and/or mode of transport25. Within this broad definition it can take a number of forms, including the use of a common payment mechanism; a single ticket on different operator services; a single ticket across different modes; or combinations of these three elements. Examples of each are discussed below.

3.4.7 Integrated tickets have been in place for over 30 years, largely in paper form. They have operated mostly where a single transport authority has sufficient control to oblige operators to accept a common ticket or where the authority has negotiated with private operators to have a single ticket accepted. There are a number of examples of integrated tickets operating internationally. Details of these are provided at Appendices 4 and 5.

3.4.8 The primary benefit of an integrated ticket is for the end–user who can choose from multiple modes or operators to take the most convenient travel route without having to purchase a new ticket at each interchange. Because of this convenience, tickets are often priced at a premium meaning the total cost may in fact be more than for single journeys (depending upon journey numbers).

3.4.9 The integrated tickets currently in operation within Scotland are as follows:

  • The "SPT ZoneCard" operates within the Strathclyde area and serves bus, train and subway. The ZoneCard is a pre-pay period ticket and operates alongside proprietary operator tickets. The ZoneCard take up is low at only 4% of public transport trips within the SPT area using the ZoneCard;
  • "Oneticket" provides bus and rail travel within one ticket independently of operators. It is priced at a premium according to a set of rail based zones and is available in weekly, monthly or annual forms. It is provided by a partnership between SEStran and the operators in the Edinburgh area;
  • Daytripper is a one day pass valid after 9am and operates on all SPT services - rail, bus and subway. It is priced as a premium product but allows 2 adults or 1 adult and 2 children to use the ticket;
  • "Plusbus" provides a bus ticket as an addition to a rail ticket. The bus ticket is valid on bus routes connecting with each end of the rail journey and offers savings on individual rail and bus fares. It offers day tickets and season tickets;
  • Roundabout is valid on rail and subway and is also a one day ticket valid after 9am. It works cross operator;
  • The "Highland Rover" provides a period ticket (i.e. a ticket which is valid for a specified period of time) which is valid on specified routes for rail, ferry and bus/coach. It covers multiple bus operators. It is a premium product with a defined start and end date; and
  • The "Freedom of Scotland" pass provides a period pass which is valid on specified routes for rail, ferry and bus/coach. It covers multiple rail and bus operators. It is a premium product with a defined start and end date.

Smart and Integrated

3.4.10 There are few examples of smart and integrated ticketing schemes where the card is a dedicated transport card and serves multiple operators and modes. The schemes with most scale include:

  • Oyster in London – operating in a regulated fares environment (except for the rail element); and
  • OV Chipkaart in Holland – still in the process of being implemented (operating in a regulated fares environment – see Appendix 5 for more detail).

3.4.11 However, where the card used is a more general payment card issued by a bank or payment card operator, there are many more examples of Smart and Integrated Ticketing including:

  • In Buenos Aires, Monedero (meaning wallet in Spanish) is a payment card for use on buses, subway and trains. It can also be used in shops with low value transactions: for example, coffee shops, pharmacies, bookshops/newsagents. It serves over 2.5 million users and has been in place since 2002;
  • In Hong Kong, Octopus has migrated from being a transport specific payment card to being a more general payment card with many retail and service outlets accepting the card. It handles over 15 million transactions per day; and
  • The Suica & Pasmo payment cards in Japan, which serve rail and bus travel in the Tokyo metropolitan area, as well as allowing the purchase of other products and services at retail outlets.

3.4.12 In these cases, the applicable fare is regulated, but the smart card payment element is only defined to the extent required to be recognised by ticketing gates or readers. In all three cases, the development was led by a payments industry-focused organisation (rather than transport-focused organisation) willing to become both card issuer and back office transaction processor, and by taking the lead in managing customer outlets and payment and collection risks.

