In partnership with
TICKET TO RIDE: REFORMING
FARES AND TICKETING FOR
SUSTAINABLE PUBLIC TRANSPORT
December 2016
TOURISM & TRANSPORT FORUM
The Tourism & Transport Forum (TTF) is a national, member-
funded CEO forum advocating the public policy interests of
leading corporations and institutions in the Australian tourism,
transport and aviation sectors.
TTF is the only national multi-modal transport advocacy group
in Australia and is committed to improving the quality of
passenger transport across the country. Our key transport
policy goals are to promote:
• the importance of investment by state and federal
governments in transport infrastructure;
• the role of the private sector in the delivery of public
transport services, particularly through franchising; and
• best practice in customer service, particularly through
the use of new technology.
ABOUT THE AUTHORS
Dave King has extensive experience in the
transport sector, in the public and private
sectors, and in both Europe and Australia. He
is a recognised expert in the development of
fares and ticketing strategy, and in defining
the customer propositions for ticketing
schemes. Dave has recently led projects
to evaluate the impact of fare policy changes in a major
Australian city, led a program of econometrics and customer
research to establish public transport fare elasticity values,
and developed future fare / product strategy options for a
large jurisdiction.
Mark Streeting is a highly experienced
transport economist with around 30 years’
experience in both the public and private
sectors. He is recognised globally for his
work associated with the development
of fares and ticketing strategy and
policy leveraging current and emerging
technologies. Recent projects include the development of
a business case associated with the introduction of open
loop contactless ticketing, the development of a strategic
fare collection roadmap for cities in the Asia Pacific region
and leading the withdrawal of legacy fare products and
associated ticketing infrastructure in a major Australian city.
For further information, please contact:
Tourism & Transport Forum (TTF)
Level 6, 7 Macquarie Place
Sydney NSW 2000
T: +61 2 9240 2000
www.ttf.org.au
CONTENTS
1 INTRODUCTION 2
1.1 SETTING THE SCENE 2
1.2 HOW THIS REPORT CONTRIBUTES 2
1.3 STRUCTURE OF THIS REPORT 2
2 THE POLICY CONTEXT
AND CHALLENGES 3
2.1 FARE POLICY OBJECTIVES 4
2.2 CHALLENGES IN DELIVERING
FARE POLICY OBJECTIVES 6
3 FARE STRUCTURE 12
CURRENT STATE 13
3.1 OBSERVED TRENDS 16
3.2 FUTURE POLICY REFORM 19
4 PRODUCTS AND
CUSTOMER SEGMENTS 22
4.1 CURRENT STATE 23
4.2 OBSERVED TRENDS 27
4.3 FUTURE POLICY REFORM 33
5 FARE LEVELS 34
5.1 CURRENT STATE 35
5.2 OBSERVED TRENDS 40
5.3 FUTURE POLICY REFORM 44
6 MEDIA, TECHNOLOGY
AND SALES CHANNELS 45
6.1 CURRENT STATE 46
6.2 OBSERVED TRENDS 50
6.3 FUTURE POLICY REFORM 54
APPENDIX A
AUSTRALIAN CITY
PROFILE OVERVIEWS 56
SYDNEY 57
MELBOURNE
(INCLUDING REGIONAL MYKI SERVICES) 58
BRISBANE (AND SOUTH EAST QUEENSLAND) 59
PERTH 60
ADELAIDE 61
HOBART
(INCLUDING LAUNCESTON AND BURNIE) 62
CANBERRA 63
APPENDIX B
AUSTRALIAN CITIES
COMPARISONS 64
APPENDIX C
OVERVIEW OF FARES
SYSTEM DESIGN 68
FARES SYSTEM DESIGN 68
FARE STRUCTURE 68
FARE PRODUCTS 69
FARE LEVELS 71
FARE MEDIA 72
1 INTRODUCTION
1.1 SETTING THE SCENE
At the end of the 1990s, there was an expectation that
the roll out of first generation smartcard ticketing systems
would see an acceleration of fare reform in an environment
where “everything is possible”. In practice, this has not been
the case for fare structures. We have seen relatively limited
reform with most jurisdictions maintaining long held historical
positions from flat fares (e.g. Adelaide and Canberra) to
distance-based fares (e.g. Brisbane, Perth and Sydney).
Over the same period, cost pressures have grown markedly
and farebox cost recovery has generally declined in all
Australian cities, with 20% to 30% being commonplace at
present. In this report we explore the context for this decline.
In essence, multiple structural and policy objectives that
combine to define fares policy are often poorly understood
and cannot all be satisfied simultaneously. The most obvious
trade-off is between patronage growth and revenue growth
– lower fares will encourage some new customers but
not neccessarily enough to have a positive impact on total
farebox revenue.
A better understanding of these policy trade-offs, and of
customer behaviours, is required before fares and ticketing
can be truly used to maximise the social return on investment
in public transport.
1.2 HOW THIS REPORT
CONTRIBUTES
This report will help to build a greater understanding of the
historical impact of fares and ticketing policy on customer
behaviour and identify the associated trade-offs under
each policy setting and the impact of emerging policy
settings/fare mechanisms.
1.3 STRUCTURE OF THIS REPORT
Section 2 explores how cities establish their fares and
ticketing policies and some of the core challenges faced
in meeting sometimes conflicting objectives.
Section 3 explores current fare structure settings,
trends observed internationally and potential drivers
of future reform.
Section 4 examines the alignment of fare products and
customer segments and potential reforms to better meet
customer needs.
Section 5 considers variations in fare levels according
to a range of criteria including customer type, time-of-day,
origin and destination and frequency of travel and identifies
potential areas of reform.
Finally, Section 6 addresses current and emerging trends
in fare media and payment channels.
The focus on this paper is principally on metropolitan areas.
This is because benchmark observations from external
jurisdictions are generally much more widely available
for metropolitan areas rather than regional, and because
the large majority of public transport usage in Australia is
concentrated on metropolitan areas.
The advent of smartcard ticketing in the late 1990s offered the potential for large scale fares and
ticketing policy reform.
Observed progress has been slow in Australia which reflects the range of difficult policy trade-offs
associated with such reform.
This report seeks to explore these policy trade-offs and associated customer behaviour
to allow fares and ticketing policy reform to play its role in maximising the social return on
public transport.
FARES AND TICKETING RESEARCH REPORT | 2
2 THE POLICY CONTEXT
AND CHALLENGES
2.1 FARE POLICY OBJECTIVES
Choosing a fare policy has deep implications from an
economic, social, financial and environmental perspective.
Policy can be designed to meet a number of such different
objectives (as shown in Figure 1 below).
Consideration of each of these factors is a crucial input to
fares policy design, including developing an understanding
of the relationship between each objective and associated
fare system lever(s). Achieving this level of transparency will
provide clarity where trade-offs are being made and support a
clear and consistent approach to policy making.
Choosing a policy direction
Extensive consultation with all key stakeholders including
government, service providers, customers and potential
customers is a highly desirable input to the development
of policy objectives and associated evaluation criteria for
assessing competing options.
A successful fares system will be based on a good
understanding of customers and their behaviour, and will be
balanced by the commercial reality of the need to contribute
appropriately to the recovery of the costs of public transport
service delivery. In this context, it is imperative that transport
agencies have a robust understanding of fare elasticities
(i.e. “willingness to pay”) across all market segments. This
ensures that policy formulation is evidence-based and the
dialogue with all stakeholders can proceed on this basis.
Fare policy in Australia
Whilst fare policy may be articulated internally (that is, at a
departmental level), we are unaware of any public statements
of overarching fare policy, or policy objectives, made by
Australian states or jurisdictions.
From time-to-time, there have been attempts by Australian
State Governments to provide planning certainty with respect
to fare levels by committing to medium-term pricing paths (e.g.
Sydney and South East Queensland). Transport for London has
adopted a similar approach by committing to real fare growth
to support network modernisation and the need for services
to meet forecast growth in demand. Rather than define
specific pricing paths, both Singapore (see below) and Hong
Kong have transparent mechanistic formulas that drive annual
fare increases capturing factors such as changes in inflation,
wages, energy costs and the productivity of public transport
service delivery. Whilst such transparency is a key strength, it
does inherently limit flexibility in fares policy setting.
2 THE POLICY CONTEXT
AND CHALLENGES
No Australian jurisdiction has clearly articulated its objectives for its urban public transport
system in a holistic manner.
Where policy has been clearly defined, it has been limited to defining a medium term pricing path
to provide planning certainty but no Australian jurisdiction has adopted the transparent, albeit
mechanistic approach, adopted in Singapore and Hong Kong to drive annual fare changes.
A number of policy challenges can be identifed including historically low levels of farebox cost
recovery (in the 20% to 30% range), pressure for fares integration and simplification to improve
fare system efficiency, social equity and fare system governance.
Cost
recovery
Patronage
targets
Fare System
Objectives
Social
Equity
Customer
friendliness
Revenue
targets
Figure 1: Illustration of selected fare system objectives
FARES AND TICKETING RESEARCH REPORT | 4
CASE STUDY: SINGAPORE
Singapore’s Fare Review Mechanism Committee
was set up in 2012 to “ensure that fares remain
affordable for the various commuter groups, while
safeguarding the long-term financial sustainability
of the public transport system”.
1
Using focus
group discussions with stakeholders, as well as
a quantitative household survey, the committee
made several recommendations, including:
• Provide more concessions (to help specific
groups of commuters with affordability)
• Improve monitoring of fare affordability (track a
wider range of households)
• Adjust fares regularly (annual reviews so the
changes in fares can keep pace with cost changes)
The overall balance of the policy objectives is
shown in Figure 2.
The 2013 review of how fares were set
recommended that the formulae be adjusted
to reflect the consumer price index, the wage
index, and an energy index designed to track
the operating costs of buses and trains. An
adjustment is also made for the productivity gains
made by public transport operators.
Figure 2: Balance of policy objectives in Singapore
Affordable
Fares
Sustainable
Public Transport
More
concessions
A more responsive
fare adjustment
formula
Improved
monitoring of
fare affordability
Regular fare
review exercises
More resources
to the Public
Transport Fund
A flexible fare
mechanism
1. “AFFORDABLE FARES, SUSTAINABLE PUBLIC TRANSPORT - The Fare Review Mechanism Committee Report”
http://www.mot.gov.sg/news/FRMC%20Report%201%20Nov.pdf
Recommendation 1:
Fares policy should be better articulated
in Australian jurisdictions. This includes
making clear what the objectives of
fares policy are, and any trade-offs that
are being made in setting the policy
FARES AND TICKETING RESEARCH REPORT | 5
2.2 CHALLENGES IN DELIVERING FARE POLICY OBJECTIVES
2.2.1 Fare setting and cost recovery
The interaction of fare levels, patronage and the costs of
public transport service delivery is reflected in observed
farebox cost recovery. TTF recently highlighted estimated
farebox cost recovery rates for four Australian cities – Sydney,
Melbourne, Brisbane and Perth in FY2013. This demonstrated
that recovery rates were as low as 22% and no higher than
30%. This reflected estimated operating expenses of $10.4
billion and farebox revenue of $2.4 billion, implying an overall
annual subsidy of $8.0 billion per annum.
Whilst few jurisdictions operate public transport at 100 per
cent farebox cost recovery (or at a profit), most raise much
higher farebox revenue (as a percentage of operating costs)
than Australian jurisdictions (see Figure 4 below). Although
longer term trend data is not available, it is understood that
farebox cost recovery in a number of Australian cities has
fallen significantly over the past decade or so, reflecting a
combination of movements in operating costs and fare levels.
Figure 4 also indicates that farebox cost recovery is not
just a function of higher population density. For example,
Wellington, Dunedin and Chicago achieve higher farebox
cost recovery despite having a similar population density to
Melbourne and Sydney. Even within Australia, the highest
rate of cost recovery is achieved in Perth, compared to the
denser metropolitan areas of Sydney and Melbourne.
One of the challenges in addressing this issue is the extent
to which patronage may suffer as a result of attempts to
improve farebox cost recovery. However, there seems to be
little doubt that fare levels across Australian jurisdictions are
at an unsustainably low level and the balance between user
pays and government subsidy needs to be addressed.
Queensland provides perhaps the only recent Australian
example of a concerted attempt to improve farebox cost
recovery through fare increases.
FARES AND TICKETING RESEARCH REPORT | 6
2
4
6
8
10
12
0
Farebox Revenue Implied SubsidiesOperating Expenses
Billion of dollars
TOTAL 23%
Cost recovery rate
(estimated)
QLD 23%
WA 30%
NSW 22%
VIC 22%
10.4 2.4
8.0
Source: Public Transport Barometer, July 2015 (http://www.ttf.org.au/wp-content/uploads/2016/06/TTF-LEK-Public-Transport-Barometer-2015.pdf)
Figure 3: Cost recovery rates in Australia (estimated) – FY2013
Fare-box cost recovery (percent)
Population density (’000 per square km)
Hong Kong
Taipei
London
Barcelona
Toronto
Beijing
Wellington
Chicago
Dunedin
Prague
New York
Auckland
Philadelphia
San Diego
Paris
Christchurch
Hamilton
Seattle
Orlando
Brisbane
San Antonio
0
50
100
150
200
0
5
10
15
20
25
30
Population density Cost recovery
Perth
Melbourne
Sydney
186
119
91
90
73
60
57
55
54 53
51
44
41
40 40
35
34
30 29
26
23
22 22
13
Source: Public Transport Barometer, July 2015 (http://www.ttf.org.au/wp-content/uploads/2016/06/TTF-LEK-Public-Transport-Barometer-2015.pdf)
Figure 4: Benchmarked cost recovery rates
FARES AND TICKETING RESEARCH REPORT | 7
2. Communication strategy – 2010 fare change (Translink)
3. http://www.brisbanetimes.com.au/queensland/commuters-abandon-public-transport-after-fares-hike-20111114-1nfgi.html
4. http://translink.com.au/sites/default/files/assets/resources/about-translink/reporting-and-publications/2010-11-annual-report.pdf
5. http://translink.com.au/sites/default/files/assets/resources/about-translink/reporting-and-publications/2011-12-annual-report.docx
6. http://translink.com.au/sites/default/files/assets/resources/about-translink/reporting-and-publications/2011-dec-train-patronage-report.pdf
7. Translink Annual Report 2011–12
8. Comparison of Translink Annual Report 2011-12 and DTMR Annual Report 2012-13
9. Comparison of DTMR Annual Reports for 2012-13 and 2013-14
10. Comparison of Translink Annual Report for 2010-11 and DTMR Annual Report for 2013-14
11. http://www.abc.net.au/news/2014-09-21/public-transport-fares-to-get-cheaper-in-queensland/5758504
12. http://translink.com.au/about-translink/reporting-and-publications/media-releases/details/3481
CASE STUDY: QUEENSLAND EXPERIENCE OF REAL FARES INCREASES
Fares in Queensland have experienced a change in
direction over recent years. Following the 2009 election,
a five year fare strategy was launched to build the public
transport network and increase farebox cost recovery
from 25% to 30%. To achieve this, a substantial series
of real fares increases was planned. Individual go card
fares were planned to rise by 16% to 21%, and paper
tickets by 13% to 42%. This was in contrast to previous
fare increases which had been in line with CPI (roughly
4% at that time)
2
.
Average fares increases of 15% were introduced in
each of January 2010
3
, January 2011
4
and January
2012
5
. During this period, there were some issues with
data reporting
6
and the 2011 Brisbane floods impacted
the consistency of services. Nonetheless, it is clear
that (as would be expected) patronage was affected
by the fare increases. Patronage fell in every year up
to and including 2011-12. By 2012, Translink reported
that satisfaction with public transport affordability had
dropped to its “lowest ever rating – an indication that
cost of living pressures were impacting our customers
more than ever”
7
. The plan for a 15% increase in fares in
January 2013 was dropped in place of a 7.5% increase;
still above inflation but intended to “provide fare relief
for customers”. Patronage fell by a further 1.5% from
2011-12 to 2012-13 . Fares rose by a further 7.5% in
January 2014; patronage grew by 0.1% year on year
9
.
Whilst patronage clearly suffered as a result of the fares
increases, the scale of the decline was not perhaps as
marked as might be expected from the cumulative fare
increases experienced. The introduction of free travel after
making nine go card journeys in a week may have been a
factor in generating patronage for some customers during
this period. However it is not clear that the cost recovery
objective was actually being met; average subsidy per trip
increased steadily over this period
10
.
The fares increases came to an end in November 2014
with an across the board cut of 5%
11
. This was followed
up by a fare freeze in January 2015
12
.
FARES AND TICKETING RESEARCH REPORT | 8
13. https://tfl.gov.uk/info-for/media/press-releases/2011/september/mayor-confirms-fares-increase-for-2012-to-support-unprecedented-andpound12bn-investment-in-
londons-transport-network
14. £43m additional income per annum quoted in https://tfl.gov.uk/info-for/media/press-releases/2015/november/mayor-announces-real-terms-fares-freeze-and-
extends-free-travel-for-children
CASE STUDY:
FARES TRANSPARENCY
IN LONDON
There is a clear and transparent approach taken
to setting fares in London. Whilst fare rises are
implemented early in January, the announcement
of the fare change (by product and zone) is made
between 1-3 months prior to that date
13
. The
announcement will typically describe the size
of the fare change with reference to inflation
(i.e., fares are described in real and nominal
terms). The overall (average) fare change is also
provided, and sometimes the net increase that
is expected in farebox income is also quoted.
The announcement will usually make explicit
linkage between the planned fares changes and
the program of works / improvements that the
additional income is intended to support.
