Addressing the cost-of-living crisis: Transport ticketing’s role

Even though post-pandemic travel restrictions have largely been lifted, predicting passenger behaviours has become harder as many traditional travelling patterns have not returned. A significant number of commuters have moved to a working from home model, be it full time or hybrid, and tourism is still an industry in recovery. These issues are now exacerbated by a second crisis: the rising cost-of-living.

Global economies still recovering from the cost of the pandemic face accelerated inflation – forecast to rise to 7.5 per cent globally by the end of the year¹ – alongside mounting energy costs. More strain is being placed on the budgets of both passengers and networks.

The transit ecosystem must learn to adapt to this crisis, maintaining crucial services while offering affordable, accessible mobility. But how can this be achieved in a way that is economically viable, and how can ticketing provide a sustainable solution to the benefit of both networks and their passengers?

Addressing the situation

Despite the immense challenges that they present, the very same financial pressures that are putting so much strain on networks can also be leveraged to make public transport the most attractive option for travellers. Passengers are having to re‑think private vehicle usage, and the transit sector can use this to demonstrate its value through a commitment to providing unparalleled convenience and reliability at an affordable price.

Some transport authorities are taking extreme solutions. Over the summer months, passengers in Germany were able to purchase a €9 monthly ticket² for use on any local train. This led to a surge in ridership. The Federal Statistics Office of Germany (Destatis) reported 42 per cent more journeys being made on distances over 30km by rail in July 2022, compared to the same period in 2019 – the last comparable period not impacted by pandemic travel restrictions.

Over the summer months, passengers in Germany were able to purchase a €9 monthly ticket for use on any local train, which led to a surge in ridership.

In the UK, Greater Manchester has capped bus fares across the conurbation³ at £2 for adults or £1 for children for a single trip. This move will save passengers up to 50 per cent on certain journeys. Affordable, reliable public transport as an alternative to private transportation can help to drive increased footfall across networks, but this needs to be done as part of a multifaceted, planned strategy.

Flexible fares for flexible travelling

Rising costs mean that customers are assessing every penny spent. Period-based card solutions that give passengers a pass for a week, month or year no longer offer the value for money that they once did due to more flexible working patterns. Meanwhile, single tickets are often still an expensive solution for those travelling regularly, but perhaps not daily.

The demand from customers is for flexibility. They want to be able to travel on as many different modes of transport as they need without being forced to purchase multiple tickets; part of a growing trend towards Mobility-as-a-Service (MaaS). This requires networks to explore flexible ticketing initiatives that deliver the optimum balance between value for passengers and return on investment (ROI) for networks.

An effective MaaS policy takes into account the entire passenger journey, from the very first step to the last. It goes beyond the traditional forms of mass transportation – such as trains, trams and buses – to encompass new mobility services for personal transportation, such as scooters or bikes.

By allowing a customer to purchase one single ticket for all of their mobility needs, this not only reduces the complexity of ticketing, but also enables users to easily optimise the value that they get from public transport. This, in turn, helps to make it a far more attractive option than costly private vehicle use.

Supporting budgeting through flexible pricing

For many transport authorities and operators, there are two budgetary elements that must be considered.

First, there is a need to show how and where public money is being invested and spent. It must be certain that it will not be limited in its actions, decisions or responsibility due to third party interests beyond its control – for example, pressures or restrictions from financial, banking, Google, Apple, Facebook and Amazon (GAFA) or industrial parties. The key here is the ability to control costs and, in particular, any additional fees or technology upgrades requested by a third party.

Second, with inflation rampant and unpredictable, transport authorities and operators must support changing passenger budgets and travel habits. Ticket pricing must be flexible.

Using closed-loop ticketing technology based on open standards enables operators to smartly combine Account-Based Ticketing (ABT) and card‑based ticketing into their system, while avoiding ceding control and sovereignty over their ticketing system to any single proprietary vendor. In doing so, passengers have access to a range of tariff types – from monthly subscription passes, to single journey tickets, to Pay As You Go (PAYG). It also ensures that, regardless of the ticket purchased, the customer will receive the same high levels of performance and data privacy.

The value of being able to purchase the exact ticket that a traveller needs should not be underestimated. It allows passengers to have control over exactly what they are spending. It also ensures that the account holder is able to easily and routinely access concessionary ticketing, should they be eligible, and networks can also deliver specialised tariff structures, season tickets or fare programmes as needed.

In short, closed-loop systems based on open standards firmly places cost control with the transport operator and, crucially, the passenger. It allows public transport operators and authorities to create an inclusive ticketing system that caters to the unique challenges of each network and the diverse communities that they serve.

Such systems also have the flexibility and agility to evolve, enabling ticketing to complement other solutions, such as open-loop. This makes public transport more attractive, by facilitating its access to occasional users. And this is without any risk, because the fact that the heart of the system is closed-loop guarantees the operator’s sovereignty.

At a time when the cost of living is forcing businesses, families and individuals to make difficult decisions, the cost of public transport must remain an easy choice for every passenger.

Delivering value for money for passengers

If the cost-of-living crisis is not properly considered by networks, they risk seeing skyrocketing operational costs at the same time as they witness a drop in footfall. This, in turn, leads to lower ticketing revenues and reduced resources for investment into the network. It is, therefore, hugely important that networks have a ticketing system that is mutually beneficial for both themselves and their customers.

The first step to positioning public transport as a superior alternative to private vehicles is to build passenger trust that the network will deliver the reliable, high-quality service that they want at the value that they demand. In other words, networks must do more with less. The key to this is ensuring that anything that helps to keep costs manageable and within budget is used. This means that it is critical that networks have control over their ticketing offerings.

Closed-loop systems designed using open standards provide networks with ultimate control and the fundamental tools that allow networks to create their own futureproofed, secure and flexible ticketing offering. By ensuring that they retain control over their ticketing system, networks can deliver the fare structures that offer the best value to their passengers without being reliant on one proprietary vendor or influenced by external business or industrial parties.

At a time when the cost-of-living is forcing businesses, families and individuals to make difficult decisions, the cost of public transport must remain an easy choice for every passenger.

References

1. https://www.globaldata.com/media/business-fundamentals/global-inflation-forecast-rise-7-5-end-2022-driven-food-fuel-energy-supply-chain-disruption-observes-globaldata/
2. https://www.intelligenttransport.com/transport-news/138774/germany-rail-ridership-exceeds-pre-pandemic/
3. https://www.intelligenttransport.com/transport-news/138788/greater-manchester-cap-bus-fares/