3.5 Technological Solution

3.5.1 The Department for Transport developed ITSO initiative is intended to deliver secure and interoperable smart and integrated ticketing across operators and geographical boundaries. The Scottish Government has already invested in ITSO-based technology to operate the Concessionary Fares Scheme, which means that all buses used for public transport in Scotland already have ITSO-compliant technology in place. In addition, First ScotRail is in the process of trialling an ITSO compliant smart card between Edinburgh and Glasgow. This investment, along with the public support of DfT for ITSO technology makes an ITSO-based solution an obvious technology option.

3.5.2 Elsewhere in the UK, bus operators are increasingly investing in ITSO technology to promote smart commercial ticketing. Stagecoach for example, is playing a leading role in this, which further helps evolve ITSO to a robust, commercial ticketing platform.

3.5.3 However, ITSO is a developing solution that is mature for some types of ticketing product but has yet to be proven on a large scale with other types. To date, it has been used for relatively simple transactions such as:

  • Concessionary fare ticketing in Scotland and England – this is a relatively simple transaction and is mature; and
  • Season tickets – a simple transaction involving start and end dates and is relatively mature.

3.5.4 The ITSO standard is designed to enable interoperability between ticketing schemes, though on balance it is focused primarily on the card transaction with the reader, rather than the back-office processing model. In our view back office and inter-operator clearing design is also important to enabling interoperability. Back-office and clearing between operators are key drivers of the cost of collection; the immaturity of the ITSO back-office development means that there are also no mature economic models for ITSO covering typical costs of collection, back office processing and inter-operator clearing to use as a reference for an ITSO-based solution in Scotland.

3.5.5 Though the latest version of ITSO is 2.1.4 (published in February 2010), the version installed on bus ETMs and on ticketing systems for the First ScotRail trial is largely version 2.1.3 which does not provide the same degree of interoperability that would be required for a national multi-modal scheme. The installed equipment is progressively being upgraded to meet version 2.1.4.

3.5.6 ITSO’s capacity to overcome the issues highlighted above is the subject of a new business plan being developed by the ITSO Board. Much of the outcome of this plan will rest on DfT’s sustained commitment to the standard and preparedness to provide funding as well as ITSO’s ability to deliver its development plan.

3.5.7 Whilst other technologies exist they do not offer the same level of interoperability. Given the level of investment in and support for ITSO, ITSO remains the most obvious solution.

3.6 Fares Structure

3.6.1 The nature of the fares structure in operation has a direct impact upon the technology needed for smart and/or integrated ticketing:

  • "Single touch" card transactions: Lothian’s smart ticket scheme operates on a flat fare basis. This means a "single touch" transaction on boarding is all that is needed to deduct the correct fare from the smart card. In London, bus services also have a flat fare structure meaning the Oyster transaction on board is a relatively simple single touch on entry also. In Glasgow, fares vary depending upon the length of the journey which would require the fare due to be stated on boarding to allow it to be deducted if a smart card was to be used. Touch out technology is not currently in operation on buses in Scotland;
  • Premium priced products: integrated tickets are typically priced at a premium compared with the price of a single mode or trip ticket to reflect the convenience of the card, as with the SPT ZoneCard. The price premium is a key driver of potential take-up. If the premium is relatively small, customers may be more likely to buy the integrated multi-trip/multi-mode product. In the case of the ZoneCard, take up is for only 4% of trips, suggesting that the premium may be pitched too high; and
  • Touch on/touch off transactions: In comparison, distance-based fares have been implemented for the Dutch OV Chipkaart scheme (Appendix 5) with a requirement for customers to touch out on all modes. One of the key reasons for the Dutch implementing the smart card was to introduce a fare structure that better reflected journey distance than the existing "strip card" scheme which has fare stages in zones that are on average 4.5km wide. In the Dutch case, the requirement for exit readers is within the control of the transport authority to specify as the ticketing arrangements are regulated.