14
Recommendation 2:
Fares policy, and particular fare
changes, should make clear linkages
between the outputs that the fare
changes are intended to support,
especially in the case of above
inflation fare increases. This would
improve transparency and support
a more mature discussion about
the role that fares play in delivering
(and improving) services.
Recommendation 3:
Fares policy should be independent
of the political cycle wherever possible,
to ensure that continuity of policy
objectives can be achieved free
of political influence. There seems
to be little doubt that fare levels
across Australian jurisdictions are
at an unsustainably low level and
the balance between user pays
and government subsidy needs
to be addressed.
FARES AND TICKETING RESEARCH REPORT | 9
2.2.2 Fares integration and simplification
What do we mean by integration and simplification?
Two terms are often used interchangeably when considering
the ease with which customers comprehend a fares system
– these are ‘integration’ and ‘simplification’.
Simplification aims to create a fares structure that is easy
for customers to understand. Generally, this involves a
reduction in the number of fares charged, and/or reducing
the number of fare products available. Customers generally
better understand what they are likely to be charged when
they travel.
Integration of fares and ticketing offers the customer the
opportunity to travel across multiple modes of transport
using only one common form of media. Integration may
incorporate separate fares structures for different modes,
meaning the actual tariff charged is reflective of the number
of modes travelled upon (e.g. Sydney), or use common fares
that represent the total journey rather than the number of
modes used (e.g. Melbourne). It is notable that Sydney is the
only major city where fares are not fully integrated across
modes, although a “transfer discount” has been introduced
from September 2016 that will remove the existing significant
financial disincentive to use multiple modes to complete a
journey (see Section 3.2.2).
Whilst fares integration represents a form of simplification,
we treat these concepts separately as far as possible in
this report.
Customers typically prefer a direct service that avoids the
need to transfer. There is little doubt that journeys that
require significant interchanging between public transport
services and/or modes should support fares integration and
thereby avoid the payment of multiple “flagfalls”, particularly
as customers typically prefer a direct service that avoids the
need to transfer between modes and/or services.
2.2.3 Efficiency and social equity
Efficiency and social equity are directly linked to the type
of fare structure adopted, and in particular, the strength of
the relationship between fare levels and distance travelled.
At one extreme, a ‘flat’ fare structure establishes a single
fare regardless of the distance travel, while a point-to-point
distance-based fare structure establishes a unique fare for
each station or stop pair.
From an economic efficiency perspective, it can be
argued that higher fares should be charged to cover the
higher operating costs associated with longer trips such
that customers travelling longer distances are not cross-
subsidised by those travelling shorter distances. Although
sound as a principle, its application is complicated by issues
pertaining to cost allocation (i.e. fixed versus variable) and
time frame (i.e. short versus long-run).
In addition, it is often claimed that passenger using higher
cost (i.e. long distance) services are less price sensitive
than those using making shorter trips and hence revenue
raising efficiency (i.e. maximising patronage for a given
farebox revenue target) dictates that those travelling longer
distances pay higher fares. In general, we would expect the
short-distance market to be most responsive to fare levels
given the range of options available including active transport.
However, there is no consistent evidence of customers being
less responsive to fare increases over longer distances. In
fact, to the contrary, income constraints would suggest that
fare elasticities might actually increase once a “threshold”
fare level is exceeded as customers find public transport
increasingly unaffordable.
From a “benefit” equity perspective, it can be argued that
customers perceive that a fare structure that establishes a
strong relationship between the distance travelled and the
fare paid is fundamentally “fair”. In addition, the multiple fare
levels established by increasingly granular distance-based
structures provides greater opportunity to manage/target the
magnitude and impacts of fare changes.
City Sydney
Total fare =
train fare + bus fare
Single fare for
total journey
Melbourne
System
Example
Journey
Fare
Calculation
Ticket
integration
Fare
integration
Figure 5: Integration in Sydney and Melbourne
as at July 2016
FARES AND TICKETING RESEARCH REPORT | 10
In some cases, it also needs to be recognised that issues
such as housing affordability dictate that those from lower
socio-economic groups tend to reside on the urban fringe and
may have lower levels of public transport service and need
to travel further on average. This might need to be reflected
in a weaker relationship between fare levels and distance
travelled. That is, the implied fare per kilometre progressively
declines over longer distances.
2.2.4 Fare system governance
On a year-to-year basis, the primary governance issue is the
approach and timing to the development and implementation
of fare changes (i.e. typically product introduction or
withdrawal, changes to fare levels).
With the exception of New South Wales, such matters are
solely the domain of the relevant Government Department
with responsibility for the delivery of public transport
services. Fare changes are often implemented in early
January to allow changes to “bed in” before commuters
return to work following the Christmas/New Year period.
In New South Wales, IPART determines the maximum prices
that may be charged by all public transport operators in New
South Wales. In accordance with legislation, IPART adopts a
relatively prescriptive approach to the fares determinations
that considers, among other things, the cost of service
delivery, protection of consumers from the abuse of
monopoly power in terms of prices, pricing policy and service
standards and the need for greater efficiency in the supply of
services so as to reduce costs for the benefit of consumers
and taxpayers. The process also provides for submissions
to be prepared and submitted by interested parties and
participation in public hearings. While the independence
and transparency of the NSW process to fare setting is
an undoubted strength, it does not necessarily provide
the same degree of policy flexibility that exists in other
jurisdictions by virtue of its prescriptive approach.
A related question is that of the role of the private sector in
setting fares. As described above, fares will typically be set
by government or a regulatory body. Whilst that represents
a robust approach which is widely adopted worldwide, there
is a need to ensure that the fares policy set is consistent
with contractual obligations which private operators might
have been signed up to. For example, if a private contractor
is obliged to use all reasonable efforts to increase patronage
and is incentivised to do so, then a fares policy associated
with significant fare increases would make achievement
of the patronage targets particularly difficult.
Similarly, ticketing can potentially act as an unintentional
barrier to new market entrants. If a well-established,
integrated ticketing solution is not offered to new entrants
or private operators, then customers may find that separately
priced trips prove less attractive, or that the need for a
separate ticket / product is a disincentive to travel with the
new operator.
Recommendation 4:
Franchise obligations should be
made with appropriate consideration
of fares policy, and in particular,
consistency between future fares
policy plans and future patronage
/ revenue obligations of operators
would be desirable. Ticketing systems
and architecture should be offered
universally across a jurisdiction
wherever possible, such that the lack
of that system is not a disincentive
to travel on any particular operator.
FARES AND TICKETING RESEARCH REPORT | 11
3 FARE STRUCTURE
3 FARE STRUCTURE
CURRENT STATE
From a fare structure perspective, the key consideration is the
strength of the relationship between fare levels and distance-
travelled. At one extreme, a flat fare structure establishes
no relationship between the fare paid and distance travelled,
while zonal and distance-based structures can impose a
progressively stronger relationship between fare levels and
distance travelled. At the other extreme, a unique fare can be
established for each station or stop pair.
All of the popular fare structures observed globally (i.e.
flat, distance-based and zonal) are represented in major
Australian cities. Some smaller systems (e.g. Adelaide
and Canberra) maintain flat fares systems, whereas larger
systems (e.g. Sydney and South East Queensland) have
retained more complex fares structures. However, system
size is not a predictor of fare structure settings, with Perth’s
system containing many more fare zones than Melbourne for
example. Figure 6 demonstrates this, with Perth fare zones
increasing in 5-10 Km bands, whilst a trip of over 35 Km in
Melbourne will only traverse two zones.
All of the popular fare structures observed globally (i.e. flat, distance-based and zonal) are
represented in major Australian cities.
System size is is not a predictor of fare structure with Perth’s zone system establishing a far more
granular relationship with distance-travelled compared to Melbourne for example.
No strong policy direction is evident in Australia over the past decade apart from Melbourne
making a number of step changes towards a flatter fare structure.
At a global level, there has been a general trend towards fare structure simplification and
integration with a view to unlocking the associated marketing benefits and allowing customers
to change modes or services without financial penalty.
Although the concept of free fares has continued to attract attention, there is no compelling case
for system wide free fare structures. On a case-by-case basis, there may be a rationale for free fare
for certain segments or customers.
FARES AND TICKETING RESEARCH REPORT | 13
Figure 6: Comparison of Perth and Melbourne distances and fare zones
landing ground
landing ground
e
0
Scale
5km
Scale
5km
0
Inset A
Scale
0
800m
For information
further south
see Inset B
ZONE 5
ZONE 6
ZONE 7
ZONE 8
ZONE 9
Zone Information
Zone 5 includes:
Zone 6 includes:
Zone 7 includes:
Carabooda
Chidlow
Jarrahdale
Beechina
Wooroloo
Yanchep
Wundowie
Two Rocks
NORTHBRIDGE
EAST PERTH
PERTH
RIDGEWOOD
JINDALEE
MELALEUCA
MADDINGTON
CAMILLO
HAYNES
HILBERT
STONEVILLE
CHIDLOW
RESERVOIR
JARRAHDALE
KENWICK
CANNINGTON
WELSHPOOL
ALKIMOS
WEST
PERTH
NORTH
PERTH
BOUVARD
DARLINGTON
BASKERVILLE
HERNE HILL
MILLENDON
STRATTON
GREENMOUNT
BOYA
ELLENBROOK
BELHUS
HENLEY BROOK
MIDDLE SWAN
VIVEASH
MIDVALE
BELLEVUE
HAZELMERE
FORRESTFIELD
WHITEMAN
WHITBY
COOLOONGUP
PERON
SHOALWATER
HILLMAN
LEDA
CASUARINA
WELLARD
CARDUP
BUTLER
MERRIWA
BYFORD
MEDINA
CALISTA
POSTANS
ORELIA
PARMELIA
NOWERGUP
NEERABUP
LOCKRIDGE
CAVERSHAM
EDEN HILL
PINJAR
CLARKSON
MINDARIE
TAMALA PARK
KINROSS
KEWDALE
MARIGINIUP
BALLAJURA
BEECHBORO
NORANDA
KIARA
WUNGONG
BEDFORDALE
EMBLETON
REDCLIFFE
ILUKA
CONNOLLY
MARTIN
SINAGRA
WALLISTON
LESMURDIE
CARMEL
WANDI
BANJUP
ANKETELL
WATTLE GROVE
MT NASURA
HENDERSON
HOPE VALLEY
WATTLEUP
MANDOGALUP
HEATHRIDGE
MULLALOO
BELDON
KALLAROO
HUNTINGDALE
SOUTHERN RIVER
HILLARYS
PADBURY
SORRENTO
MARMION
KINGSLEY
GREENWOOD
HAMERSLEY
DUNCRAIG
KOONDOOLA
MARANGAROO
GIRRAWHEEN
TRIGG
SCARBOROUGH
GNANGARA
WANGARA
DIANELLA
CULLACABARDEE
LANDSDALE
MENORA
BEDFORD
INGLEWOOD
TUART HILL
JOONDANNA
COOLBINIA
WEMBLEY
INNALOO
BALGA
NOLLAMARA
YOKINE
CARINE
GWELUP
BALCATTA
KARRINYUP
DOUBLEVIEW
BELMONT
CLOVERDALE
RIVERVALE
JANDABUP
THORNLIE
LANGFORD
FERNDALE
WILSON
SUCCESS
NEDLANDS
DALKEITH
BICTON
ATTADALE
APPLECROSS
ARDROSS
COMO
MANNING
BENTLEY
SHELLEY
RIVERTON
KENSINGTON
KARAWARA
MUNSTER
BEELIAR
OAKFORD
FORRESTDALE
CRAWLEY
COOGEE
BEACONSFIELD
PARKWOOD
LYNWOOD
CANNING VALE
YANGEBUP
COOLBELLUP
SPEARWOOD
ROSSMOYNE
WILLETTON
LEEMING
ATWELL
PALMYRA
MELVILLE
WILLAGEE
O'CONNOR
KARDINYA
SAMSON
HILTON
BRENTWOOD
WINTHROP
BATEMAN
MURDOCH
MYAREE
LEXIA
HOCKING
PEARSALL
CRAIGIE
WOODVALE
MALAGA
BALDIVIS
ST JAMES
WANNEROO
CARRAMAR
MADELEY
DARCH
WESTMINSTER
MIRRABOOKA
FREMANTLE
ROCKINGHAM
KELMSCOTT
GOSNELLS
THE VINES
KARRAKUP
MUNDIJONG
MT CLAREMONT
FLOREAT
CHURCHLANDS
WOODLANDS
ASCOT
MAYLANDS
JANDAKOT
TAPPING
BULLSBROOK
OLDBURY
MARDELLA
JOONDALUP
SECRET HARBOUR
GOLDEN BAY
KARNUP
SINGLETON
STAKE HILL
LAKELANDS
MANDURAH
PARKLANDS
BARRAGUP
GREENFIELDS
COODANUP
FURNISSDALE
WAIKIKI
WARNBRO
PORT KENNEDY
SAFETY BAY
BALDIVIS
WANNANUP
FALCON
ERSKINE
DAWESVILLE
ASHBY
CURRAMBINE
WARWICK
STIRLING
EDGEWATER
BRIGADOON
MIDLAND
KOONGAMIA
MORLEY
BICKLEY
KALAMUNDA
BERTRAM
BROOKDALE
MT RICHON
ARMADALE
COTTESLOE
LATHLAIN
HERDSMAN
SWANBOURNE
MUNDARING
ROLEYSTONE
WAIKIKI
WATERFORD
HOVEA
PARKERVILLE
MT HELENA
RED HILL
HARRISDALE
SOUTH
GUILDFORD
KWINANA
TOWN
CENTRE
OCEAN
REEF
ALEXANDER
HEIGHTS
EAST
VICTORIA
PARK
PEPPERMINT
GROVE
EAST
FREMANTLE
SOUTH
FREMANTLE
MT
HAWTHORN
NORTH
BEACH
SOUTH
PERTH
MT
PLEASANT
WEMBLEY
DOWNS
HAMILTON
HILL
BANKSIA
GROVE
KWINANA
BEACH
QUINNS
ROCKS
SALTER
POINT
WHITE GUM
VALLEY
NAVAL
BASE
EAST
ROCKINGHAM
DARLING
DOWNS
MAHOGANY
CREEK
GLEN
FORREST
PERTH
AIRPORT
MAIDA
VALE
GOOSEBERRY
HILL
OSBORNE
PARK
WEST
SWAN
MOSMAN
PARK
BIBRA
LAKE
UPPER
SWAN
JANE
BROOK
SAWYERS
VALLEY
SAN
REMO
SILVER
SANDS
HALLS
HEAD
MEADOW
SPRINGS
DUDLEY
PARK
SOUTH
YUNDERUP
NORTH
YUNDERUP
HELENA
VALLEY
NORTH
FREMANTLE
ALFRED
COVE
BULL
CREEK
SOUTH
LAKE
NORTH
LAKE
HAMMOND
PARK
HIGH
WYCOMBE
PAULLS
VALLEY
PIESSE
BROOK
SWAN
VIEW
KINGS
PARK
WEST
PERTH
HIGHGATE
SEVILLE
GROVE
AUBIN
GROVE
PIARA
WATERS
THE
SPECTACLES
BURNS
BEACH
CHAMPION
LAKES
COCKBURN
CENTRAL
MADORA
BAY
WATERMANS
BAY
NORTH
COOGEE
MT LAWLEY
THIS MAP SHOULD ONLY
BE USED AS A GUIDE.
Refer to individual timetables
for detailed information on
fare/zone boundaries.
ZONE 2
ZONE 3
ZONE 4
ZONE 5
ZONE 6
ZONE 1
ZONE 2
ZONE 3
ZONE 4
ZONE 5
ZONE 6
ZONE 1
Inset B
FREE TRANSIT ZONE
Indian
Ocean
Indian
Ocean
Swan River
Mirrabooka
Morley
Booragoon
Victoria
Park
North Fremantle
Victoria Street
Mosman Park
Cottesloe
Grant Street
Swanbourne
Claremont
Loch Street
Karrakatta
Daglish
Subiaco
West Leederville
Leederville
Warwick
Whitfords
Edgewater
Currambine
Mt Lawley
Maylands
Bayswater
Ashfield
Success Hill
Guildford
Midland
Queens Park
Cannington
Beckenham
Kenwick
Seaforth
Challis
Sherwood
Armadale
East Guildford
Kelmscott
Welshpool
Oats Street
Carlisle
Victoria Park
Burswood
Meltham
Bassendean
Stirling
Glendalough
Shenton Park
Showgrounds
Joondalup
Fremantle
Karrinyup
Curtin
University
Maddington
Kalamunda
Clarkson
Greenwood
Woodbridge
Thornlie
Murdoch
Bull Creek
Canning Bridge
Wellard
Rockingham
Warnbro
Mandurah
Esplanade
McIver
Claisebrook
City West
East Perth
Esplanade
Busport
Cockburn Central
Kwinana
Gosnells
Wellington
Street
Perth
Warnbro
Butler
Mends St
Perth
Underground
Kwinana
Hub
e
Legend
Inset A
KINGS
PARK
Bus Route
Ferry Route
Major Road
Armadale & Thornlie Railway
Fremantle Railway
Joondalup Railway
Mandurah Railway
Midland Railway
Train and Bus Transfer
Train Transfer
Bus Station
Train Station
Special Events Station
Ferry Terminal
Free Transit Zone
Circle Route
Effective: 5 June 2014; DoT 9020110G; [email protected]
Barrack St
S
w
a
n
R
i
v
e
r
CITY
BEACH
SAFETY
BAY
ORANGE
GROVE
HACKETTS
GULLY
Perth Melbourne
In summary, there is no dominant structure and where distance-based structures have been maintained, there is typically a
strong “taper” in the relationship between distance and fare levels (i.e. fares continue to increase over longer distances but
at a slower rate). This is particularly evident in Sydney rail fares. Figure 7 below shows how the cost per kilometre falls as the
distance travelled increases.
