fares development Alain Flausch Secretary General International Association of Public Transport Moscow Transport Council 2 nd October 2015 Make the system effective easy to use and ID: 477776
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Slide1
Trends in fares development
Alain
Flausch
Secretary General
International Association of Public Transport
Moscow Transport Council
2
nd
October
2015Slide2
Make the system effective, easy to use and
sustainable
Legal framework for Public Transport Operator in Moscow (e.g. Quality standards) Extending the quantity of BUS LANESPriority for Public transport Enforcing the parking policy Optimizing the network design (straightening and expressifying)Enhancing transfer hubsLink with land use Safeguard future transport corridorsFurther developing the smart ticketing system (mobile phone)Developing an integrated rate card system with increasing role for season ticketsDeveloping a rate card by zoneRegular fare adjustments to cover increasing operating costs Developing an extensive passenger information systemMaking the system clean with a low CO² footprint (Gas, E-mobility, Hybrid)Developing the existing clean transport systems (Trolleybus, LRT)Developing a congestion charge system Developing the pedestrian zones and bike routesDeveloping parking and ride facilities The right mode of transport at the right place
UITP
2Slide3
Focusing on revenues
Enforcing
a
parking policyDeveloping a congestion charge systemLinks with Land useDevelopment of smart ticketing systemsPromote an integrated rate card systemDeveloping a rate card by zoneRegular Fare AdjustmentUITP3Slide4
Funding breakdownUITP
4
Operations
Fare revenueInvestmentCommercial revenues
Expenditure
Funding
General budget
Earmarked
charges
?
?
Higher
demand
,
Better
quality
of service
Renewal
/new infrastructure
Enhanced
accessibility
Quality
requirements
Tight
public finances
Lower
fares
and/or
Lack
of optimisation of
fare
revenuesSlide5
What is resilience?
There
is
no silver bullet, in a context of constrained available public funding, it is required:Cost effective service delivery Fares which reflect the quality expected by customersDevelopment of other commercial revenueCreation of earmarking funding sources from indirect beneficiariesEnsuring a financially sound system enabling the longevity of the system and its capacity to resist to external shocks. Slide6
Farebox does not cover
opex
UITP6Am = American (North/South)Eu = EuropeanAs = Asian
0.0
0.5
1.0
1.5
2.0
2.5
As
As
As
Am
As
Am
Am
As
Am
Eu
As
Am
Eu
Eu
Eu
Eu
Am
Eu
Eu
As
Eu
Am
Eu
Eu
Am
As
Eu
Non-Fare Commercial Revenue
Fare Revenue
Cost Coverage - Revenue /Total Operating Cost (2009)
Source: Imperial College LondonSlide7
Word of cautionUITP
7Slide8
Fares trends
Regions
showcase different priorities in the definition of fares (social/environmental vs commercial)Evolution of fares levels/structure show a preference for ease for to customers Seamless travelIntegrated faresIntroduction of smart card mostly for customer careHowever, some regions have implemented more sophisticated fare structuresPricing is also used as a tool for demand management, especially for peak managementUITP8Slide9
Optimising Fare revenues
Main challenge:
reconciling
different objectives of authorities, operators and customersBetter quality and higher fares more customersFare regulation and adjustments are deemed desirable:Generating sufficient margins Transparent and dependable incomeEMTA assesses that the fare revenues coverage in Europe of OPEX is on average 47%.UITP9Slide10
Fare regulation
A
sound
fare policy should consider the position of all relevant stakeholders.UITP10Timing of reviewGovernanceAdjustment mechanism Success factors
Good practice case: Germany
Operators
involved
in
decision
making
process
Annual
review
(
optional
)
Inflation + 1%
Outcome
(Germany):
increased
revenue per passenger
, increased
number of
passengers, significant
improvement of
cost coverage
rate, higher
margin of manœuvre for service improvement
.Slide11
Fare formulaUITP
11Slide12
Fare structure: navigo pass
Fare
integration project: Navigo Pass(Sept 2015)Seasonal ticket: 70EUR per month Increase of +3% of single ticketsTarget: 3,8m commuters. Dezoning of 1-5 (excluding 6 and 7)UITP12Objective: increase ridership through seasonal ticket (annual, monthly and yearly), it is estimated that there
will
be
400m
less
in
fare
revenues. Slide13
Maximising fares MTR HK
Fare
Revenue
Strategy designed to maximise revenue from differentiated customers with varying price elasticity.Fare structure: distance based (mostly)Development of tailored tickets targeting:Long distance commuters: up to 5 seasonal passesMedium distance: City saver ticketShort Distance passengersUITP13Slide14
Revenue managementProviding
the
right service to the right customer at the right time (price discrimination, market segmentation) Common in many sectors/industrues Potential cost reduction and revenue increase Facilitated by automated fare collectionsPossibilities for transport: time of day pricing, distance based pricing, premium services, loyalty schemes, etc…Tensions between Revenue Management and Fare IntegrationUITP14Slide15
Solidarity pricing in grenoble
Concessionary
fares set till 2009 provided prices discount established within a specific framework (tot 52,000 free or quasi free). The new approach aimed to: Redefine the socio-economic realities of the agglomeration Include new categories (job seekers, young workers, etc)Improve targeting of concessionary faresOutcome: 33,000 users pay more thorugh increased fare, enabling 60,000 users to benefits from solidarity pricing UITP15Slide16
Free Public transport
Tallinn
is
the largest experiment with FREE public transport Outcomes: Passenger demand rose by 3% with only 1.2% in passenger demand the rest was dependent of quality/capacity increasesHigher levels of inhabitants registration as Tallinn residentsUITP16Slide17
Loyalty programes
Hong Kong’s MTR launched MTR Club
Registration using
Octopus CardOver 1.1 million membersMembers accumulate points by ride or shop for exclusive gifts redemptionAssessment:Club members spend 1.8 times more than non club members Club members exhibit 5.5% increase in spending per day over first year of use UITP17Slide18
Marketing programmes
Welcome
Kit sent by Munich (Germany)
Mobility organiser: overview about the most relevant information and offers in terms of transport and mobility in the city of Munich.Service card to order a test ticket for public transport and further information free of charge:MVG city mapMap of all PT linesTariff and special offersBike mapMunich by foot (cultural/historical paths)UITP18Slide19
Conclusion Fares
should
reflect the quality expected by customers Fares require to be adjusted on a timely basisSmart cards and e-ticketing should be used as tools to implement a sustainable fare lelve, while retaining its social component,Building a relationship with passengers to foster loyalty via special schemes, marketing or communication campaigns,UITP19