3.7 Ticketing at Multi-Sports Games

3.7.1 There is an increasing trend for the use of smart card technology for a wide range of purposes. In particular, multi-sports games events such as the Olympic Games and the Commonwealth Games are considering the increased use of technology for access and travel to events. Given the hosting of the Commonwealth Games by Glasgow in 2014, there is a potential opportunity to use the event as a stepping stone for the implementation of a national ticketing strategy.

Table 3.2: Multi-sport Event Ticket Approaches

Games Event

Number of Venues

Spectators (Million)

Transport Ticketing Approach

London 2012 (OG)

29

7

Paper based ticketing for events. Free travel on the day on public transport

Delhi 2010 (CG)

18

1.7
(estimated)

Event tickets separate from transport tickets. Event tickets accepted on metro and buses.

Beijing 2008 (OG)

37

8

First RFID based Olympic ticket. 1,000 RFID readers in place. Separate AFC card for metro and buses + Beijing SuperPass

Melbourne 2006 (CG)

16

2

Free travel on the day of the event based on presentation of the games ticket

Athens 2004 (OG)

35

3.6

Paper-based ticket. Free travel on the day on public transport.

Manchester 2002 (CG)

15

1

Paper-based ticket. Free travel/park & ride on the day on public transport.

Sydney 2000 (OG)

19

6.7

Paper-based ticket. Free travel on the day on public transport.

3.7.2 Further details of four Games Events are provided at Appendix 6 (Delhi 2010, London 2012, Beijing 2008 and Torino 2006).

Glasgow 2014 (Commonwealth Games)

3.7.3 The 2014 Games in Glasgow will draw significant numbers of spectators and visitors to the city, creating a significant spike in public transport demand for a concentrated period and also affording Glasgow the opportunity to showcase its public transport network.

3.7.4 Initially, there was an aspiration to introduce integrated transport and event ticketing as a means of offering an improved customer experience at the Glasgow Commonwealth Games (Appendix 1, Ref 26). However, Glasgow 2014 has since stated that smart travel ticketing is not central to their ticketing strategy for the Games. They have also expressed concerns over the risks associated with new technology and consider that their aspirations can be delivered in a more appropriate way, perhaps along the lines envisaged for the London Olympics in 2012.

3.8 Existing and Planned Infrastructure

3.8.1 Concessionary Fares infrastructure has already been implemented throughout Scotland on some 6,300 buses with 7,128 ITSO electronic ticket machines (ETMs) and 1.2 million Concessionary Fare ITSO smart cards issued. Lothian Buses has implemented a smart card scheme based on the 1k Mifare card (the same card type as Oyster) and has 60,000 customers using a proprietary ticket format.

3.8.2 However, the current framework contract for supply and maintenance of the on-bus ticket readers has expired and may need to be re-procured, as will the existing AMS/HOPS contract (assuming TS continues to be responsible for the installed Electronic Ticketing Machine equipment). This presents a key opportunity to bring together the supply and maintenance activity with other ticketing needs within a wider ticketing operation.

3.8.3 The main established plans for future smart card infrastructure are:

  • The First ScotRail Pilot on the main Edinburgh and Glasgow route commenced initially with staff testing the infrastructure. The pilot has been expanded to include customers (from May 2010) with the trial of weekly and then monthly season ticket products on Smartcards. The existing ticket gates at Waverley, Haymarket and Queen Street have been smart enabled and platform validators have been installed at interchange platforms and other stations along the route enabling customers to ‘hold and hover’ over the yellow smart card target to record the start and end of their journeys and pass through the gates where applicable. After initial testing, the intention is to expand the scheme to up to 10,000 Smartcard holders. As of Jan 2011, there are understood to be 400 season ticket customers signed up. The infrastructure and contracts in place are compliant with ITSO version 2.1.3. The outcome of this pilot and indeed TS’s ticketing strategy will need to form part of the consideration for the specification of the re-procurement of the ScotRail franchise, with re-procurement starting in 2011 and commencement of the new franchise from 2014;
  • The procurement by SPT of a new ITSO-compliant ticketing system and gates and barriers for the Glasgow subway, serving 15 stations. This tender has been re-issued. The specification requires that the ticketing gates and systems are implemented within 2 years of contract award. The contract has not yet been awarded; and
  • SPT has also submitted an OJEU notice for the procurement of a new back office (AMS/ HOPS) serving not only the Subway, but potentially other areas. This project is understood to be running in parallel with the procurement of gates however plans have yet to be confirmed.