Over 35km
from city
Over 35km
from city
Over 30km
from city
FARES AND TICKETING RESEARCH REPORT | 14
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
$0.00
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.35
$0.40
$0.45
Up to 10Km 10 to 20Km 20 to 35Km 35 to 65Km Over 65Km*
Opal Adult Single Fare Cost per Km at furthest possible distance
(*) For distances over 65Km, assumes 100 Km as maximum distance possible
Source: Opal Card Website, as at July 2016
Figure 7: Sydney Opal fares implied per Km, as at July 2016
FARES AND TICKETING RESEARCH REPORT | 15
3.1 OBSERVED TRENDS
3.1.1 Australia
From an Australian perspective, no strong policy trend is
evident in policy reforms implemented over the past decade.
Two smaller Australian cities (i.e. Newcastle and Canberra
in 2002
15
) have moved to flat fare structures. On the other
hand, full fares integration was achieved in South East
Queensland in 2004 via the extension of the concentric ring
model employed by Brisbane Transport for its bus operations
(see case study below). This has maintained a strong
relationship between fare levels and distance travelled, with
23 zones defined between the Sunshine and Gold Coast. This
relationship between fare levels and distance travelled will be
reduced somewhat in South East Queensland from January
2017, with the introduction of a new 8 zone model.
This lack of consistent policy direction is also evident in
recent changes for Sydney and Melbourne, with the former
retaining distance based fares, but with Melbourne making
initial steps towards a flatter fares structure (with the
effective abolition of the Zone 1+2 fare). Figure 8 below
demonstrates the relative breadth of policy approach to fare
structures in major Australian cities.
15. http://www.icrc.act.gov.au/wp-content/uploads/2013/02/finaldeterminationactionpricing2003-2006cw.pdf
16. Streeting, M. and Barlow, R., Understanding Key Drivers of Public Transport Patronage Growth - Recent South East Queensland Experience, 2007
Free
Fares
Simplest
Structure
Most
Complex
Structure
Flat
Fares
Minimal
Zones
Multiple
Zones
Distance
Based
Canberra
Adelaide
Melbourne
Brisbane
Perth
Hobart
Sydney
Recent reduction in
fares for travel in
metropolitan area,
and free fares for
Tram in CBD
Fares vary by mode.
Transfer discount for
multi-modal trips
introduced in
September 2016
Number of zones
reduced from
23 to 8 from
January 2017
Section
based fares
Figure 8: Summary of fares structures in Australia
CASE STUDY:
SOUTH EAST QUEENSLAND
FARES INTEGRATION
In 2004, the newly established TransLink authority
introduced the full integration of fares and
ticketing for public transport services in South
East Queensland. These fares and ticketing
changes were implemented in conjunction with
improvements to service levels, service quality
and marketing efforts. The combined impact of
these changes, in addition to exogenous factors
(e.g. population, fuel prices, road congestion)
resulted in patronage growth in in 2005/06 of
12%. Detailed analysis
16
of the impacts of each
of these factors suggested that the ‘integration
effect’ represented 3.5% of the total increase of
12% in 2005/06.
FARES AND TICKETING RESEARCH REPORT | 16
17. EMTA, Study on electronic ticketing in public transport, 2008
18. Fare Policy Reform in the Smart Card Era, UITP
European and North
American cities are
characterised by
relatively coarse fare
structures (i.e. flat
or coarse zonal)
Australasian cities comprise a
range of structures, although
flat and zonal structures
tend to dominate (e.g. zonal
structures in Perth and
Brisbane and flat/time based
structures in Christchurch)
Asian cities tend to
favour distance based
fare structures with
flat fares offered for a
selection of product
types (e.g. daily
and monthly)
Source: Fares Policy Reform in the Smartcard Era, Streeting & Hobbs (UITP)
Figure 9: Complexity of fares structures globally
3.1.2 International trends
Trends in simplification
The global trend for fares structure is toward simplification,
through the introduction of zone based or flat fare
structures
17
. This is particularly noteworthy given that the
introduction of “touch in – touch out” smartcard ticketing
systems from the late 1990s increased the ability to support
relatively complex distance-based fares structures. However
the use of more complex distance-based fare structures is
generally limited to systems in Asia
18
.
Although it is difficult to ignore the obvious impact fare levels
have on farebox cost recovery, international evidence also
suggests that it is the more commercially oriented transit
operators who have tended to maintain distance-based
fare structures rather than embrace customer friendly fare
simplification initiatives.
The main benefit of simplification is reducing customer
confusion around the fare structure. Such confusion can be
a barrier to travel, both for non-users and for making new or
unfamiliar journeys; simplifying the fare structure can thus create
a greater willingness to travel (and increase public transport
patronage). Simplification also has the potential to drive
operational benefits (such as improved bus dwell times through
eliminated need for touching off under a flat fare structure).
The downside of simplification is a reduced ability to target
specific customer groups according to their willingness
and ability to pay. From an economic standpoint it can
be argued that the fare charged should be reflective of
willingness to pay and/or the cost to provide each service,
e.g. higher fares for longer journeys.
FARES AND TICKETING RESEARCH REPORT | 17
The overall trend to simplification suggests many authorities
believe the ‘marketing’ benefits of simplification in dense
urban networks outweighs the benefits of finely targeted
fares. Separating the simplification impacts from other
effects (such as patronage growth through lower fares
or the impact of service changes implemented at the same
time) can be difficult.
Trends in integration
The simplification of fares structures often includes fares
integration across available public transport modes.
Table 1 offers a further selection of case study examples
where fares integration benefits have been realised, though
it is noted that these benefits are often combined together
with simplification benefits and/or service improvements.
Significant increases in patronage have generally occurred
as a result of these integration initiatives.
CASE STUDY:
LONDON BUSES.
In 1997, the number of fare zones was reduced
from six to two; the short term estimate of the
trips generated by this initiative was an additional
1.5%. A further simplification to a single flat fare
took place in 2000. TfL quoted “evidence of a
pure ‘simplification effect’. That is, new journeys
appeared to be made merely because the new
fare structure is easier to understand”
19
. There
is evidence in the UK that the long term elasticity
is twice that of the short term
20
; this implies
the long term simplification effect would be
of the order of a 3% uplift in trips.
CITY INITIATIVE PATRONAGE IMPACT
New York City, USA
Population 8.4m
Introduced integrated fares in 1998 following
implementation of integrated ticketing in 1996
40% increase (bus)
17% increase (subway/rail)
21
London, UK
Population 8.3m
Introduction of Travelcard (multi-modal ticket) 10% increase (Tube)
16% increase (bus)
22
Freiburg, Germany
Population 216,000
The introduction of low cost, multi-modal travel cards
with wide regional validity and fare capping
7.5% growth p.a. (1983-95)
(price and simplification effects combined)
23
Zurich, Switzerland
Population 360,000 (Wider pop 1.4m)
Introduction of integrated fares and ticketing, zonal
fares (c. 1990)
12% increase (system wide)
24
Table 1: Examples of integration initiatives and impacts
Perception gaps – what are they?
Research into the barriers to public transport usage reveals
that whilst there are many ‘rejecters’ of public transport,
there are also many who are willing to use public transport -
if the barriers to use that they perceive can be removed
or reduced. Beyond service access, frequency and quality,
these barriers extend to customers’ understanding of
the fares system. For example, research carried out in
Manchester testing customers’ understanding of fares for
a number of specified point-to-point trips revealed that 46%
of respondents overestimated fares by an average of 42%
25
.
Tangible barriers to travel such as service frequency can
be addressed by running more services; however
perception gaps (referred to as “soft barriers”) may be
addressed by simplifying the information presented to
customers and improving the way in which these messages
are delivered (using clear and consistent messages). This
does not necessarily imply that the service offering (or
components of it) need to change, rather the way that it is
conveyed to customers.
19. Transport for London, Effects of the 2000 Fares Revision on Bus Passenger Travel, 2001
20. The demand for public transport” a practical guide (TRL, Table 6.55), London Underground Research note U1
21. Booz Allen Hamilton, The Impact of Fares and Ticketing Integration on patronage International Case Studies
22. The Demand for Travel and for Travelcards on London Regional Transport (Journal of Transport Economics and Policy), Jan 1991
23. Fitzroy, F. & Smith, I., Public transport demand in Freiburg: why did patronage double in a decade?, 1998
24. Booz Allen Hamilton Report, Integrated Fare System for South East Queensland, 2000
25. Goulcher and King, GMPTE Fares Research, November 2008
FARES AND TICKETING RESEARCH REPORT | 18
CASE STUDY: LONDON FARES.
In the late 1990s research showed that a large proportion of potential customers believed that fares were higher
than that actually offered, with around 40% of respondents believing the fare to be higher by an average of around
40%
26
. Tariffs finely segmented by distance or origin and destination or by time of day were assessed as sensible
in theory, but lacked an understanding of consumers’ perceptions and motivations. In fact, a more sophisticated
approach combining a simple basic tariff, widely marketed, with carefully targeted discounts to certain segments
(families, young people) was adopted. Marketing campaigns to close the perception gaps were launched off the
public transport systems to target non-users, using radio and street-side posters. As a key part of a wider package
of works to simplify the system, this led to net increases of 5% in patronage and 16% in revenue
27
.
26. Adam Goulcher, former director of London Underground
27. Adam Goulcher, former director of London Underground
3.2 FUTURE POLICY REFORM
3.2.1 Efficiency and social equity
The motivation for distance based pricing is typically based
on allocative efficiency (setting fares in accordance with
elasticity levels), technical efficiency (setting fares to better
match the costs of service provision) and social equity (to the
extent that it is fairer to charge customers more for travelling
longer distances). However there is no universally compelling
rationale on either economic efficiency or equity criteria that
supports the retention or adoption of a specific fare structure
over another.
While the “benefit” equity argument is perhaps the strongest
one in terms of supporting distance-based pricing, together
with the enhanced capacity to manage fare increases
spatially, the potentially regressive nature of distance-based
pricing suggest that some moderation of fares against
distance (i.e. higher absolute fares but a reduction in average
fares per kilometre) will generally be appropriate.
In addition, fare elasticity evidence needs to be assessed
on a case-by-case basis. This will reveal customer attitudes
(through willingness to pay) and enables the development of
the most appropriate structure for that jurisdiction.
3.2.2 Fares integration
Before the advent of smartcard ticketing systems, full fares
integration (i.e. the same fare being payable for a given
origin-destination pair regardless of the number and mix of
service used) was the only means available of delivering
the customer a “seamless” travel experience using a single
ticket. Melbourne, Perth and South East Queensland all
migrated to full fares integration before the roll out of their
respective smartcard systems. On the other hand, seamless
travel was only achieved in Sydney with the completion of
the Opal smartcard roll out in late 2014. Sydney will move a
step closer to fares integration from September 2016 with a
introduction of a $2 adult ‘transfer discount’ where multiple
modes are used to complete a journey and the transfer is
within 60 minutes of alighting the previous mode.
There would seem to be little doubt that a service delivery
model that requires significant interchanging between
services and/or modes should support fares integration and
thereby avoid the payment of multiple “flagfalls”, particularly
as customers typically prefer a direct service that avoids the
need to transfer.
Historically, the biggest barrier to partial or full fares
integration across services and/or modes has been the
development of sustainable farebox revenue sharing models
(i.e. to allocate revenue between services and operators)
and the often wide variation in the costs of service provision
across modes.
The need for farebox revenue sharing mechanisms has largely
become a “non-issue” as Australian cities have progressively
migrated from net to gross cost service contracts where
Government typically retains all farebox revenue risk. For
example, the introduction of gross cost service contracts in
the mid-2000s was a key enabler of integrated fares in South
East Queensland. An exception is Melbourne, where Metro
Trains and Yarra Trams hold revenue risk, sharing 70% of the
total metropolitan farebox revenue.
FARES AND TICKETING RESEARCH REPORT | 19
Material differences in the cost of service provision between
modes can also be a barrier to fares integration, particularly
where farebox cost recovery is a key policy driver. In the
Australian context, ferry services provide the most extreme
example of operating cost differentials compared to other
public transport modes. All ferry services provided by
Brisbane Transport on the Brisbane River operate under full
fares integration, while all Sydney Ferries services provided
on Sydney Harbour are provided with integrated ticketing
(i.e. via Opal) but without fares integration (i.e. ferry fares are
substantially higher than those applicable to other modes).
3.2.3 Simplification
In principle, there is a strong case for the simplification of
the customer proposition around fares. Whilst this can be
achieved through the flattening of fares (a reduction of the
number of fares charged), we concluded that the case for
change could only be made on a case-by-case basis. Better
marketing of the overall proposition (to remove perception
gaps) will likely also be beneficial (see case study below) by
removing barriers to public transport usage and helping to
grow the market.
CASE STUDY:
MELBOURNE FARES
A 2011 study conducted for Metlink focussed on
customer perceptions of travel at the weekend.
At the time, weekend fares were capped at $3,
however 62% of users in the study overestimated
the fare by 135% (i.e., thought that the daily price
would be $7.06). An even higher proportion (78%)
of near market users in the study overestimated
the weekend public transport fare for Melbourne
by an average of almost 90% of the weekend
myki fare.
CASE STUDY: REMOVAL
OF PRICE DIFFERENTIALS
ACROSS MODES
Singapore provides one example of a move to
distance based pricing with a single boarding
charge, which was fully implemented in mid-2010
as a means of ensuring price was totally removed
as a driver of public transport service choice. LTA
recognised that transfers are an integral part of
the success of their system and that the previous
fares structure discouraged people from making
transfers to complete their journey
29
. The current
distance-based fares structure now provides
customers with more flexibility in the choice of
routes to complete their journey. Customers took
advantage of these changes, with overall system
patronage and farebox revenue increasing, and
approximately 72% of commuters saving on their
journey costs
30
.
3.2.4 Variation of fare by mode or service type
There is a trade-off to be made between the simplicity
benefits associated with common fares across modes (as
is currently done in Melbourne and Brisbane), and offering
modal specific prices to align with the costs of service
provision and the associated customer willingness to pay
(broadly the approach currently taken by Sydney).
Customers who transfer between services to complete their
journey perceive transfers as being inconvenient. This is often
referred to as a “transfer penalty”, typically encompassing
both the time penalty of waiting for a connecting service and
any additional fare payable. It is estimated that the waiting
time component of the transfer penalty is perceived by the
passenger as 1.5-2 times the actual waiting time
28
. If service
integration and optimisation is an objective, then ensuring
that there are no price penalties for transfers should be
one of the primary objectives of fares policy (i.e. meeting
mobility needs on a “mode agnostic” basis). Significantly, as
discussed in Section 3.2.2, Sydney will introduce a “transfer
discount” from September 2016 as a means of supporting
multi-modal travel without moving to full fares integration.
28. Reed, TB, Reduction in the Burden of Waiting for Public Transit Due to Real-Time Schedule Information: A Conjoint Analysis Study, Seattle, 1995; also ATC
Volume 4 (Table 1.6.1)
29. http://www.mot.gov.sg/About-MOT/Land-Transport/Public-Transport/Fares---Payment-Systems/
30. Ministry of Transport - Written Answer to Question on Distance-Based Fare System (Impact on-Travel and Operators Revenue), 2012
FARES AND TICKETING RESEARCH REPORT | 20
3.2.5 Free fares
Making public transport free can be employed in an attempt to induce a significant increase in patronage, incentivise modal
shift, particularly from car users, and attract new users to public transport. This obviously comes at the cost of surrendering
farebox revenue.
Potential benefits of free fares schemes
Advocates of a free fares scheme would highlight five main
areas of benefit:
• The removal of the need to pay fares, even on limited
services, can potentially reduce the costs associated with
collection and administration of fares, as well as costs
related to enforcement of fare compliance;
• The introduction of free fares can potentially improve
vehicle loading/unloading times by removing the need
for any ticket interaction at entry/exit. However, if
patronage increases are significant, these time savings
per passenger may be eroded;
• Greater social inclusion through the reduction of cost
barriers to travel;
• Simplification of public transport by removing customers’
need to comprehend fare rules and ticket purchase
procedures; and
• Free fares can induce significant shifts to public transport
from private car travel, reducing road network congestion
and emissions, as well as improving public health through
increased walking to/from public transport services.
Potential disbenefits of free fares
The largest downside to free fares is the dramatic effect that
this can have on farebox revenue. This would likely lead
to a need for additional government subsidy to support the
public transport system. UITP analysis
31
has shown that
a 10% improvement in service levels can generate a 5%
increase in patronage, versus a 3% rise in patronage for
a 10% decrease in fares, suggesting that the revenue
foregone through introducing free fares may be better spent
on improvements to services.
Limited free fares schemes risk adding more complexity into
a city’s fares system, with customers required to understand
the specific services, times or areas where payment is not
required. This confusion may add to incidences of inadvertent
fare evasion.
If significant patronage increases are experienced as a
result of introducing free fares, there is a risk that the
services included in the scheme may become overcrowded,
affecting both customer satisfaction and service reliability/
on-time running.
Overall, we see no compelling case for system wide free
fares structures. On a case-by-case basis, there may be a
rationale for free fares for certain segments or customers.
31. UITP, Better Public Transport Fare Policy for More Resilient Funding, 2014
FARES AND TICKETING RESEARCH REPORT | 21
4 PRODUCTS AND
CUSTOMER SEGMENTS
4 PRODUCTS AND
CUSTOMER SEGMENTS
4.1 CURRENT STATE
4.1.1 Core products offered to customers
The single fare continues to underpin all public transport
systems in Australia’s major cities. In the smartcard era,
the role of the single fare has increasingly focussed around
the irregular public transport customer, including both
residents and non-residents, notably tourists. There is also
evidence that many public transport customers from lower
socio-economic groups continue to rely on single fares
because they are unwilling or unable to justify holding funds
on a smartcard.
