REPLACEMENT OF ELECTRONIC TICKETING SYSTEMS

Transcription

1 Report No Decision Required REPLACEMENT OF ELECTRONIC TICKETING SYSTEMS 1. PURPOSE 1.1. To introduce the collective work a number of regional councils have undertaken being an investigation to replace their existing electronic ticketing systems on board their respective regional bus fleets, and to seek the Committee s endorsement for Council to include in the Long Term Plan (LTP), funds for a new ticketing system. 2. EXECUTIVE SUMMARY 2.1. Existing regional ticketing systems are nearing the end of their technological life cycle. In order to meet the operational requirements of the bus operators, planning and reporting needs of Councils and NZ Transport Agency (NZTA), protection of revenue streams, and to meet the expectations of customers, an alternative option needs to be adopted For the past several months, a number of regional councils have been working together to investigate an alternative system. Having considered all alternatives, and subject to final costs being confirmed, a joint procurement approach is the preferred approach. 3. RECOMMENDATION That the Committee recommends that Council: a. receives the information contained in Report No ; b. allows funding for an integrated regional ticketing system to be included in the draft Long Term Plan, subject to final cost estimates being known. 4. FINANCIAL IMPACT 4.1. Indicative cost estimates are available, however final costs will not be known until a Request for Proposal (RFP) process has been run. This is currently timed for February- April Final costs will be subject to the LTP funding process. 5. COMMUNITY ENGAGEMENT 5.1. No community engagement is required for this item. Should the Committee and Council endorse the project, it will be recommended for inclusion in the draft LTP pending Council approval where full consultation will occur. 6. BACKGROUND 6.1. Horizons buses currently operate with an electronic ticketing system supported and serviced by the company ETS. ETS is also the current supplier of electronic ticketing systems to most non-metropolitan regional councils in this country. Other suppliers are Snapper, Vix and INIT s Ticketing machines have featured on Palmerston North and Wanganui bus services for over ten years now, and more recently the Feilding, Levin and Marton commuter services. The ETS system requires payment via either cash or a pre-loaded smart card which is electronically scanned and debited. A paper ticket is produced for the customer and certain details are recorded relating to the date, time and type of ticket purchased and its Replacement of Electronic Ticketing Systems Page 1

2 cost. This information is used to record patronage and confirm the timeliness and punctuality of the service All technological equipment has a use by date and electronic ticketing systems are no exception with general life span being ten years. Currently most of the equipment used on our bus services is at, or is nearing the end of its useful life and will either require full replacement or more frequent maintenance and repairs. This situation is not unique to our region The amount of suppliers of electronic ticketing systems in New Zealand is very limited. Currently only a handful of suppliers are active in the market, including ETS. Some members might be aware that Auckland has recently rolled out the Auckland Integrated Fares System (AIFS) across its entire public transport network (bus, rail and ferry). The implementation of this system has had an effect on Horizons as ETS lost around half of its business due to the contract being awarded to French company Thales. At the time there was very real concern that ETS might exit from the ticketing business and therefore leave partnered regions without a ticketing system With the assistance of NZTA, all regional councils with ETS business have signed a Service Level Agreement (SLA) that ensures ETS supports them for a period of at least three years. For Horizons, the SLA is scheduled to expire in December This is subject to two one-year rights of renewal. The SLA gives Horizons time to investigate options for a replacement ticketing system in anticipation of ETS withdrawing from the market The need for these investigations can not be overstated. ETS no longer has the client base to remain profitable and will therefore likely dissolve themselves in the immediate future. If not for the collaborative intervention by councils and NZTA to extend their service, they likely would have already withdrawn from the market. If they do ultimately pull out, Horizons and other regions will be left without a ticketing system and would have to rely on a manual cash based system that would likely be ill-received by the public. Furthermore it would make accounting of revenue potentially inaccurate and result in people not using the service which would affect revenue streams. 7. COLLECTIVE REGIONAL APPROACH 7.1. Given the real concern that ETS could withdraw from the market a Governance Group (GG) was established towards the end of 2013 to investigate alternative ticketing systems to support services into the future The GG was established and supported by a Technical Working Group (WG). The idea being that all regional councils that needed to find a replacement ticketing system would be represented. NZTA was also represented as they are supportive of the approach and would ultimately be contributing funds via subsidy The reason for taking a collaborative approach is primarily because investment in information technology is not cheap, with electronic ticketing systems being no exception. If costs could be shared between councils to minimise the impact on ratepayers that would be greatly beneficial. NZTA also saw the benefit of a nationally integrated system and therefore committed to a contribution Larger Councils in Auckland, Wellington and Christchurch already use electronic ticketing systems (e.g. Snapper card ). Waikato, Otago and other provincial Councils have asked NZTA for assistance with joint procurement of a similar technology (but not necessarily snapper ) and Horizons Regional Council has been invited to participate. Replacement of Electronic Ticketing Systems Page 2