3.8.4 Other plans are more tentative and include:

  • Individual local authorities are considering what services they will provide on ITSO-based entitlement cards. These include Dundee and Dumfries and Galloway;
  • Lothian Buses may refresh its infrastructure as part of a migration away from the current 1k Mifare proprietary card towards a more robust smart card system within the next 2 years. It may also take the opportunity to implement a CRM system so that customers can have access to their usage history and accounts; and
  • SPT has approved a programme of investment over thirty years in the Subway for new rolling stock, ticketing, gates and barriers, and refurbishment of stations. It is understood to be liaising with Scottish Government on these plans. However, the extent and precise timing of the investment that will be made is not yet clear.

3.9 Operators’ Views of Smart and Integrated Ticketing

Subway

3.9.1 The Glasgow Subway is operated by SPT, which already has an integrated ticketing product (the SPT ZoneCard) in place, albeit paper-based. Following discussions with SPT, the prospect of Smart and Integrated Ticketing within Strathclyde has been considered already. Indeed SPT is progressing its plans to implement Smart Ticketing on the Subway, with a view to making the ZoneCard smart at some point in the future. This may provide SPT with the opportunity to increase patronage, potentially through a higher number of multi-modal journeys, although the driver for the change is the need to replace an outdated magnetic stripe ticketing system.

3.9.2 On the basis of our understanding of SPT’s position, there does not appear to be a need to undertake any further development of the commercial case for inclusion of the Subway as it is already supported.

Rail

3.9.3 Rail services throughout Scotland are operated by FSR, with the current franchise operating until 2014. FSR is currently trialling a Smart product on the Edinburgh to Glasgow route and as such is gathering experience on the costs and benefits of such technology.

3.9.4 In terms of the rail commercial case, it is important to note two points. First, there is only one rail operator in Scotland (with the exception of cross-border services). Second, rail services are delivered through a franchise which is controlled by TS. TS could therefore initiate negotiations to bring about variations to the franchise to include Smart technology. Alternatively, this could be included as part of the next rail franchise.

3.9.5 Taken together, it is clear that there are available mechanisms to facilitate the participation of FSR in a smart and integrated ticketing scheme. Clearly, there may be financial implications for TS of varying the existing franchise terms, as there would be with any contractual variation. However, the key point to note is that it is within the gift of TS (perhaps at additional cost) to achieve FSR/next operator buy-in and hence availability of rail to the scheme.

Ferry

3.9.6 This mode has been excluded from further evaluation at this stage at the request of TS, as there are some unique issues around using smartcard equipment in a marine environment.

Bus

3.9.7 Within the bus mode, a significant number of commercial bus operators would need to be involved in the scheme.

3.9.8 Given that a deregulated bus market is in place within Scotland and based on interviews with certain operators, it is clear that operators will only participate willingly where there is a clear commercial rationale for them to do so. The challenge then in developing a Business Case for smart and integrating ticketing is to explore how these operators can be brought on board. This requires a detailed understanding of the operators’ commercial concerns regarding Smart and integrating ticketing and of how these concerns can be addressed, drawing on wider experience of models that have been used elsewhere.

3.9.9 This element is critical - in order for integrated ticketing to be multi-modal and multi-operator in a way that can truly deliver benefits, full commitment must be secured from the commercial bus operators. However, it is possible that buy-in from one of the major operators (e.g. First Glasgow) could be enough to trigger others to follow suit, such is the effect that this participation in a smart and integrating ticketing scheme could have on the wider market.