The single fare is inexorably linked with the goal of a cashless
fare collection system, while at the same time supporting
access to public transport services. Major Australian cities
have pursued vastly different strategies in this regard.
Melbourne does not support the purchase of a single fare
on any mode. Sydney has and will continue to support single
fare purchase on heavy rail, light rail, ferry and some bus
services, while Brisbane supports single fare purchases
on all modes, albeit at a very significant premium to an
equivalent smartcard fare.
The introduction of smartcard ticketing has seen the progressive demise of most traditional
product concepts, with Australian cities global leaders in moving to a “product free” world.
Fare capping (trips or value) is now the preferred means of rewarding regular customers,
although the approach adopted by major Australian cities varies significantly. Sydney is unique
in that fare caps are available on both a value and trip basis – other Australian cities adopt to one
or the other approach.
Australian jurisdictions offer a range of off-peak and weekend discounts, including free fares in
the early AM (Melbourne).
Even where smartcard systems are well established and card takeup among users is high, all
major cities apart from Melbourne still offer a “distress” single cash single ticket option for
irregular customers and tourists. Given the high costs of supporting cash fare payment, such fares
are typically only available at a signficant premium to equivalent smartcard fares.
Specific tourist products are very limited and arguably the only clearly successful tourist product
in the Australian market is the “go-explore” daily product introduced by Translink for the G:Link
tram on the Gold Coast. The near term introduction of open payment models using contactless
debit and credit cards will be of significant value to the tourist market.
FARES AND TICKETING RESEARCH REPORT | 23
The introduction of smartcard ticketing across major
Australian cities has seen the progressive demise of many
traditional product concepts such as daily/return fares, multi-
ride tickets, weekly passes, monthly passes and annual
passes. Major Australian cities have been global leaders
in moving to a “product free world”. In contrast, major
international cities, including London and Paris, have retained
legacy product concepts despite achieving high levels of
smartcard take-up.
The introduction of fare capping on the back of smartcard
ticketing has served to preserve and/or enhance the benefits
that formerly accrued to weekly and longer term period pass
holders. That is, the frequent, loyal public transport customers
continue to be rewarded with free or discounted travel,
typically in off-peak periods where the costs of meeting
additional demand are lowest (i.e. weekends and weekday
evenings). However, customers also avoid the limitations of
traditional product concepts where an upfront decision to
purchase (say) a weekly ticket was based on the expectation of
five days of commuting and some additional non-commuting
trips. In an environment of greater employment flexibility
(e.g. working from home, greater off-peak travel), the value
proposition of such rigid traditional product concepts has
inevitably been diluted for many customer groups.
4.1.2 Tourist market and occasional users
The delivery of ticketing services to occasional users has
traditionally presented a greater challenge to transit operators
than regular users. Regular users typically have a sound
knowledge of the ticketing system and well-defined patterns
of travel making it easier to support their needs. Conversely,
the delivery of ticketing options for occasional users is often
difficult and cost ineffective.
Occasional users present public transport authorities with
different needs to those of regular users. The needs of
the occasional user can easily be overlooked by policy
makers, who often focus disproportionately on the needs
of perceived ‘core’ markets (e.g. commuters). At the same
time, the average fare paid by the occasional user is typically
considerably greater than the average fare paid by most
regular users. Therefore, it is in the best financial interest
of public transport authorities to attract greater numbers of
occasional users.
But catering for the occasional user is not straightforward.
Occasional users may lack familiarity with the ticketing
system and its procedures and in some cases they may
be attempting to overcome language barriers. Accordingly,
the core ticketing system requirements for servicing the
occasional user can be summarised as follows
32
:
• Simple, easily understood and intuitive – no barriers to
usage are presented
• Accessible – ideally allowing the ticketing solution to be
used in other markets or via a common media (such as
contactless credit cards)
• Cost effective – ticketing solution does not cost the
operator more
On the question of accessibility, public transport authorities
from a selection of states did work together in the early
2000s to develop a common interoperable standard for
smartcard ticketing in Australia - called the Australian
Transport Interoperability Protocol (ATIP), but with no tangible
evidence of these standards being applied in jurisdictions.
The emergence of new open payment solutions (e.g. using
contactless debit or credit cards) are likely to address the
interoperability issue in the near-term in our major cities.
Similarly, previous attempts to offer seniors full fares
reciprocity across Australian states have been unsuccessful
due to lack of agreement over funding.
4.1.3 Temporal pricing
Temporal pricing is as simple as offering different prices
across time periods and/or days of the week for the same
travel. Typically this might be via offering discounted fares
outside of peak times. Smartcard ticketing technology
enables off-peak fares to be automatically adjusted without
the need to purchase a separate fare product in advance; as
such, this media is most commonly associated with prices
that vary with time.
Varying fares by time of day can have two main objectives:
• alter the behaviour of existing customers by helping to
manage or spread demand at the peak periods; and
• attract new customers at those times when excess
capacity is available.
32. SERVING THE OCCASIONAL USER IN A SMARTCARD ENVIRONMENT – AN AUSTRALASIAN PERSPECTIVE (Streeting et al)
FARES AND TICKETING RESEARCH REPORT | 24
The overall costs of providing public transport services
are generally driven by providing sufficiently high levels
of service to meet demand during peak travel periods,
with lower levels of service generally provided in off peak
periods. From an economic standpoint it can be argued
that customers would and/or should pay fares that reflect
the quality of the service being provided at various times
of the day or week. In addition to the objectives mentioned
above, time-of-day pricing can also aim to improve social
equity, particularly to reduce the financial burden on transit
dependent passengers
33
. This passenger segment may
include those without private transport options (including
those too young to drive), the elderly, and persons with
lower incomes. Typically these passengers take a higher
proportion of non-work trips, which are more likely to occur
during off-peak hours.
How is temporal pricing applied in Australia?
Table 2 shows that most public transport networks in
Australia offer at least one form of time-of-day pricing, the
most popular being discounts for travel during weekday off-
peak periods and reduced fare caps for travel on weekends.
However a range of approaches are taken, including:
• Free fares for some modes at certain times of day , but
no reduction in fares between the peaks (Melbourne)
• Reduction in weekday fares at all times bar the morning
and evening peak and a Sunday fare cap (Sydney)
• Reduction in weekday fares between the morning and
evening peaks and after the evening peak (Canberra,
South East Queensland)
• Reduction in weekday fares between the peaks (Adelaide)
• Capped fares if first boarding is after the morning peak
(Perth, Hobart)
33. Smith, M. J., Public Transit and the Time-Based Fare Structure: Examining the Merits of Peak Pricing for Transit
34. It is noted that the IPART draft report on fares recommends that the discount be increased from 30% to 40% to better reflect the lower costs of providing off-
peak rail services
CITY /
JURISDICTION
OFF-PEAK DISCOUNTS (VS PEAK) WEEKEND DISCOUNTS (VS WEEKDAY)
Melbourne 100% i.e. free fares (pre-0715, Trains)
Capped at 50% of daily fare (post-1800 if no travel made prior
to 1800). No other off-peak fares
23% ($6.00 cap vs. $7.80 weekday cap)
100% for seniors (free weekend travel)
Perth $12.40 cap (if first boarding after 0900) $12.40 cap
Sydney 30% (Sydney trains outside 0700-0900 and 1600-1830,
Intercity trains outside 0600-0800 and 1600-1830)
34
83% ($2.50 Sunday cap vs $15 weekday cap)
Adelaide 23-45% (0901-1500) No discount on Saturday
23-45% discount on peak (on Sunday)
South East Queensland 20% (0830-1530 and 1900-0300 in the next day) 20%
Hobart 50% ($4.50 daily cap if first boarding after 0900 vs.
$9.00 daily cap)
50% ($4.50 cap vs. $9.00 weekday cap)
Canberra Up to 20% ($2.37 vs. $2.98 per trip, 0900-1630 and after 1800) Up to 40% ($5.45 cap vs. $9.00 weekday cap)
Table 2: Temporal pricing schemes in Australia, as at July 2016
Source: Public transport authority websites, as at July 2016
FARES AND TICKETING RESEARCH REPORT | 25
The differing approaches of Melbourne and Sydney are
highlighted in Figure 10 above. Fares in Sydney have more
variation, although Melbourne offers the deepest discount
(100% on trains pre 0715; i.e., trains are free at this time).
Results from Melbourne indicate that 10% of passengers
accessing free fares prior to 0710 using the Early Bird ticket
were new public transport users, while 23% had shifted
from travelling in the peak, and the remaining 67% were
existing pre-peak passengers
35
. Melbourne does offer
reduced fares after 1800, but only if no travel has been
made that day prior to 1800.
35. Currie, G., Quick and Effective Solution to Rail Overcrowding: Free Early Bird Ticket Experience in Melbourne, Australia
0%
20%
40%
60%
80%
100%
11pm -
12pm
10pm -
11pm
9pm -
10pm
8pm -
9pm
7pm -
8pm
6pm -
7pm
5pm -
6pm
4pm -
5pm
10am -
4pm
9am -
10am
8am -
9am
7am -
8am
6am -
7am
Up to
6am
Melbourne Sydney (trains)
Source: Public transport authority websites, as at July 2016
Figure 10: Price variation by time of day (peak fare = 100%), as at July 2016
FARES AND TICKETING RESEARCH REPORT | 26
4.2 OBSERVED TRENDS
4.2.1 Core products offered to customers
The introduction of smartcard ticketing often coincides
with a review of that system’s fares structure. In some
instances more complex structures have been introduced,
recognising that customers no longer need to have the
capacity to readily calculate their fare. Conversely, in other
cases, the fare structure has been simplified to help ease
the transition to a new system in light of an already changing
fares collection process.
In Australia, the approach of fares structure and product
simplification has been favoured. In Sydney, the benefits
arising from the removal of longer term periodical products
were anticipated to include passengers only paying for the
travel they use
36
, addressing identified barriers to product
purchase such as significant financial outlay and passengers’
uncertainty about their future travel plans. Changes to
the employment landscape, including flexible working
arrangements and the increasing proportion of part time
employees, also mean that traditional fares products
may not provide the best option for many travellers,
whereas fare capping can often provide a superior customer
value proposition.
It is recognised that some passengers who previously used
longer term products may end up paying more if these
products are removed. However, given that these customers
are already frequent public transport users their sensitivity
to price may be a less significant factor in their travel choice,
meaning that the price elasticity/impact on patronage would
be lower. The overall fares structure changes would aim to
have any patronage decrease from past users outweighed by
an increase in use from other existing and new passengers.
The different product sets used in Australia
Figure 11 shows how Australia takes a wide range of
approaches to smartcard product sets, with most states
providing a unique combination leveraging stored value travel
(SVT) and fare capping concepts.
36. http://www.transportnsw.info/resources/documents/some-paper-tickets-are-being-retired.pdf
SVT Only
SVT and
Period passes
SVT, Daily caps,
Period passes
SVT and
Daily caps
SVT and
Capped trips
SVT, Daily caps
and Capped trips
SVT, Daily caps,
Capped trips and
Capped value
Smartcard offering
Perth Adelaide Melbourne Tasmania Brisbane Canberra Sydney
CapCap and
pass
No cap
Source: Public transport authority websites, as at July 2016
Figure 11: Use of Stored Value Tickets (SVT), passes and caps in Australia
FARES AND TICKETING RESEARCH REPORT | 27
There are two basic ways in which capping is used to either
replicate or replace traditional fare products:
• Capped value, where there is a set maximum amount
a passenger will pay for travel over a defined period,
typically daily, weekly, monthly, or a combination of these.
Melbourne and Perth provide examples of fares being
capped over even shorter timeframes (2 to 3 hours)
according to the fare zones used; and
• Capped trips, where passengers receive free or
discounted travel after completing a defined number of
paid journeys within a defined period, usually a week or
a month. Sydney and South East Queensland provide
examples of weekly trip caps, while Canberra has
implemented a monthly cap on paid trips.
It is notable that Sydney offers both capped value and
capped trips.
Capped value
Capped value schemes offer customers the assurance that
they will not pay more than a certain amount for their public
transport use over a certain period of time. The simplest
traditional form of fare capping is providing free transfers
between services within a set time period, such that
customers pay a single fare for a journey comprising multiple
individual trips. Smartcard systems allow a customer’s travel
patterns and spending to be tracked over a day, a week, or
a month, and for a cap on spending to be applied to one or
more of these time periods. Theoretically, this practice could
be extended to cap travel costs over a year.
Fare capping applied over shorter time periods will benefit
a larger proportion of the market, including infrequent
customers, enticing customers to make multiple journeys
rather than just a single trip. As the cap period increases,
travellers are rewarded for more frequent use of the system,
accessing free travel for the remainder of the period once
they have reached the cap. Of the jurisdictions offering daily
fare capping, Melbourne, Canberra and Hobart offer no other
type of value cap, whilst Sydney also offers capped value over
a longer period.
Daily capping - Melbourne: Fares under the myki ticketing
system are capped over a 2 hour period and over a day,
according to the zones in which a passenger has travelled.
Once a passenger has made a trip, they are entitled to
unlimited trips within a 2 hour period in that zone(s). The daily
cap is twice the value of the 2 hour cap; hence a passenger
need only make a minimum of two trips to reach the daily
cap. Passengers travelling exclusively in Zone 2 pay a lower
cap.
Daily and weekly capping - Sydney: The Opal ticketing
system applies fares value caps on both a daily and weekly
basis. Sydney’s current fare structure involves separate fares
being charged for travel on trains, buses, ferries and light
rail, with the cost of a single full fare ranging from $2.40 for
the shortest bus fare, to $8.80 for the longest train fare. This
means that to reach the daily $15 cap, passengers need to
make as few as two journeys, or four times this amount to
reach the $60 weekly cap.
Capped trips
Capped trips schemes offer customers either discounted
or free travel once they make a certain number of trips
within a defined time period. These schemes typically aim to
encourage and reward existing customers for more frequent
use of public transport, with trip caps generally applied over
a week (Sydney and South East Queensland) or month long
period (Canberra).
CITY
PTA /
SMARTCARD
VALUE CAP (*)
WEEKDAY WEEKLY
Melbourne PTV / myki $7.80 N/A
Sydney TfNSW / Opal $15.00 $60.00
Canberra TfC / MyWay $9.00 N/A
Hobart Metro Tas /
Green Card
$9.00 N/A
Table 3: Capped value schemes in Australia,
as at July 2016
(*) Full fares
Source: Public transport authority websites, as at July 2016
FARES AND TICKETING RESEARCH REPORT | 28
CITY
PTA /
SMARTCARD
TRIPS CAP
WEEKLY MONTHLY
South East
Queensland
Translink / go card 9 journeys,
then free
N/A
Sydney TfNSW / Opal 8 journeys,
then free
N/A
Canberra TfC / MyWay N/A 40 journeys,
then free
Table 4: Capped trips schemes in Australia,
as at July 2016
Source: Public transport authority websites, as at July 2016
The message to customers under this type of scheme may
be easier to understand, as the examples in the capped fares
section show that there can be variation in the number of
trips required before a value cap is reached. Under a capped
trips scheme, customers will still need to understand what is
considered to be a paid trip – whether it is a single trip on a
service, or a single journey that may comprise multiple trips
and transfers within a defined time window.
South East Queensland: Translink’s go card currently
provides customers with free travel once they make nine
paid journeys in a week (set as Monday to Sunday). Translink
makes the distinction between a “journey” and “trip”, with
a journey comprising any number of individual trips made
within a 3.5 hour period, with a maximum of one hour to
transfer between each service.
From January 2017, a less generous capping scheme will
be introduced (i.e. 8 journeys and then a 50% discount for
the rest of the week). This represents a partial move back
to the original go card capping regime (10% journeys and
a 50% discount).
The Queensland Government has suggested that the
combination of lower fares and the tightening of incentives
via capping will still leave 93% of customer better off
37
.
Sydney: In addition to the capped value scheme previously
described, Sydney’s Opal fare system also provides a capped
trips scheme where customers currently receive free travel
once they make eight paid journeys within a week (set as
Monday to Sunday). Similar to Queensland, a journey may
consist of multiple individual trips if each transfer between
services is made within one hour. It has been reported that
some Opal passengers have taken advantage of this fare rule
by making cheap journeys in the middle of the day in order
to reach their trip cap sooner and ultimately pay less for their
travel over the entire week
38
.
In September 2016, Sydney will move to the same trip
capping regime to be introduced in South East Queensland
(i.e. 8 journeys and then a 50% discount for the rest of the
week). The NSW Government has suggested that around
70% of customers are not currently reaching the reward and
hence do not receive any benefit
39
.
Do products sit alongside these new innovations?
While there has been a trend toward providing capped
fares and trips, some systems have retained traditional fare
products. In some instances the number of different products
may have been reduced. Customers who continue to travel
using products or passes, paying in advance for travel over
a week or longer period, can reasonably be expected to be
frequent, loyal customers.
In Australia, only Melbourne and Adelaide have retained the
option to purchase longer term fare products, which are
loaded onto a user’s smartcard. The maximum time over
which Melbourne’s myki system applies a fares cap is one
day, hence the weekly “myki pass” and other products do
not compete against an equivalent cap. A customer would
need to make five weekdays’ worth of travel before paying
the cost of a weekly pass. Monthly passes are available for a
minimum of 28 days, with a passenger needing to make 17.5
weekdays’ travel before realising the benefits of this product.
