Filed Under: Money, Public Sector and NGO, Public Sector and NGOs, Retail, Retail and Transit, Ticketing, Transit and Travel

Rail usage up, so what?

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The Office of Rail and Road (ORR) has just made a quarterly statistical release for Passenger Rail Usage. So what?

There are relevant economic and social trends to which public-sector bodies must respond with transport policies:

  • Circa 60% of the UK population lives in cities. Congestion is a real problem which in turn leads to increased pollution and reduced air quality.
  • As a population, we travel substantially less today than we did one or two decades ago.
  • We are travelling less by car and more by train and bike. Fewer of us are getting driving licences, and we are getting them much later in our lives.

A key response to these trends is to try to drive modal shift from privately owned cars to mobility as a service (MaaS). Rail is a key mode in MaaS solutions, and Rail, in the UK, is undergoing a root and branch review which was announced by Chris Grayling and the Department for Transport in September 2018. Keith Williams is leading the review, supported by an expert panel. Amongst other things, it will look at the structure of the whole rail industry, regional partnerships and improving value for money for passengers and taxpayers. Any emerging reform plans will be implemented from 2020.

One can imagine that there are many problems to be addressed as part of this review and that fares and ticketing might not get much of a look in. However, the ‘value for money for passengers and taxpayers’ part seems significant.

In a February meeting with DfT about the future of fare collection and transport payments, Consult Hyperion was asked to respond to the recent Rail PAYG Consultation covering:

  • what a Pay-As-You-Go (PAYG) travel area is, and how it would work in general
  • where a PAYG travel area could cover
  • the changes to fares that could be made within the area

The consultation ran from February to the end of April 2019 and now the Department for Transport is considering the responses.

In the context of this activity, the ORR statistical release makes perhaps more interesting reading than it otherwise would have done.

 “Passenger journeys using ordinary tickets increased by 5.0% in 2018-19 compared to the previous year. This was driven by a 6.9% growth in anytime tickets. In contrast, the number of passenger journeys made using season tickets fell for the third consecutive year, down 0.4%. Market share of season ticket journeys was 36% in 2018-19, down from 48% a decade ago.”

These would seem like exactly the right market conditions for introducing PAYG on rail beyond London. Today’s passengers cannot easily predict their journeys in advance, but would like to be rewarded for frequency of travel; which, by choosing Rail, will help meet social and environmental goals. Granted, PAYG is not well suited to long-distance Rail if ticket prices are high, but there are many train journeys that are in the right price bracket.

In time, it would seem desirable to phase out season tickets. Ticketing should be tailored to the increasingly flexible patterns of work: perhaps for a specified number of days per month or the use of digital carnet tickets (to be enabled prior to departure). It would seem that smartphone apps are ideal for handling this.

Flexibility is also required within each day. Passengers travelling out in off peak times frequently don’t know until they start their return journey whether it will be peak or off-peak. In addition, designations of peak and off-peak are complex, localised and require further study.

A PAYG solution which focuses primarily on the gate line may limit subsequent progress. Mobile ticketing has an important role to play. It provides the means to offer a variety of ticket types on a single device and is comparatively easily updated. It also offers much greater flexibility for passengers travelling from unmanned stations, where gate lines don’t generally feature, and ticket machines are frequently vandalized. Another benefit of mobile ticketing is the quality of travel data that can be collected (while respecting passenger privacy).

We have recently been advising three UK Sub-national Transport Bodies (STBs) and recently facilitated a transport operator workshop to discuss options for fare collection and transport payments. The thing that the operators seemed most excited about was PAYG.  The kind where customers just turn up and travel without having to worry about the tariffs in advance and trusting that they will be charged a fair price. Inevitably, the discussions dipped into which technologies are good at this and which are bad, but the fact remains, they are clear what their customers want and truly believe that by giving them what they want, they will receive increased ridership in return.

Clearly, this is what Transport for London already provides and their offering is slowly extending out from London into the SE region, for example to Gatwick Airport. However, the open-payment-based PAYG models (using contactless bank cards) are limited in the amounts up to which fares can be aggregated before payment is taken. This is for reasons of risk of payment for the journey never being received, but it also makes sense from the point of view of the customer who does not want to travel on trains all day not knowing how many hundreds of pounds they will be charged at the end and they also want to benefit from any available capping of fares.

What is needed is flexibility. Open-loop transit payments are better than conventional card-based transport cards for travelling within cities. As we have said before, open-loop transit payment suffers from the passenger identifier (their bank card) being tightly coupled to just one of their payment mechanisms (one of their bank accounts). We have been exploring other mobile-based solutions with the Rail Delivery Group (RDG) recently and are hopeful that such customer-centric alternatives will emerge soon.

If you’re interested in finding out more, please contact: sales@chyp.com

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