3.9.10 To gauge views in the Scottish market, a series of interviews with two major operators was undertaken. Prior to engaging with operators, the potential aspects of the operator case were tested with senior industry advisers at Scottish Government Transport Directorate. Interviews were held with the following bus operators to understand their reaction to potential options for Smart and integrating ticketing:

  • Lothian Buses; and
  • First (Glasgow).

3.9.11 Whilst certain other operators were approached, they were unable to make time available because of other pressures they were facing, particularly in relation to responding to the ongoing Competition Commission review into the bus market26. Detailed discussions with both the named operators have added an additional dimension to the bus operator knowledge base, allowing the potential benefits and principal concerns regarding Smart and integrating ticketing from an operator perspective to be identified.

Potential Operator Benefits:

3.9.12 A number of potential benefits are set out with the DfT’s Smart and integrating ticketing Strategy (See Section 2 and Appendix 2). Those which are most pertinent to bus operators are as follows:

  • The potential to increase the use of public transport, and by implication bus usage, through a modal shift from cars;
  • The potential to achieve cost savings through reduced journey and dwell times; and
  • The potential to access detailed passenger journey information.

Emerging Operator Concerns:

3.9.13 In spite of the potential benefits identified, views expressed by some bus operators (see Appendix 7) suggest that bus operators are generally sceptical of the concept of integrated ticketing. Neither of the operators who were engaged in the process indicated plans to implement smart integrated ticketing themselves. Key concerns were as follows:

  • Integrated ticketing would increase competition between bus operators and other modes of transport thereby threatening market share;
  • Loss of the direct relationship between operators and customers; and
  • Depending on the source of funding, the costs of introduction and maintenance would outweigh the benefits from a commercial perspective.

3.9.14 The operation of a deregulated bus market in Scotland means there are limited levers available to encourage or compel operators to participate in any Smart and integrating ticketing scheme.

3.9.15 In addition the bus market is currently under review by the Competition Commission and the outcome of that review is not yet known. Operators are unlikely to consider radical changes until the implications of the review are known.

3.9.16 Certain operators already have their own multiple trip tickets or Smart tickets in place and do not want to lose their market share or invalidate their original investment in these products. The competitive nature of the bus market also means that fares vary between operators. This would make revenue allocation challenging, given that operators are reluctant to share their fare information, albeit this would not be insurmountable.

3.9.17 Bus operators are also sceptical of some of the key benefits cited, particularly on boarding time savings, reduced dwell time and cash handling, where no directly comparable evidence of achievement could be identified or cited.

3.9.18 At a wider strategic level, operators have concerns that national and local transport policy and planning do not consistently promote bus travel and that as a result potential bus users are using cars. Bus priority and other measures would need to be applied consistently across Scotland to encourage a modal shift.

Addressing Operator Concerns

3.9.19 To address some of these concerns and also to identify how it might be possible to motivate operators to participate, the potential measures that may overcome these barriers have been considered. These measures are set out in greater detail in Appendix 8 where the nature of the measures and their potential applicability are described in a Scottish context. In essence, the incentivisation models we have identified fall into one of the following five groups:

  • Provide subsidies;
  • Promote operator products;
  • Provide ticketing infrastructure;
  • Mitigate costs; and
  • Introduce disincentives for non-participation using levers such as Bus Service Operator Grant

3.9.20 There are a range of potential ways of incentivising available across these five areas. However the levy by the public sector, in essence, all require either direct public sector investment and a clear articulation of the benefits to operators or some form of disincentive for non-participation.

3.9.21 Further assessment by TS will be required to confirm the availability of public sector funding and validate that these measures would have the desired outcome in terms of participation by operators.

3.10 Analysis of Key Issues

3.10.1 This chapter has set out the landscape for smart and integrating ticketing. This analysis and information has highlighted a number of factors that will need to be considered in terms of determining the way forward for smart and integrating ticketing in Scotland.