3 7.5. Earlier this year the GG directed the WG to develop a business case, called the Case for Change, that sets out how the procurement process will work and what the likely cost to participating regions will be. 8. COSTS 8.1. Costs for the ticketing project have been split into three distinct areas. The first area is made up of system development costs. The development phase will account for 43% of the total project cost. Although development will largely use the work done for the Auckland Transport system, costs will be significant. It is not as simple as picking up the Auckland system and plugging it into the smaller regions services. It is a highly technical process which will require a large amount of reconfiguration How much of the development costs will be funded by NZTA will not be known until October. It is fair to say that the number of Councils that opt into the project will be determined by the amount that NZTA subsidise The second area of costs is referred to as the capital enhancement costs. These account for the remainder of the capital costs and will be subsidised by NZTA at 58%. Those costs are itemised in Table 1 below. The Case for Change has set Horizons share of these costs at 7%. This is the net cost to Horizons after any NZTA subsidy. The factors considered in setting this % share were patronage, transport rates and other revenue, and contract values. Table 1. Item Cost Implementation $100, Hardware $200, Regional $138, Communications Total Capital Cost $440, Implementation is the cost of developing a regional ticketing system such as employing a project manager and technical consultants, software development and testing. Regional Communications are the costs of establishing the communication network to link the ticketing systems with NZTA s reporting system. It also includes the purchasing of smart cards to be used by passengers. Hardware costs is the purchasing of the physical ticketing equipment such as on bus consoles, retail devices, hand held devices and depot systems The final set of costs are the ongoing operating costs, again to be subsidised by NZTA at the FAR of the day. Taking a FAR of 52% we expect the total net cost for Horizons to be approximately $60, per annum which has been calculated as 7% of the national operational cost Until such time as the development costs are finalised, we are unable to provide certainty as to what will be Horizons total share. Notwithstanding this, the figures above are indicative costs and are calculated on the basis of Horizons only contributing to the capital enhancement phase and not the development costs. It is recommended that should the Committee endorse the ticketing system, that these costs are used in any draft LTP process until further certainty can be provided, expected to be in late October. Replacement of Electronic Ticketing Systems Page 3

4 9. RISKS 9.1. The Committee needs to be clear on what the current risks are if ETS withdraws from the market. Horizons would have to do one of the following: Revert to a cash only policy for all bus services; Invest in a replacement ticketing system on its own; Cash Only Customers now expect a ticketing system that meets modern day expectations of a virtually cashless society. Features such as online top-ups and purchasing of cards is now expected; the ability to use your travel card for multiple purchasing options (ie. parking and other small purchases); and even using credit cards for public transport are all features that modern ticketing systems encompass, or have the ability to encompass In the financial year Horizons received just over $1M in passenger revenue ($1,035,991) from the services that use electronic ticketing. On the Palmerston North services, about half of fare paying passengers currently do so using the GoCard. This is significant revenue and a significant risk should users be turned away or choose not to use the bus because it requires cash only transactions As electronic ticketing also records when passengers board the bus, the planning aspect of Horizon s business would also be seriously compromised without having the information that we currently can gather. NZTA also analyse the quality of the data gathered by each Council. If the quality of the data is poor then there is a possibility NZTA could review its subsidy paid to Horizons Massey s current free fares system for students and staff is wholly reliant on an electronic ticketing platform to record passenger use. Only those students/staff with the appropriate chip in their identification card can board the buses for free. Go it Alone 9.5. Horizons could look into procuring a replacement ticketing system on its own, however it would have to bear the full cost of the system software, hardware and support which will be significantly higher than when procured jointly, and most likely unaffordable. In New Zealand the ticketing market is quite small in the international context and therefore purchasing replacement systems individually is unlikely to result in value for money. NTZA has become involved for this very reason, to support councils in acquiring a fit for purpose and value for money system Given that a key driver in the GPS engagement Draft is value for money, it would be a risk for Horizons to go it alone as it may not secure a subsidy from NZTA. 10. BENEFITS The benefits of procuring ticketing equipment jointly with other partners include value for money, as well as the potential to tap into the international ticketing market therefore enhancing the competitive nature of the procurement process. Collectively around 450 on board ticketing machines will be procured plus other ancillary devices such as depot devices and vending machines There are also other benefits that could be accrued through investing in better technology, such as increased farebox recovery, and greater reliability of passenger transport networks. Replacement of Electronic Ticketing Systems Page 4

5 10.3. A new ticketing system will bring enhanced features such as tag on tag off and online top ups of travel cards, as well as online registering of travel cards. These features enhance the viability of the services and provide passengers with greater confidence in the services Ticketing systems are an integral part of any public transport system and, in fact, they are now seen as business critical in order to capture important passenger information as well as recover revenue from our services. Over recent years there has been a greater emphasis on the need to use data captured by the systems to assist in network performance and monitoring, planning and network optimisation. Therefore it is important that Horizons has a more direct involvement in ticketing moving forward given the importance to Horizons business continuity. 11. CONSULTATION Public consultation will be undertaken as part of the draft LTP process. This will take place in March/April TIMELINE / NEXT STEPS If the Committee endorses the project, it will be put forward to Council to be included in the draft LTP process. Wayne Wallace SENIOR TRANSPORT PLANNER Phillip Hindrup MANAGER TRANSPORT SERVICES ANNEXES There are no attachments for this report. Replacement of Electronic Ticketing Systems Page 5