Despite having the Metrocard smartcard, Adelaide’s
fare structure does not provide any form of capping.
The Metrocard 28-Day Pass provides better value for the
customer once they make a minimum of 35 “peak” journeys.
37. QLD Government Response to the SEQ Fares Review, retrieved 14 July 2016
38. http://www.smh.com.au/nsw/transport-minister-backs-commuters-who-beat-the-opal-man-20140908-10dv5f.html
39. Opal Card Fare Freeze and Weekly Travel Reward Reform, Media Release, Andrew Constance, Minister for Transport and Infrastructure, 18 May 2016.
FARES AND TICKETING RESEARCH REPORT | 29
Single tickets
Melbourne’s myki ticketing system is the only system that
does not support a single ticket. All passengers are required
to purchase a smartcard and either add value or a pass
prior to travelling. During the initial roll-out of the system,
short-term disposable smartcards were available for use
on regional bus networks, however these were not
introduced to services in metropolitan Melbourne, and
were eventually phased out from all services. The decision
to discontinue this option was cited as part of a broader
attempt to reduce the complexity of the project to provide
a more reliable ticketing system
40
.
4.2.2 Tourist markets and occasional users
Many cities offer tourist or visitor products that cater for short
term users of the system. These are intended to be simple,
easily understood and intuitive. A common approach is not
taken across Australian jurisdictions, with variation in the
approach to fare rules, media, and sales strategies.
South East Queensland: Translink provides a go card
visitor information pack, detailing how to use the card,
how to top-up, how to obtain refunds
41
, and a map of
Brisbane. Alternatively, the “seeQ” card provides unlimited
travel for three or five consecutive days (including two
journeys on Airtrain) for $79-$129
42
(full fare). However,
depending on the number and length of journeys made,
a regular go card may be cheaper.
Visitors to the Gold Coast can obtain a “go explore” card
and load $10 per day (full fare), for unlimited travel on Gold
Coast buses and the G:Link tram
43
. Gold Coast visitors can
also purchase tickets from Gold Coast Tourist Shuttle, whose
tickets are valid for travel on Translink Gold Coast buses.
These passes are available for 3, 5, 7 or 10 days, ranging
from $59 (3 days, excluding airport transfer) to $149 (10 days,
including airport transfer)
44
.
It is understood that sales of the “seeQ” product are modest.
On the other hand, the “go-explore” product has proved
extremely popular with tourists.
Sydney: Visitors may acquire a free Opal card and leverage
the daily and weekly travel caps. Additional charges apply
for travel to/from airport stations. Unused Opal credit can be
refunded by submitting the card and a claim form, however
refunds are only processed to an Australian bank account or
via cheque sent to an Australian address.
Melbourne: There is a “myki Visitor Value Pack” solution
marketed directly at visitors. This contains discount offers,
which may be of interest to the visitor. A non-refundable
charge of $6 is still made for the myki card
45
. International
visitors can receive an on-the-spot refund on unused credit
with proof of international residence, however visitors from
within Australia are bound by the same refund requirements
as regular users, requiring submission of a refund application.
London: The “Visitor Oyster card” allows visitors to purchase
an Oyster card prior to their arrival. The card costs £3
(non-refundable), compared to the regular Oyster cost
of £5 (refundable)
46
. Visitors may also purchase a Travelcard
product (either a one-day or seven day pass). Unused travel
credit may be refunded in a similar fashion to a regular
Oyster card
47
. The Visitor Oyster card has the same capping
rules as a regular Oyster card, and provides discounts
for travel on some tourist services. External offers and
promotions are provided.
Singapore: The EZ Link Singapore Tourist Pass provides
visitors with one, two or three days’ of unlimited travel
on the bus, MRT and LRT services
48
. There is a SG$10
card deposit, refundable at selected MRT stations. Travel
may potentially be cheaper by using a regular EZ Link card,
however Singapore’s fares system is complex – the tourist
pass avoids this barrier. The Singapore Tourist Pass Plus ticket
is another option, which also includes one day’s travel on
each of Bubble Jet Boat sightseeing tours and FUNVEE Bus
Tour services. The Tourist Pass Plus is available from limited
outlets and has no refundable components.
40. http://web.archive.org/web/20110628002406/http://www.premier.vic.gov.au/media-centre/media-releases/1195-fixing-myki-to-get-victorias-transport-ticketing-
system-back-on-track-.html
41. http://translink.com.au/sites/default/files/assets/resources/tickets-and-fares/visitor-information/visitor-pack-brisbane.pdf
42. http://translink.com.au/tickets-and-fares/seeq-card
43. http://translink.com.au/goexplore?utm_source=translink-gc&utm_medium=primary-tile&utm_content=%2410-go-explore&utm_campaign=go-explore
44. http://gcshuttle.com.au/freedom-pass/
45. http://ptv.vic.gov.au/tickets/myki/myki-visitor-value-pack/
46. http://www.tfl.gov.uk/travel-information/visiting-london/visitor-oyster-card
47. http://www.tfl.gov.uk/fares-and-payments/replacements-and-refunds/oyster-refunds-and-replacements
48. http://ezlink.com.sg/singapore-tourist-pass
FARES AND TICKETING RESEARCH REPORT | 30
49. http://en.gvb.nl/gvb-dag-meerdagenkaart
50. http://www.iamsterdam.com/en/visiting/i-amsterdam-city-card/benefits-of-the-i-amsterdam-city-card
51. https://www.ns.nl/producten/en/uitleg-overige-producten/p/amsterdam-travel-ticket
52. https://www.london.gov.uk/sites/default/files/MD1418%202015%20Fares%20for%20submission%20(signed)%20PDF.pdf
53. http://www.wmata.com/fares/?forcedesktop=1
54. https://www.metro.net/riding/fares/#off-peak
55. https://www.metro.net/projects/silverline/
56. http://www.translink.ca/en/Fares-and-Passes/Single-Fares.aspx
57. http://www.lta.gov.sg/content/ltaweb/en/public-transport/mrt-and-lrt-trains/travel-smart/for-commuters.html
58. http://www.metrosantiago.cl/guia-viajero/tarifas/en
Amsterdam: GVB unlimited travel day tickets (€7.50)
and multi-day tickets (up to €32) are available as either a
disposable smartcard or as a product on an OV-chipkaart
49
.
The “I amsterdam City Card” provides unlimited use of
GVB services for one, two or three days and includes free /
discounted fees at selected tourist attractions and services
50
.
The Amsterdam & Region Day Ticket can be purchased for
€13.50 or added to an ‘I amsterdam’ City Card for €10, for
travel on services that extend beyond Amsterdam. Visitors
travelling to/from Amsterdam Airport (Schiphol) may purchase
an Amsterdam Travel Ticket, valid for one, two or three days
51
.
4.2.3 Temporal pricing
In January 2015, London Underground scrapped their off-peak
cap – passengers can still access off-peak fares, but are now
bound by the regular cap. The removal of the off-peak cap
coincided with a reduction in the regular daily fares cap, with
the intention of these changes combining to be revenue-
neutral
52
. Passengers who make a combination of peak and
off-peak journeys are now bound by the peak fares cap;
however they may continue to pay less than this amount if
all journeys are taken during the off-peak. This amendment
to the fare rules means that passengers are encouraged to
avoid both the morning and evening peak periods, whereas
previously passengers could access discounted travel in the
evening peak if they had not travelled in the morning peak.
Table 5 provides some examples of cities across the
world that also offer peak/off-peak differential pricing,
with discounts generally ranging from 8% - 53%, with
Singapore providing an example of free fares for early
morning travellers.
CITY / JURISDICTION OFF-PEAK DISCOUNTS (VS PEAK) WEEKEND DISCOUNTS (VS WEEKDAY)
Washington, D.C. 18-39% (0930-1500 and after 1900)
53
18-39% (until midnight, then full fares until close)
Los Angeles 53% (Local fares, seniors only, 0900-1500 and after 0700)
54
30% (Silver line/Express bus, seniors only, 0900-1500 and
after 1900)
55
53% (Local fares, seniors only)
30% (Silver line/Express bus, seniors only)
Vancouver Up to 50% ($2.75 max fare after 1830)
56
Up to 50% ($2.75 max fare)
Singapore 100% (free exit at central MRT stations prior to 0745)
57
SG$0.50 (exit at central MRT stations between 0745-0800)
57
Santiago, Chile 8-15% (0630-0700, 0900-1800, 2000-2045)
(“Normal” vs. “Rush Hour” fares)
11-15% (0600-0630, 2045-2300)
(“Low" vs. “Rush Hour” fares)
58
8-15% (“Normal” vs. “Rush Hour” fares)
Table 5: Temporal pricing schemes internationally
FARES AND TICKETING RESEARCH REPORT | 31
CASE STUDIES OF SUCCESSFUL OR UNIQUE TEMPORAL PRICING
SCHEMES IN OTHER CITIES
London: Research conducted relating to differential
pricing in London confirmed that passengers making
longer journeys are less sensitive to price (i.e. lower
elasticity)
59
. This change in elasticity has been attributed
to a relative drop in competition from alternative modes.
This research informed price setting, whereby London’s
approach to peak pricing involves the size of the peak-
period premium rising with distance travelled. For
example, a Zone 1-2 peak single has a 21% premium
versus the off-peak fare, with the differential increasing
to 28% for a Zone 1-4 trip, and a further increase to
42% for a Zone 1-9 trip. Additional research of peak
versus off-peak fare differentials in London showed
that a 10-30% increase in peak fares could reduce
demand for these services by 4-11%. Passenger
surveys in 2007 showed that passengers with lower
incomes were less likely to have flexible working
arrangements that would allow them to access
discounted fares outside of peak times
60
.
Singapore: LTA introduced free pre-peak travel on
its MRT rail network in 2013. Passengers exiting the
system at any of the 18 designated inner city stations
prior to 0745 are not charged a fare, while those
exiting between 0745 and 0800 receive a SGD 50 cent
discount. The scheme was extended in May 2014,
with analysis to that date revealing that 7% of
passengers had shifted their travel from the peak
period
61
. This means that for every train commuter who
travels in the pre-peak hour of 0700 to 0800, there
are now 2.1 travellers who travel in the peak hour of
0800 to 0900, compared to 2.7 before the Free
Pre-peak Travel scheme.
The ability to access free early travel is limited, including
those who have flexible working arrangements or
those who commence work at earlier hours (e.g.
tradespeople). LTA surveyed passengers who continued
to travel in the peak, with two thirds of respondents
stating they had not shifted their travel because they did
not have flexible working arrangements.
Recommendation 5:
Whilst the offering of off-peak fares is welcome for those customers
whose travel is discretionary in nature (including tourists), careful
consideration needs to be given to the level of discount offered as well
as the timing of the discount. This is particularly the case where the
aspiration is for fares to be used as a demand management tool
59. London Underground Research note U(31), Disaggregation of Underground Fare and Service Elasticities’
60. Faber Maunsell | AECOM, Demand Management Techniques – Peak Spreading (2007)
61. Land Transport Authority Press Release: Extension of Free Pre-Peak Travel by One Year (at: http://www.lta.gov.sg/apps/news/page.aspx?c=2&id=e96f7b3a-67dd-
4588-9fd9-d115472cf9b0#_ftn1 )
FARES AND TICKETING RESEARCH REPORT | 32
4.3 FUTURE POLICY REFORM
4.3.1 Core products offered to customers
Only Melbourne and Adelaide have retained the option to
purchase longer term periodicals (in both cases a monthly pass
is available), which are loaded onto a customer’s smartcard.
Given the transaction cost of purchasing and loading a fare
product, it is difficult to see the rationale for sustaining such
fare products, particularly when the value delivered by such
products can be straightforwardly delivered via fare capping,
which is extensively used in Sydney, South East Queensland
and Canberra.
Our investigations have shown that even where smartcard
systems are well established and card uptake among users
is high, the vast majority of operators still offer a “distress”
single ticket option for irregular travellers and tourists. The
customer proposition in Melbourne is relatively weak in this
regard, especially in the context of the initial cost of myki
being non-refundable.
4.3.2 Products – tourists and occasional users
The examples of tourist specific products identified suggest
no great commonality of features, beyond the offering of
promotional / discount offers targeted at tourists and visitors.
As shown in some of our examples, a regular (i.e. commuter)
product may be cheaper for the tourist market (this will
be especially relevant if the promotional / discount offers
provided are of limited interest to particular visitors).
With this in mind, there may be a case for focussing on
simplifying the existing (core) product offering and marketing
this to all users, with a reduced focus on products and third-
party offers specifically focussed at tourists and occasional
users. Simplification (including reducing the number of
products offered) would have potential benefits for all current
and potential users of the public transport system.
FARES AND TICKETING RESEARCH REPORT | 33
5 FARE LEVELS
5 FARE LEVELS
5.1 CURRENT STATE
There are multiple dimensions that need to be addressed
in any discussion of fare levels including the “headline”
fare level, variations in fare levels according to trip origin
and destination, time-of-day and variations according to
customer type.
In addition, it is necessary to consider the positioning of
public transport fare levels against the private car alternative.
Given the market failure inherent with the use of the private
car tied to both congestion and pollution costs, consideration
can also be given to “socially optimal public transport fares”
that have the effect of optimising the use of both private cars
and public transport. This has been, and continues to be, a
key consideration for IPART (for example) in developing its
recommendations for Sydney public transport fares.
Overall level of fares and affordability
There are many different ways in which the affordability of
public transport fares can be measured. This will generally
rely on a quantifiable metric, given that customers will
generally always consider fares to be expensive if they are
asked as part of a survey.
Comparison across jurisdictions is complicated by factors
including service quality (for example, the number of services
per hour), currency levels and exchange rates, and different
travel patterns, fare structures and products.
Although both international and interstate comparisons are difficult to make, relative to
minimum wage levels, Australian fare levels would appear to be relatively low compared to many
international cities, notably London. There are significant variations in fare levels across Australian
cities with South East Queensland and Sydney at the higher end and Canberra and Hobart at the
lower end of the range, again based on the relativity between minimum wage levels and the fare
for the average trip length in each jurisdiction.
Variations in fare levels according to origin and destination tend to be relatively unsophisticated
in Australian cities, with examples restricted to airport rail stations in Sydney and Brisbane. This
would appear to be an area of untapped opportunity for all Australian jurisdictions.
The application of time-of-pricing is tied to reduced early AM and inter-peak fares relative to
morning and evening peak fares. These discounts typically range from 20% to 30% relative to
standard smartcard fares. Melbourne offers free early AM travel before 0700. The Melbourne
“early bird” scheme has had only limited success in shifting customers out of the morning peak,
which is a reflection of prevailing fare elasticities.
Over time it might be expected that a combination of time-of-day/origin-destination pricing could
attract attention as a potential means of managing peak period demand, particularly for our
busiest CBD stations.
There is relative uniformity across Australian cities in terms of concession availability and
associated discounts, with discounts typically ranging from 35% to 70%.
FARES AND TICKETING RESEARCH REPORT | 35
A recent report
62
attempted to normalise fares by comparing
them to the minimum wage in that jurisdiction. This
approach has many merits and should produce a reasonable
comparison, but even this metric is open to interpretation (for
example, the minimum wage applied to the London data is
the UK minimum wage, yet London earnings are far higher
than the rest of the UK)
63
.
Table 6 demonstrates this affordability of fares,
comparing the results for Australia against a number of
global peers based on average trip lengths in each
jurisdiction. It shows that:
• London tube fares present as a significant outlier
compared to the other cities/modes in the sample; and
• There is relatively wide variation across Australian cities
with persons on the minimum wage being required to
work 50% - 90% longer in South East Queensland and
Sydney to pay for an average fare compared to the likes
of Canberra and Hobart.
5.1.1 Variation in fare according to origin
and destination
Variations in fare levels according to journey origin and
destination continue to be relatively unsophisticated in
major Australian cities. With the exception of airport stations
the only variation in fares according to journey origin and
destination reflects the overarching fare structure (i.e. where
distance-based or zonal structures are in place).
5.1.2 Variation in fare according to time of day
The application of public transport time-of-day pricing in
Australian cities has been tied to reducing early AM or inter-
peak fares relative to fares charged during the morning and
evening peaks. The introduction of discounted or free early
AM fares has been directed at securing trips that would
otherwise have been made during the morning peak.
Sydney offers a significant off-peak discount for trains, but no
discount at all for off-peak travel on other modes. All other
cities apply the same level of discount across all modes
(there are minor exceptions in Melbourne
64
where travel
before 0700 on trains is free of charge, and where trips made
after 6pm – where no other travel has been made that day –
are capped at the 2 hour fare).
62. http://ninesquared.com.au/wp-content/uploads/2015/10/2015-Fare-Benchmarking-Final-Report.pdf
63. http://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/annualsurveyofhoursandearnings/2015provisionalr
esults - “In April 2015, London topped the regional list for median earnings for full-time employees, at £660 per week. Employees here earned £108 more
per week than the next highest, the South East (£552), and £132 more than the median for the whole of the UK (£528)”
64. Metropolitan Melbourne offers no variation in fares by time of day, though regional travel (such as V/Line) does
RANK CITY
MINUTES
REQUIRED
1 London (Tube) 86.77
2 Auckland 39.05
3
Berlin 38.12
4 Tokyo 33.46
5 New York 32.91
6 Chicago (Train) 32.73
7 Portland 32.43
8 Vancouver 32.2
9 Toronto 30.55
10 South East Queensland 30.19
11 Glasgow 29.54
12 Sydney (Bus) 29.16
13 Chicago (Bus) 29.09
14 London (Bus) 27.69
15 Sydney (Train) 27.21
16 Paris (Bus) 25.18
17 Jakarta 24.89
18 Seoul 24.73
19 Melbourne 24.36
20 Perth 24.23
21 Los Angeles 23.33
22 Paris (Metro) 22.67
23 Adelaide 21.97
24 Darwin 19.44
25 Canberra 18.86
26 Hobart 16.07
27 Wellington 13.51
28 Beijing (Rail) 10.65
29 Beijing (Bus) 10.65
Table 6 - Affordability of public transport fares
Source: See footnote 62
FARES AND TICKETING RESEARCH REPORT | 36
Where a discount is offered, it is generally between 20%
(Brisbane and Canberra) and 30% (Sydney Trains). The notable
exception is Adelaide where the discount is 45%.