Scottish Transport Experience (section 3.2)

  • The majority of journeys in Scotland are undertaken by car, meaning that a modal shift to public transport will be required to maximise uptake of smart and integrating ticketing;
  • The majority of public transport journeys are in Edinburgh and Glasgow (and close surrounding areas). This may make these areas more suitable for initial implementation of a smart and integrating ticketing policy; and
  • Over 80% of journeys by public transport in Scotland are by bus. The bus market in Scotland is de-regulated with multiple operators working in competition. A smart and integrated scheme will require the full support and participation of the bus operators if it is to succeed.

Ticketing Practice (section 3.4)

  • Smart ticketing is well established in urban centres around the world where there are multiple public transport modes, trip options and high volumes of usage. However, it is not yet proven as cost effective solution in national, rural or low usage scenarios;
  • Smart and integrating ticketing has been most successful when a single authority has taken the lead by implementing or setting a technical and fares standard in a regulated rather than a de-regulated environment. It has been most successful where the ticketing provider has had a payment industry rather than transport provider focus; and
  • In Strathclyde, SPT has taken the lead role in establishing an integrated ticket (the ZoneCard) through dialogue with each operator. As with other integrated ticketing products, it has been priced at a premium. This has limited take-up to 4% of trips in the area, illustrating the importance of the pricing strategy in optimising usage of integrated ticketing products.

Technological Solution (section 3.5)

  • The Scottish Government has invested in ITSO technology for the concessionary fares scheme on the basis that it could also provide the interoperable platform required to support smart, integrated ticketing for commercial ticket products in the future. However, while this is a clear strategic objective the ability of ITSO to deliver to the requirements of a wholly smart and integrated scheme of the scale required has not been fully tested and should be factored into any decision making process.

Fares Structure (section 3.6)

  • Smart and integrating ticketing that is wholly automated requires technology to allow passengers to "touch on" on boarding and "touch off" on disembarking. This would require investment in exit readers on buses and buy in from operators.

Ticketing at Multi-Sports Games (section 3.7)

  • No multi-sports games have yet chosen to use a smart and integrated transport and event ticket. To do so for Glasgow 2014 may represent an unnecessary and riskier development than required or sought by the 2014 Operating Company.

Existing and Planned Infrastructure (section 3.8)

  • There are a diverse set of smart card projects on the horizon which result in a number of infrastructures. This will need to be considered in deciding a future delivery model for smart and integrated ticketing.

Operator Views (section 3.9)

  • Bus operators, whose active participation is essential, remain to be convinced of the benefits of or commercial case for integrated ticketing. However, they are already introducing smart technology for their own products and a case for a smart rather than smart and integrated solution may be viewed as more viable at this time.

3.11 Conclusions

3.11.1 The analysis of the current landscape in relation to smart and integrated ticketing has highlighted some key issues in relation to the way forward. In particular:

  • Whilst G2014 was originally seen as a driver for a smart and integrated ticketing scheme, the aspirations of the Organising Committee can be met in a less ambitious manner;
  • The deregulated nature of the bus market in Scotland and its dominance in terms of public transport journeys means that the commitment of bus operators to smart and integrated ticketing is vital to its success. Bus operators, whilst supportive of smart ticketing, are less convinced by the arguments in favour of integrated ticketing;
  • The investment already made in ITSO infrastructure and the commitment shown to it so far by DfT and TS, supports its choice as the obvious technological solution for a smart and integrated ticketing scheme. However, it is not yet fully proven on a scheme of this scale and complexity;
  • The total number of journeys by public transport in Scotland is 563 million, equating to an average of 1.5 million journeys per day in Scotland. This is significantly lower than the 10 million daily journeys in London, of which 75% are Oyster-based. A key issue for further consideration is whether the benefits of a smart and integrated ticketing scheme can be delivered in a cost effective way with this volume of transactions and across such a wide geographic area; and
  • The number of Smart schemes is likely to expand locally (e.g. through the FSR pilot and Lothian scheme). The range of services that can also be provided through a Smartcard continues to grow, thereby making the product increasingly attractive.