The rationale for inter-peak discounts has been to increase
the attractiveness of using public transport where significant
excess capacity exists and hence the incremental cost
of carrying an additional customer is effectively zero. The
success of such pricing lies in customers re-timing their trips
away from the morning or evening peak or entirely new trips
being undertaken in off-peak periods.
Melbourne’s “early bird” scheme offering free travel before
0715 has only had limited success in shifting customers
out of the morning peak (studies have suggested that
peak demand reduced by 1.2% to 1.5%
65
). Whilst 50% of
customers stated that they would consider travelling earlier
and 20% travelling later, most would only shift by a maximum
of 30 minutes. In this context, the cut-off for free travel at
0715 may well be too early to shift significant numbers from
the morning peak. This accords with our recommendation
made in section 4.2.3.
5.1.3 Variation in fare according to frequency of travel
As discussed in section 4 there is extensive use of capping
applied to smartcard travel in Australia. However, only
Sydney Trains and Brisbane offer a trip cap that attempts
to replicate traditional commuter periodical products.
Based on 10 peak trips per week, Brisbane offers a discount
of 10% compared to standard fares (i.e. “9 and free”), while
the effective discount in Sydney was 20% as at July 2016
(i.e. “8 and free”). Significantly, both jurisdictions have
recently announced plans to move to a proposition of a 50%
discount after 8 journeys are completed (see Section 4.2.1).
Melbourne still offers period products such as weekly,
monthly and annual passes via products loaded onto myki.
65. Transportation Research Record: Journal of the Transportation Research Board, No. 2146
Table 7 - Concession discounts offered by jurisdiction,
as at July 2016
Source: Public transport authority websites, as at July 2016
5.1.4 Variation in fare according to concession type
All Australian cities support a range of concession discounts
to support the mobility needs of the transport disadvantaged,
as described in Table 7 below.
There is a relatively broad consensus around the discount on
fares being in the range of 30% to 70%, with a small number
of outliers. By offering a flat fare of 60c for all Student trips,
Perth offers a generous discount of almost 100% on the
highest 9 zone fare of $12.40.
Adelaide combines time-of-day effects with concession
discounts with the aim of inducing additional demand outside
of the peaks. The Seniors Metrocard costs $1.75 in the peak
(a discount of 51%) but is offered free in the inter-peak (0901
– 1500 Monday to Friday) and on Sundays.
JURISDICTION DETAILS OF DISCOUNT OFFERED
Sydney
Melbourne
Brisbane / South
East Queensland
All offer 50% discount on the Full Fare
(for Students, Seniors, Concessions)
Perth • Between 60% discount for Seniors,
Children
• Flat fare of 60c brings discount
between 62% and 94% for Students
Adelaide • Between 100% (free off-peak) and
51% discount for Seniors
• Between 9% and 51% discount
for school age Children
• Between 39% and 67% discount
for Students
Hobart • Between 31% and 67% discount
for Adult Concession
• Between 50% and 76% discount
for Child/Student concession
FARES AND TICKETING RESEARCH REPORT | 37
5.1.5 Variation in fare by media
In all Australian jurisdictions where more than one media is offered, this is used to offer a pricing discount for smartcard when
compared to paper tickets. In Sydney, the level of discount varies by the distance travelled, as shown in Figure 12 below.
Dollars ($)
Sydney
Bus
Brisbane
Canberra
Adelaide
Hobart
0
2
4
6
8
10
12
14
<10 km <20 km10-20 km
Perth
Melbourne
Sydney
Ferry
Sydney
Train
Smartcard
<10 km <20 km10-20 km
Single Ticket
% discount smartcard vs paper
Discount
No single
ticket option
16%
13%
15%
15%
15%
33%
33%
33%
35%
35%
35%
23%
23%
20%
8%
7%
6%
6%
8%
4%
4%
31%
31%
30%
Note: No single paper ticket option in Melbourne Metropolitan region
Source: Public transport authority websites, as at July 2016
Figure 12 - Discounting on smartcard fares, as at July 2016
5.1.6 Other variations in fare
Apart from concessions, the only public transport pricing
policy clearly targeted at a specific market segment is that
associated with the use of airport stations at Sydney and
Brisbane Airports. In both cases, a premium pricing model
was an integral component of the strategy to support
the delivery of the infrastructure under a private – public
partnership model.
At Sydney, agreement was made in 2014 between NSW
government and Airport Link that Opal would be accepted for
travel to the airport, and that fares would be capped for those
travelling to the airport more than once a week. This meant
that whilst a premium pricing model still exists, significant
fare reductions are now possible for commuters to and from
the airport
66
.
In Brisbane, the premium pricing model is tempered by
the ability to reduce the fare through advance booking.
A number of pre-travel discounts are available, as shown
in Table 8 below.
Source: Brisbane Airtrain websites, as at July 2016
ONE-WAY
FARE
%
DISCOUNT
Full Adult Fare $17.50 N/A
Online Fare
(on day or day before travel)
$16.62 5%
Online Fare
(2 to 6 days before travel)
$15.75 10%
Online Fare
(7 or more days before travel)
$14.87 15%
Table 8 - Brisbane Airtrain fares, as at July 2016
66. http://www.transport.nsw.gov.au/media-releases/nsw-government-signs-10-million-agreement-ensuring-regular-airport-customers-can-save
FARES AND TICKETING RESEARCH REPORT | 38
Melbourne has no train connection to the airport but does
have the dedicated Skybus offering. This is marketed as a
premium bus offering, with regular departures, a new fleet
(including the recent launch of double deckers), and free
WiFi. A single fare between Southern Cross and the airport
costs $19. Whilst Skybus is not integrated with myki or
directly comparable, as a reference point, the myki fare for
the equivalent journey would be $3.90. From a marketing
perspective, Skybus fares are “about a third of the cost
of a taxi
67
”.
CASE STUDY:
PTV COMMUTER CLUB
PTV offers a 10% saving on annual myki
passes when they are procured through its
‘myki Commuter Club’ program. This allows
organisations to buy the passes (on behalf of
their staff or members) at the discounted rate and
then pass on to the end customer. The program
is not open to individuals and the onus is on the
organisation to reach out to PTV (after signing up a
minimum of 10 staff) to set up an agreement.
There is some flexibility in how the Commuter
Club myki is paid for, with options including
salary packaging and one-off payment. However
the organisation can also choose whether they
pass on all or part of the discount, and some
organisations may deduct a handling fee. For new
users, Commuter Club is additionally attractive
through the waiver of the normal $6 card fee.
Clearly the commuter club has the potential to
generate new users to public transport through
the sizable fare discount (on what is already, on
a per day basis, the cheapest product for regular
users) and / or additional trips through generation
associated with placing an annual pass in the
hands of customers who might otherwise pay
purely for the trips they intended to take.
67. https://www.skybus.com.au/skybus-express-service/
FARES AND TICKETING RESEARCH REPORT | 39
5.1.7 Fare elasticities
Fares structures, and more commonly fares themselves,
are not static. Fares may be regularly increased to reflect
changes in inflation and operating costs, or reduced in an
attempt to elicit a rise in patronage. Fare structures may be
reviewed to reflect a change in fares policy, for example to
improve farebox cost recovery or provide a more equitable
structure. Authorities responsible for setting fares need an
understanding of how customers will react to changes in
fares. The most common way of predicting such changes in
patronage is achieved through applying fares elasticities to
the proposed fare changes.
Ideally, fares elasticities should be calculated in detail (by
mode, distance, customer segment, etc.) to reflect the
unique conditions in each jurisdiction. There are a number of
reasons why this is not always the case, including:
• Complexity – accurately reflecting the variations in fare
elasticities across each component of the fares structure
is not a straightforward task to do properly; and
• Cost – the time and labour required to undertake
extensive primary research can be a prohibitive factor.
• Naturally, there is a temptation to simplify the task of
determining fares elasticities, with one such option being
to use external benchmarks. These may be appropriate
to a degree, but a number of factors must be properly
considered if this approach is adopted, including but not
limited to:
• Modal competition – this can be very city specific,
with the biggest competition coming from private car
travel which is influenced by levels of car ownership,
congestion levels, and car ownership costs;
• Spatial variation – the density of city’s population and
intensity of employment/ activity centres; and
• Overall cultural attitudes to public transport – this
can be in comparison to private travel options and
even across public transport modes, e.g. different
perceptions of rail versus bus services.
A potential source of benchmark elasticity information comes
via the Australian Transport Council (ATC)
68
. These are general,
high level indicators and are now somewhat dated (last
published in 2006). As such, they may not fully reflect the
current economic landscape and public attitudes.
5.2 OBSERVED TRENDS
5.2.1 Variation in fare according to origin
and destination
Hong Kong MTR fares provide an example of the way in
which fare levels can be managed on an origin-destination
basis to reflect the competitive positioning of public transport
and, implicitly, prevailing fare elasticities. Line based pricing
is used, recognising the willingness and ability of passengers
to pay based on different journeys, service quality, economic
conditions, and competition from alternative modes.
5.2.2 Variation in fare according to time of day
Many jurisdictions vary fare by time of day (typically via a
peak / off-peak differential), generally ranging from a 20%
to 50% discount.
As well as smart discounts (e.g., reduced fares via SVT), there
are a number of different ways in which the discount can be
delivered. In Berlin, two different off-peak products are offered:
• The monthly ’10-Uhr-Karte’ can be used between 10:00
and 03:00 the following day on Monday to Friday, and all
day on Saturdays, Sundays and public holidays.
• The ‘Freizeitkarte’ allows existing annual pass holders and
students (with a minimum of ten months ticket validity)
to access the VBB overall network (includes Berlin and
Brandenburg areas). The ticket is valid between 14:00 and
03:00 the following day (Monday to Friday) and all day on
Saturdays, Sundays and public holidays.
• Tokyo’s Metro offers off-peak discounts based on a multi-
ride system:
• A book of 12 tickets for the price of 10 (i.e. 17%
discount) is available to customers travelling between
10:00 and 16:00 on Tokyo’s Metro
• A greater discount (14 tickets for the price of 10
i.e. 29% discount) is offered to passengers travelling
on weekends
5.2.3 Variation in fare according to frequency of travel
Capped fares are offered at a relatively limited number of
jurisdictions outside of Australia.
68. http://www.transportinfrastructurecouncil.gov.au/publications/files/National_Guidelines_Volume_4.pdf
FARES AND TICKETING RESEARCH REPORT | 40
69. Only available for EMV payments, caps on a Monday – Sunday week, for travel involving zone 1 (https://tfl.gov.uk/fares-and-payments/contactless/is-
contactless-for-me)
70. https://www.luas.ie/leap-card-fares.html; exchange rate from xe.com as at 20/08/2016
Source: PwC analysis
Figure 13 - Illustration of price discrimination in Hong Kong
CITY MODE / OPERATOR DAILY WEEKLY MONTHLY
London Metro/TfL Daily capping provides 7%
discount on paper product
Caps at the same price as
a 7 day weekly Travelcard
69
N/A
Dublin Luas/TfI Capped at AU$9.50
70
Capped at AU $34.90
70
N/A
Table 9 - Capped fares outside of Australia
Fare in dollars ($)
0
2
4
6
8
10
12
14
Tseun Wan Station to Station
on Kwun Tong Line
Shek Kip Mei
Kowloon Tong
Kowloon Bay
Ngau Tau Kok
Kwun Tong
Lam Tin
Yau Tong
Tiu Keng Leng
Tseung Kwan O
Hang Hau
Po Lam
Lok Fu
Wong Tai Sin
Diamond Hill
Choi Hung
Interchange point with
Tseung Kwan O Line
Small markets
New residential
developments
Fare in dollars ($)
0
2
4
6
8
10
12
14
From Tseun Wan Station to all stations
of TseunWan Line (on Kowloon side)
& Island Line (on HK Island)
Tai Wo Hao
Kuai Fong
Tsim Sha Tsui
Central
Wan Chai
Tin Hau
North Point
Tai Koo
Shau Kei Wan
Chai Wan
Mei Foo
Cheung Sha Wan
Prince Edward
Yau Ma Tei
Harbour
Crossing
Small markets
Strong bus competition
FARES AND TICKETING RESEARCH REPORT | 41
5.2.4 Variation in fare according to concession type
The majority of operators offer discount for concession holders. There is, however a very wide range – from those operators
who do not offer a discount (0%), to those offering free fares (100%). Figure 14 below shows that there is a degree of
uniformity around 50% as the discount level offered for concessions, by comparing the discount rate of Australian jurisdictions
with international benchmarks.
0% 20% 40% 60% 80% 100%
Bangkok
Tok yo
Taipei
Hong Kong
Perth
Adelaide
Hobart
Melbourne
Canberra
Sydney
SE Queensland
Toronto
San Francisco
Washington
New York
Chicago
Dublin
Madrid
Berlin
London
0% 20% 40% 60% 80% 100%
Bangkok
Tok yo
Taipei
Hong Kong
Perth
Adelaide
Hobart
Melbourne
Canberra
Sydney
SE Queensland
Toronto
San Francisco
Washington
New York
Chicago
Dublin
Madrid
Berlin
London
Source: Operator websites
Figure 14 - Level of discount offered for senior and student concessions
Senior Student
FARES AND TICKETING RESEARCH REPORT | 42
5.2.5 Other variations in fare
The premium pricing approach discussed above for airport services is relatively common in other jurisdictions. One major
difference is that generally in other jurisdictions there are competing (slower) modes that the customer can choose to take
if they are not prepared to pay the premium associated with the quicker service. Table 10 below provides a selection of
comparators from the United Kingdom.
AIRPORT REGULAR SERVICE AND COST PREMIUM SERVICE AND COST
PRICE DISCOUNT OF
REGULAR SERVICE VS PREMIUM
London Heathrow London Underground £5.10 to
Zone 1 with Oyster (peak single)
Heathrow Express £21.50
for single to Paddington
(from ticket office or machine)
76% cheaper
London Gatwick Southern to London Victoria
£15.30 (Anytime Day Single)
Gatwick Express £19.90
to London Victoria
23% cheaper
London Stansted Airport National Express coach /
£12.00 single to London Victoria
Coach Station
Stansted Express £19.00
to London Liverpool Street
(Standard Class Single)
37% cheaper
Table 10 - Price differential of airport services in the United Kingdom
5.2.6 Fare elasticities
As suggested above insight from external jurisdictions can sometimes be of limited value, because of the way that elasticities
reflect the specific circumstances of the jurisdiction that they relate to (for example, the number and quality of competing
modes and the level of service quality).
FARES AND TICKETING RESEARCH REPORT | 43
5.3 FUTURE POLICY REFORM
Where pricing differentials are used in Australia, it is through a discounted off-peak (rather than an increased, or premium
priced, peak period). Over time, it might be expected that a combination of time of day/origin-destination pricing could
attract attention as (for example) a potential means of managing peak period demand at Australia’s busiest CBD stations –
as opposed to a coarse peak – off peak pricing model that it not specifically targeted at public transport service or infrastructure
pinch points.
In London, a time-of-day differential has been achieved by applying a peak period surcharge (see Figure 15 below).
London Capacity Demand Management Framework
80%
20%
Current
Patronage
Additional
Demand
Tele-
Working
Peak
Premium
Additional
Capacity
Source: PwC analysis
Figure 15 - London Underground pricing differentials
Peak pricing has been used as a way to help solve endemic capacity problems in London. Stated preference research revealed
that a 25% peak premium could reduce peak hour demand by 4% for short-distance rail commuting. Peak pricing varies by
types of market, including journey purpose (commuting, business, and leisure), income, occupation and journey distance.
Switching travel practices requires there to be capacity in shoulder peak.
FARES AND TICKETING RESEARCH REPORT | 44
6 MEDIA, TECHNOLOGY
AND SALES CHANNELS
6.1 CURRENT STATE
6.1.1 Media
Of Australian jurisdictions using smartcard technology, all bar
Melbourne offer an additional alternative media (either paper
or magnetic stripe). However, it should be noted that Sydney
withdrew all remaining magnetic stripe tickets from the 1st of
August 2016. Unlike Melbourne, however, it will be possible
to purchase a single trip Opal ticket as a “last resort” for
infrequent public transport customers.
6.1.2 Channels and channel strategies
In the context of public transport fares and ticketing, channels
are usually grouped into two categories:
• On-system – the customer must interact with the physical
transport environment (ticket office sales and ticket
vending machines (TVMs), driver interaction on buses)
• Off-system – any means by which the customer can
procure travel without interacting with the physical
transport environment (third party retailers, online sales,
auto-top (where value is added to a smartcard when
credit drops below a certain level), telephone sales,
postal sales, etc.)
Use of off-system sales has major benefits for both
customers and transport operators. For customers, they are
able to eliminate time spent queuing for tickets / products
at the station, and off-system sales are generally associated
with improved ability to manage the transaction at their
convenience (that is, they are in control of where and when
they purchase transport). Off-system channels are typically
associated with other benefits such as an improved ability
to access information both about the transport system (e.g.,
travel alerts) as well as about their own travel (trip history,
fare balance on SVT, expiry date of products, etc.).
For transport operators, moving transactions off-system
can also improve the customer experience by reducing the
amount of time they spend on the system to pay for and
complete their journey, including reduced queues for those
who continue to make purchases on-system. Off-system
channels are cheaper to operate and therefore offer the
potential for cost savings. Table 12 summarises the sales
channels offered by jurisdiction in Australia.
Given these benefits, the use of price differentials to
influence customers’ choice of ticket media, e.g. higher
prices for single tickets to drive smartcard take-up, is
commonplace among ticketing systems. A similar approach
may also be adapted to influence customers’ choice of
sales channel, offering discounts/additional travel credit for
the use of off-system channels. While there are relatively
few examples of this practice, Australia provides two of the
leading examples in Perth and Canberra.
6 THE POLICY CONTEXT
AND CHALLENGES
JURISDICTION PAPER
MAGNETIC
STRIPE
SMARTCARD
Sydney
✕ ✕ ✓
Melbourne
✕ ✕ ✓
Brisbane / South
East Queensland
✓ ✕ ✓
Perth
✓ ✕ ✓
Adelaide
✕ ✓ ✓
Hobart
✓ ✕ ✓
Table 11 - Media offered in Australian
smartcard jurisdictions
FARES AND TICKETING RESEARCH REPORT | 46
JURISDICTION
ON-SYSTEM
CHANNELS
OFF-SYSTEM
CHANNELS
Sydney • Ticket offices
(stations, ferry
wharves)
• TVMs
• On board (Bus,
Ferry, Light Rail)
• Opal website
• Auto top-up
• Third party
(Opal retailers)
• Opal kiosks
• Call centre
Melbourne • Ticket offices
(stations)
• TVMs
• Third party (7-11)
• Myki website
• Auto top-up
• Call centre
Brisbane / South
East Queensland
• Ticket office
(stations, G Link,
busway stations)
• TVMs
• On board
(buses exc.
Brisbane Transport,
Brisbane City
Council Ferries)
• gocard website
• Auto top-up
• Third party
(7-11 and selected
newsagents)
• Call centre
Perth • TVMs at
some stations
• On board
(buses and ferries)
• Auto top-up
• Third party
(authorised
retail outlets)
• Transperth
info centres
• BPAY
Adelaide • TVMs
• On board
• Infocentres
• Third party
(Metrocard agents)
• Call centre
• Online
• Auto top-up
Hobart • On board • Metro shop or
depots
• Third party
(Greencard agents)
• Call centre
• Online
• Auto top-up
Table 12 – Sales channels offered by jurisdiction
CASE STUDY:
CHANNEL INCENTIVES
IN PERTH
Passengers in Perth who use the SmartRider
smartcard receive a 15% discount on standard
cash fares. Transperth customers who set up
autoload, adding value from a credit card/bank
account when their travel credit falls below a set
threshold, receive a 25% discount on standard
cash fares (broadly a 12% discount from standard
SmartRider fares)
71
.
Figure 16: Price incentives in Perth
Add value to
SmartRider
Add value via
Auto top-up
15% discount
on cash fares
25% discount
on cash fares
71. http://www.transperth.wa.gov.au/tickets-fares/fares
FARES AND TICKETING RESEARCH REPORT | 47
CASE STUDY: CHANNEL INCENTIVES IN CANBERRA
In Canberra, autoload and BPAY are offered at a 5% discount to customers using BPAY and autoload. Incentivising
these lower cost channels will offer operational benefits as well as reducing customer queue and transaction times.
Cost of media
In a smartcard system, offering fully functional, long-life smartcards to occasional users can be costly. These costs can be offset
if the user is incentivised to retain and re-use the card via a refundable deposit, or through a non-refundable charge.
CITY MODE / OPERATOR INITIAL CARD DEPOSIT
(IN AU$)
1
REFUND
(IN AU$)
1
NET CARD COST
(IN AU$)
1
Europe London Metro/TfL 9.31 9.31 0.00
Paris All modes/RATP 7.19 0.00 7.19
Berlin All modes/BVG 0.00 0.00 0.00
North America Chicago Metro/CTA 5.56 5.56 0.00
New York Metro/MTA 1.11 0.00 1.11
Washington Metro /WMATA 2.22 0.00 2.22
San Francisco Metro/BART 3.33 0.00 3.33
Vancouver SkyTrain/Transitlink 6.03 6.03 0.00
Australia SE Queensland All modes/Translink 10.00 10.00 0.00
Sydney All modes/ TfNSW 0.00 0.00 0.00
Canberra ACTION Bus/TfC 5.00 0.00 5.00
Melbourne All modes/PTV 6.00 0.00 6.00
Hobart Bus/Metro Tas 5.00 0.00 5.00
Adelaide All modes/Adelaide Metro 5.00 0.00 5.00
Perth All modes/ Transperth 10.00 0.00 10.00
Asia Singapore Metro/SMRT 4.48 0.00 4.48
Hong Kong Metro/MTR 6.63 2.21 4.42
Tokyo Metro/Tokyo Metro 5.18 5.18 0.00
Bangkok Metro/Bangkok Metro 2.82 2.82 0.00
Table 13 – Smartcard cost – Australian cities and a selection of comparators
Note: (1) AU$ exchange rate is provided by xe.com on 16 September 2014.
Source: PwC Analysis
FARES AND TICKETING RESEARCH REPORT | 48
Many Australian cities have chosen the approach of a non-
refundable deposit (a notable exception is Sydney, where
a new Opal card comes at no cost). Where the deposit is
non-refundable, in general the smartcard systems are offered
alongside legacy magnetic stripe or paper ticketing systems
(as discussed in section 6.1.1). This “combined technologies”
approach has the potential to create confusion in the market
and can limit other significant benefits of smartcards (speed,
ease of use, management data) to only a small proportion of
the market, but it does offer customers a choice compared
to the sunk cost of smartcard. Melbourne is the notable
exception – as per Table 13, myki has a non-refundable
charge, and no alternative media is offered.
New payment channels
New and emerging technologies bring additional opportunities
for fare payment options. Customer expectations constantly
change and increase with each new innovation, which is
not just limited to the fares and ticketing space. Over 65%
of Australians have a Smartphone and their use has increased
rapidly in recent years
72
. One need only board a public
transport service and observe the proportion of passengers
using their mobile phones to recognise that this technology
provides a great opportunity for both fare payments and
real-time customer information.
Cashless transactions are also growing in popularity. EMV
(Europay, MasterCard, and Visa) is the global standard for
processing these payment transactions. Contactless cards
utilising EMV standards (such as PayPass and PayWave)
are becoming increasingly popular in Australia
73
.
A potential drawback of cashless systems is the need to
manage the revenue risks associated with third party cards
not capable of charging fares at the device in real time.
EMV cards are read-only, hence all fare processing must be
performed in the back office as part of regular reconciliation
procedures – typically at the end of day. This read-only
limitation also means that the device and system cannot
establish, in real-time, whether the cardholder’s account
has sufficient funds to pay their fare. This ‘first ride risk’
necessitates establishing a method of managing revenue
risks (if material) between the operator and card issuer
that will need to carefully consider a range of policy settings.
Depending on the fare structures that apply in a particular
city, the contactless card customer may be required to
pay a higher/default fare as a consequence of not having pre-
purchased a ticket. As these cards do not contain personal
travel information, users typically pay the full-fare rate
regardless of their concession entitlement status.
CASE STUDY: SYDNEY OPEN
PAYMENT TRIALS.
In April 2016, TfNSW announced that trials of
open payment systems (contactless payment
with credit and debit cards) would begin in
2017. The trial would be a first for the southern
hemisphere, and will provide a valuable test case
for other Australian cities which may have been
contemplating new payment channels. Open
payments would continue to operate alongside
Opal, as an enhancement to the system rather
than a replacement.
72. http://think.withgoogle.com/mobileplanet/en/
73. Reserve Bank of Australia, The Changing Way We Pay: Trends in Consumer Payments, June 2014
FARES AND TICKETING RESEARCH REPORT | 49
6.1.3 Means of payment
Whilst the majority of payment mechanisms are welcomed
by operators, the removal of cash as a payment option
has obvious benefits. These include reduced costs of cash
handling and banking, the elimination of the need to carry
a float or for ticket machines to provide exact change, as
well as a reduction in the potential for fraudulent activity
associated with cash handling. Typically, it would also be
expected that non-cash transactions would be quicker
than cash, with knock-on benefits associated with reduced
boarding times (especially for buses).
No Australian jurisdiction has completely removed cash as
a payment option, although some limitations have been
introduced. In Sydney, buses in the CBD are pre-pay only
from 7am to 7pm, Monday to Friday, and some routes pre-
pay only at all times.
In Melbourne, a customer must have a valid myki card before
they can board a bus. However, top-ups are allowed on
the bus (to a minimum value of $1) via cash. Thus, despite
the smartcard nature of myki, cash payments can still be a
regular feature of bus travel.
6.2 OBSERVED TRENDS
6.2.1 Withdrawal of legacy media
As previously noted, Melbourne withdrew all legacy media
when introducing myki. By contrast, the launch of Opal in
Sydney was not associated with any initial removal of legacy
media. By September 2014, Opal had been in place 18
months and at that point TfNSW announced a programme
of retiring old paper tickets. This would allow further
modernisation of the transport network
74
.
6.2.2 Channels and channel strategies
Examples of channel incentives
New York City’s Metropolitan Transit Authority (MTA) offers
MetroCard customers an 11% bonus on travel credit
when they add a minimum of $5.50 using their auto top-
up function, “EasyPay”
75
. Beyond the auto top-up bonus,
customers are encouraged to pre-purchase tickets through
the application of a $1 surcharge to purchase a new
MetroCard at subway stations, but there is no charge to
purchase a new card from off-system retailers
76
.
San Francisco’s Bay Area Rapid Transit (BART) system’s
Clipper card gives customers access to a 6.25% discount on
High Value Discount (HVD) tickets by using autoload and a
limited number of off-system programs. The HVD product is
only available in denominations of $48 (discounted to $45) or
$64 (discounted to $60), hence, the HVD is both a channel
incentive and a top-up value incentive
77
.
74. See footnote 36
75. http://web.mta.info/metrocard/EasyPayXpress.htm
76. http://web.mta.info/metrocard/mcCombinationValue.htm
77. https://www.clippercard.com/ClipperWeb/bart/faq.do
FARES AND TICKETING RESEARCH REPORT | 50
78. https://fitforthefuture.tfl.gov.uk/wp-content/uploads/2015/02/Ticketing-changes-guide-for-ipads.pdf
79. Ticket Vending Machine Usability Qualitative Research Report of Findings, July 2010
Retention of face-to-face channels
There will nearly always be a need to retain some level of
face-to-face sales channels to cater for complex transactions
or for those who are uncomfortable with/unable to use
alternative channels. Operators will still seek ways to
minimise this on-system demand; one way has been to
increase the attractiveness of TVMs.
Many operators have tried to encourage use of TVMs to
perform transactions that have traditionally been carried
out via face-to-face channels. London is currently overhauling
the functionality of its TVMs
78
, in order to reduce demand
at ticket office windows, in combination with limiting the
types of transactions available at the ticket office. Table 14
shows that purchasing paper tickets, buying multiple Oyster
cards, or adding a weekly/monthly pass will be moved from
the ticket office to TVMs. Additional functions, including
cancelling a lost Oyster, adding discount entitlements, and
resolving incorrectly charged journeys, will also be possible
at TVMs (though assistance from a staff member is required).
Whilst TVMs can be improved to provide greater functionality,
their use to reduce demand on other channels is by no
means a panacea. Many customers will continue to prefer
face-to-face channels. A 2010 study
79
into TVMs on London’s
regional rail network identified four key barriers to use of
TVMs/automated channels over utilising the ticket office:
• Even those who were the most capable were not always
confident enough to buy a ticket from a TVM;
• Many feel the need to ask questions about the journey,
especially one that is unfamiliar or complex;
• Most passengers do not know enough about ticket
types or restrictions that apply to make informed
decisions (and find rail “terminology” around, say, peak
and off-peak to be confusing and prefer to check at the
ticket window); and
• Specific issues apply to various disability groups that
will require further consideration.
WHAT CUSTOMERS DO IN THE FUTURE WHAT CUSTOMERS DO NOW
Find best value way to pay
• Staff with handheld device
• Ticket machine
• TfL website
• Fares poster in ticket hall
• Ticket office
• TfL website
• Fares poster in ticket hall
Buy multiple Oyster cards in one
transaction (via anAFM or MFM)
• Ticket machine (up to five oyster cards)
• Visitor Information Centre (six or more)
• Ticket office
• Ticket machine (multiple transactions)
Buy a paper ticket
(single journey/day Travelcard)
• Ticket machine self service • Ticket office
• Ticket machine self service
Buy weekly or monthly Travelcard
on Oyster (without registration)
• Ticket machine self service
• TfL website
• Ticket office
• TfL website
Buy journey extension
• Ticket machine self service • Ticket office
Buy Network Rail paper
season tickets
• NR ticket office
• NR online
• NR ticket office
• NR ticket office
• NR online
Pay with company cheque
• Jan 2015 onwards - TfL no longer accepts
cheques, refer customers to TfL website
• Ticket office
Table 14: London examples of changes to ticket office and TVM functions
FARES AND TICKETING RESEARCH REPORT | 51
6.2.3 Means of payment – the removal of cash
London - Since the introduction of the Oyster card in 2003
and the launch of contactless payment cards on London
buses (see also section 6.2.4 below), cash fares have fallen
to around 1% of total bus journeys in 2013. With such low
levels of cash being used, TfL went to public consultation
to ask for people’s views on going cashless. Cost savings
(estimated at around $50m p/a from 2019/20) were the
primary reason for investigating cashless
80
.
TfL undertook an extensive consultation and advertising
programme prior to implementing its cashless solution.
Campaigns were launched across a variety of media,
including direct emails to 1.5 million registered bus users.
Approximately two-thirds of survey respondents did not
agree with the proposal, with key concerns related to
contactless payments, catering for tourists and irregular
travellers. TfL responded to passenger concerns by gradually
introducing the scheme, allowing “one more journey”
to help people to complete their travel if they fall into a
negative travel credit, and ensuring that passengers are
catered for in emergencies.
The impact on elderly customers of going cashless was
be expected to be negligible, given a wide ranging free travel
scheme on Oyster for seniors is already in place.
6.2.4 New payment channels
London – TfL introduced the option for paying by contactless
payment card on buses in 2012, and on the underground in
2014. By December 2015, contactless payment cards were
used to pay for roughly 9m trips per month on bus / tram,
14m on the underground. More than 25% of all pay as
you go customers now use contactless payment, and over
350 million contactless journeys have now been made using
cards from more than 80 countries
81
. The success of the
scheme means that one in ten contactless transactions
in the UK are made on TfL’s services, making TfL one of the
largest contactless merchants worldwide.
TfL has also introduced Apple Pay, and through partnership
with MasterCard has incentivised its use. A series of
‘MasterCard Mondays’ have been offered, whereby
customers using Apple Pay can travel for free for one day
82
.
Chicago launched its Ventra payment system in 2014, built on
open standards to permit the use of Ventra cards, contactless
debit/credit cards and mobile devices
83
. The interoperability of
each of these options, and the ability to link to a customer’s
Ventra account mean that longer term passes can be loaded
to an account and accessed when using a bank card or
mobile device. However, contactless fares are offered at a
price premium (costing $2.25 on bus rather than the regular
$2 fare) if the user has not added value prior to boarding
84
.
It is unclear what the take-up of contactless cards has been
as a result of this.
In addition to the case studies presented above, other
jurisdictions have started to look at incorporating NFC
and mobile solutions into their fare payment systems.
Whilst there is a groundswell of support for the benefits
of such solutions, there are also barriers to successful
implementation. Figure 17 provides highlights from some
established and developing NFC and mobile solutions.
It is worth noting that the results from the Washington D.C.
pilot (referred to in Figure 17) have now been evaluated
85
.
Metro has abandoned the program because
the public’s response to it has been “tepid”. There were
barely enough customers willing to take part in the trials,
and as such the concept is not popular enough with the
public to justify a long-term investment in it.
6.2.5 Other innovations
Transport is obviously only one aspect of the lives of the
customers we serve. Beyond the public transport network,
customers interact with a myriad of other interfaces, payment
devices, and payment methods. Where integration of transport
payment methods with other transaction types is possible
and done correctly, it brings potential simplicity benefits to
customers and financial benefits to the transport operator.
For these reasons, many operators have aspired to build this
functionality when introducing smartcard; it offers obvious
potential in a way that media such as magnetic stripe did not.
80. https://consultations.tfl.gov.uk/buses/cashless/user_uploads/web-published-consultation-report-post-14july14.pdf-1
81. https://tfl.gov.uk/info-for/media/press-releases/2016/march/pay-as-you-go-travel-with-contactless-and-oyster-extends-to-swanley
82. http://www.mastercard.co.uk/applepay-fare-free-monday.html
83. http://www.transitchicago.com/ventra/
84. http://www.transitchicago.com/fares/, as at 22nd April 2016
85. https://www.washingtonpost.com/local/trafficandcommuting/metro-scraps-plan-for-high-tech-fare-paying-system/2016/04/14/eed44f54-0272-11e6-b823-
707c79ce3504_story.html
FARES AND TICKETING RESEARCH REPORT | 52
Hong Kong
Introduced mobile phone SIM card incorporated
with Octopus functionality for use on public
transport and broader Octopus network. Phone
app displays transactions and account balance
Portland, USA
The TriMet Tickets app allows customers to
buy and activate tickets either via an account or
one-off. Youth and senior discounted tickets
are available where customers hold a valid ID
Bangkok, Thailand
Trial: NFC SIM cards will enable customers
to use their mobile phones as e-purses
to pay for public transportation and goods
Santiago, Chile
Hackers highlighted the risks of NFC by
developing a smartphone app to add travel
credit to the users “Tarjeta BIP” card
without payment
Utah, USA
UTA buses and rail stations are equipped
with NFC readers and accept payment from
contactless cards and smartphone payment
apps (Google Wallet, Apple Pay, SoftCard)
Washington DC, USA
Pilot program to test fare payment via
smartphones, NFC-enabled watches,
contactless cards, Federal ID cards, and more.
SNCF, France
2015 Transport Ticketing Awards:Winner of Most
successful mobile ticketing programme.
Passengers can buy and validate tickets on their
mobile device.
Austin, USA
CapMetro App enables customers to
purchase and activate travel passes. Cloud
storage enables passes to be accessed from
multiple devices.
NFC
Figure 17: Trends in NFC and mobile fare payment solutions
86,87,88,89,90,91,92,93,94
In practice, adoption has been very limited. Operators in
many jurisdictions have suffered from cost blow outs or time
delays with smartcard implementation and have chosen to
forego broader integration in favour of focussing on their core
offering. As these systems mature, there is renewed interest
in looking again at the case for non-transport applications.
Application in Australia of non-fares functionality is limited
and has tended to involve use of a passenger’s public
transport smartcard to pay for services beyond their journey,
but still within the public transport environment. These are
generally simpler to implement because they fall within
jurisdiction controlled environment. An example is capability
of Perth’s SmartRider card to enable passengers to pay for
parking at railway stations.
Similarly, Brisbane’s go card can be used to access the
CityCycle bike share services. To enable this function, users
must sign up for a minimum three month subscription
CityCycle account and link their go card to that account .
Payment for bike hire is not drawn from the user’s go card
balance, this set-up simply allows the user to carry one card,
rather than both their go card and CityCycle card.
It is notable that in both these examples these broader
integrations represent recent system expansions that were
not included as part of original system scope.
International systems provide some other examples of
smartcards being used for applications outside the public
transport environment.
86. Santiago: http://securityaffairs.co/wordpress/29491/cyber-crime/chile-nfc-ticketing-hacked.html
87. SNFC: http://www.transport-ticketing.com/Content/2015-Award-Winners-Announced
88. Bangkok: http://www.finextra.com/news/fullstory.aspx?newsitemid=24603
89. Utah: http://www.rideuta.com/news/2014/11/apple-pay-on-uta/
90. Austin: http://www.capmetro.org/app/
91. Washington: http://www.wmata.com/about_metro/news/PressReleaseDetail.cfm?ReleaseID=5778
92. Portland: http://trimet.org/mobiletickets/faq.htm
93. Hong Kong: http://www.octopus.com.hk/get-your-octopus/choose-your-octopus/mobile-sim/en/index.html
94. http://www.citycycle.com.au/How-does-it-work/Frequently-Asked-Questions/go-card#faq0
FARES AND TICKETING RESEARCH REPORT | 53
CASE STUDY:
SAN FRANCISCO
Customers with an EZ Rider card can use it to
pay for parking at BART stations. Customers who
have a Clipper card, used for travel on regional
public transit services and most Bay Area transit
services, can link this to their EZ Rider parking
account. Payment for parking is made from the
customer’s EZ Rider account and does not affect
their Clipper card balance
97
– the linking
of accounts simply means the customer does
not need to carry both an EZ Rider card and
Clipper card.
Integration with other public services
Estonia: Estonia has a highly-developed national ID card
system. The mandatory national card serves as the digital
access card for all of Estonia’s secure e-services
98
.
In addition to the standard public transport smartcard,
Ühiskaart, Estonia’s national electronic ID card can be used
for travel on public transport services in the cities of Tallinn
and Tartu. This same ID card is used for a wide variety
of public services, including health services, voting, tax
lodgement, and travel within the EU.
Scotland: The Young Scot card can be used to pay for
discounted fares on buses, trains and ferries within Scotland.
The card is used as proof of entitlement when buying
tickets by presenting it at a rail station ticket office or
scanning on the card reader on-board buses (note the
card does not actually have value on it)
99
. The same card
can be used to access other discounts retail, food and
education purchases
100
.
6.3 FUTURE POLICY REFORM
6.3.1 Is there a future for single tickets?
Even where smartcard systems are well established and card
uptake among users is high, the vast majority of operators
still offer a “distress” single ticket option.
Rationale for retaining single ticket options
Single tickets form part of an overall customer service
offering to accommodate the immediate travel needs of the
customer. Despite the convenience and price benefits for
users associated with smartcards, there are times at which
purchasing a single ticket may be a better option. This may be
for infrequent travellers, short-term travellers such as tourists,
or passengers who already own a smartcard but have
forgotten to carry it with them.
Implementation of single ticket options
The technology used by each system to provide single ticket
options can vary widely from traditional paper tickets, to
disposable smartcards, to facilitating fare payment via bank-
issued contactless payment cards (as per section 6.1.2).
In order to maintain the perception that single tickets should
be a last resort, the convenience of these tickets may be
reduced by limiting their validity to either a single trip or
95. http://ezlink.com.sg/use-your-ez-link-card/where-to-use
96. http://www.nets.com.sg/cards/flashpay-card
97. http://www.bart.gov/guide/parking
98. https://e-estonia.com/component/electronic-id-card/
99. http://www.transportscotland.gov.uk/young-scot-national-entitlement-card
100. http://www.youngscot.org/discounts
CASE STUDY: SINGAPORE
The EZ Link card and NETS FlashPay cards can be
used for not only public transport fares payments,
but also payment of other transport costs
including taxi fares, car parking, and Electronic
Road Pricing (ERP) tolls, as well as non-transport
payments such as food, retail, and government
services
95,96
. Extensive promotional activity and
rebates are used to support usage on non-
transport activities.
Figure 18: Singapore NETS FlashPay
non-transit rewards and rebates
FARES AND TICKETING RESEARCH REPORT | 54
single day, limiting the channels through which they are
available (e.g. only from TVMs). The price rewards of using
a smartcard over single tickets are commonly marketed
as a discounted rate for smartcards. Some systems may
market this price difference as a penalty, such as the Dutch
OV-chipkaart, which applies a €1 surcharge for purchasing a
single ticket.
Removal of single ticket options
The most notable exception to the practice of providing
single ticket options is Melbourne’s myki ticketing system.
All passengers are required to purchase a smartcard and
either add value or a pass prior to travelling. During the initial
roll-out of the system, short-term disposable smartcards
were available for use on regional bus networks, however
these were not introduced to services in metropolitan
Melbourne, and were eventually phased out from all services.
The decision to discontinue this option was cited as part of
a broader attempt to reduce the complexity of the project to
provide a more reliable ticketing system.
101
Disposable smartcards
Disposable smartcards are much less costly to produce
than regular plastic smartcards, but traditionally have been
more expensive than paper tickets. However, a range of
new, disposable and much cheaper smartcards is now being
introduced. Whilst these cards have a lower data capacity,
less security and less durability than long-life cards, they are
well suited to some sectors of the occasional user market
where full smartcard functionality is not required. If cost of
disposable smartcards and churn are perceived to be issues,
solutions such as that employed in Singapore (where re-use
is incentivised) are available, as shown in Figure 19 and
Figure 20 opposite.
6.3.2 Cashless systems – can we get there?
The market penetration and increasing popularity of EMV
and NFC / mobile device payments mean these potentially
provide many opportunities for fares and ticketing, especially
given the widespread acceptance already present in Australia
(see section 6.1.2).
However none of these can be seen as a universal panacea.
In the short term, public transport authorities will face a
residual need for facilitating traditional payment methods to
service those who do not have access to, or do not wish to
adopt, these new technologies.
6.3.3 New payment channels
As discussed in section 6.1.2, Sydney is likely to be at the
forefront of adopting new payment channels in the short
term. We would expect that other states and jurisdictions will
look on closely at the success of the 2017 trial, with a view to
adopting themselves in the medium term.
Figure 20 - Deposit terms for Singapore
disposable smartcard
Figure 19 - Singapore disposable smartcard
STANDARD TICKET
• The ticket holder can pay for a single/return trip at any General Ticketing
Machine located in all MRT/LRT stations.
• A trip is valid for use on the day of purchase during the MRT/LRT operating hours.
• This ticket can be used for up to 6 times within 30 days from the day of purchase.
• The ticket deposit of $0.10 will be refunded from the travel fare on the 3rd trip.
• A $0.10 discount on the travel fare will be given on the 6th trip.
• The unused trip can be refunded within three days from the day of purchase at
the Passenger Service Centre in any MRT station.
• There will be no refund or replacement for damaged or lost tickets.
• The above conditions are subject to change without prior notice.
101. http://web.archive.org/web/20110628002406/http://www.premier.vic.gov.au/media-centre/media-releases/1195-fixing-myki-to-get-victorias-transport-ticketing-
system-back-on-track-.html
FARES AND TICKETING RESEARCH REPORT | 55
APPENDICES
APPENDIX A
AUSTRALIAN CITY PROFILE OVERVIEWS
SYDNEY
Table 15: Sydney public transport and ticketing overview
SYSTEM OVERVIEW
Modes Covered Metro and Intercity Train Ferry Metro Bus Light Rail
Annual Patronage 316.0m 15.4m 189.5m 3.9m
524.8 million
102
Annual Fares Revenue $330.2 million
Cost Recovery 22%
FARES STRUCTURE
Spatial Distance based (bands)
Modal 5 fare bands 2 fare bands 3 fare bands
FARE PRODUCTS
Single Fare Up to three transfers between
services / four trips per journey
Transfer only at Circular Quay Up to three transfers between
services / four trips per journey
Daily Fare / Cap Daily cap ($15 Full Fare, $7.50 Concession, $2.50 Seniors)
Period Product / Cap • Weekly fare cap (Monday to Sunday) ($60 Full Fare, $30 Concession)
• Weekly trips cap (Monday to Sunday)(8 journeys, then free travel)
FARE MEDIA
Smartcard Opal (MiFare DESFire EV1)
Single Tickets Disposable Smartcard
(Single)
Disposable Smartcard
(Single)
Disposable Smartcard
(Single)
Disposable Smartcard
(Single)
FARE LEVELS (AS AT JULY 2016)
Smartcard Cost $0.00
Full Fare “Single” $4.00 - $8.80 $6.20 - $7.60 $2.40 - $4.70 $3.80 - $4.80
Concession Schemes • 50% of Full Fare (Students, Seniors, Concessions)
Temporal Pricing / Discounts • Off-peak 30% discount
(Metro. outside 0700-
0900 and 1600-1830,
Intercity outside 0600-
0800 and 1600-1830)
Sunday cap ($2.50)
Channel / Media Discounts • No discount schemes
SALES CHANNELS
On-system Channels Ticket Office / Ferry Wharf, Ticket Vending Machines, On board (Bus, Ferry, Light Rail)
Off-system Channels Retail, Website, Call Centre, Opal kiosks
Auto top-up Yes
FARES AND TICKETING REFORM
Ticketing system Opal introduced 2012-2014
Fares Structure and Products • Period passes phased out as part of Opal roll-out (2014)
• Fare distance bands consolidated (2010)
• MyZone integrated magnetic stripe tickets (2010)
102. TTF – L.E.K. Consulting Public Transport Barometer: A review of key public transport indicators for Australia, July 2015
FARES AND TICKETING RESEARCH REPORT | 57
MELBOURNE (INCLUDING REGIONAL MYKI SERVICES)
Table 16: Melbourne public transport and ticketing overview
SYSTEM OVERVIEW
Modes Covered Metro Rail Tram Metro Bus Regional Rail Regional Bus
Annual Patronage 224.5m 177.8m 123.6m 13.0m 15.2m
525.9 million (Metropolitan) 28.2 million (Regional)
Annual Fares Revenue $435.185 million
103
Cost Recovery 22%
FARES STRUCTURE
Spatial Zonal (2 zones) Zonal (13 zones)
Modal Fares consistent across all modes Fares consistent across all modes
FARE PRODUCTS
Single Fare 2 hour fare, all transfers included 2 hour fare, all transfers included
(3 hours for travel in 6-11 zones, and 4
hours for travel in 12-13 zones)
Daily Fare / Cap Daily cap equivalent to 2x applicable 2 hour fare (i.e. most zones used in that day)
Period Product / Cap Weekly pass, 28-365 day passes
FARE MEDIA
Smartcard myki (MiFare DESFire)
Single Tickets Not available
FARE LEVELS (AS AT JULY 2016)
Smartcard Cost $6.00 Full Fare ($3.00 Concession), non-refundable
Full Fare “Single” $3.90 – $4.68 $2.40 - $30.00
Concession Schemes • 50% of Full Fare (Students, Seniors, Concessions)
Temporal Pricing / Discounts • “Early Bird” (Free train travel with exit before 0715)
• Evening Cap (Max. 2-hour fare after 1800)
• Weekend Daily Cap ($6 Full Fare/Concession, Free travel
for Seniors)
• Public Holiday Cap ($6 Full Fare/Concession, $3.90 Seniors)
• 30% off-peak discount
(excludes journeys arriving in
Zone 1 before 0900 or departing
Zone 1 between 1600-1800)
Channel / Media Discounts • No discount schemes
SALES CHANNELS
On-system Channels Ticket Office, Ticket Vending Machines
Off-system Channels Third party retail, Website, Call Centre
Auto top-up Available for e-purse (“myki money”), not available for passes
FARES AND TICKETING REFORM
Ticketing system myki introduced 2008-2010
Fares Structure and Products • Zone 1+2 fares capped at Zone 1 fare levels (2015)
• Free tram zone (Melbourne CBD) (2015)
103. TTF – L.E.K. Consulting Public Transport Barometer: A review of key public transport indicators for Australia, July 2015
FARES AND TICKETING RESEARCH REPORT | 58
BRISBANE (AND SOUTH EAST QUEENSLAND)
Table 17: Brisbane public transport and ticketing overview
SYSTEM OVERVIEW
Modes Covered Train Ferry Bus Light Rail
Annual Patronage 49.82m 7.44m 118.65m 6.18m
182.1 million
Annual Fares Revenue
Cost Recovery 23%
FARES STRUCTURE
Spatial Zonal (23 zones)
Modal Fares consistent across all modes
FARE PRODUCTS
Single Fare Any number of individual trips made within a 3.5 hour period,
with a maximum of one hour to transfer between each service
Daily Fare / Cap No maximum daily spend
Period Product / Cap Weekly trips cap (Monday to Sunday)(9 journeys, then free travel)
FARE MEDIA
Smartcard go card (MiFare Classic)
Single Tickets Paper tickets (Single trip only)
FARE LEVELS (AS AT JULY 2016)
Smartcard Cost $10.00, fully refundable
Full Fare “Single” $3.35 – $21.35
Concession Schemes • 50% of Full Fare (Students, Seniors, Concessions)
Temporal Pricing / Discounts • 20% Off-peak discount (0830 to 1530 and 1900-0300 (next day) on weekdays,
all day weekends and public holidays)
Channel / Media Discounts • 30% discount on go card fares versus single paper tickets
SALES CHANNELS
On-system Channels Ticket Office (stations, G Link, busway stations), Ticket Vending Machines,
On board (buses exc. Brisbane Transport, Brisbane City Council Ferries)
Off-system Channels Third party retail (7-11 and selected newsagents), Website, Call Centre
Auto top-up Yes
FARES AND TICKETING REFORM
Ticketing system go card introduced 2008
Fares Structure and Products
FARES AND TICKETING RESEARCH REPORT | 59
PERTH
Table 18: Perth public transport and ticketing overview
SYSTEM OVERVIEW
Modes Covered Train Ferry Bus
Annual Patronage 63.9m 0.43m 83.6m
147.9 million
Annual Fares Revenue $213.1 million
104
Cost Recovery 30%
FARES STRUCTURE
Spatial Zonal (9 zones)
Modal Fares consistent across all modes
FARE PRODUCTS
Single Fare • “2 Section” fare available for single mode journey under 3.2km
• 2 hour journey comprising any number of individual trips in up to 4 zones (3 hours if 5 or more zones)
Daily Fare / Cap No maximum daily spend (weekdays)
Period Product / Cap Not available
FARE MEDIA
Smartcard SmartRider (MiFare Classic)
Single Tickets Paper tickets (Single trip only)
FARE LEVELS (AS AT JULY 2016)
Smartcard Cost $10.00, non-refundable
Full Fare “Single” $2.10 – $12.40
Concession Schemes • 60% discount for Seniors, Children
• 62% to 94% discount for Students
Temporal Pricing / Discounts • $12.40 weekday off-peak cap (if first boarding before 0715 or after 0900)
• $12.40 weekend cap
Channel / Media Discounts • 15% discount on SmartRider fares versus single paper tickets
• 25% discount on SmartRider fares when using auto top-up versus single paper tickets
SALES CHANNELS
On-system Channels Ticket Vending Machines, on board (buses and ferries),
Off-system Channels Retail, BPAY, Transperth info centres
Auto top-up Yes
FARES AND TICKETING REFORM
Ticketing system SmartRider introduced 2007
Fares Structure and Products
104. Public Transport Authority Annual Report 2013-14
FARES AND TICKETING RESEARCH REPORT | 60
ADELAIDE
Table 19: Adelaide public transport and ticketing overview
SYSTEM OVERVIEW
Modes Covered Train Tram Bus
Annual Patronage 10.4m 2.6m 50.3m
63.3 million
Annual Fares Revenue
Cost Recovery
FARES STRUCTURE
Spatial Flat fares (with short-trip option)
Modal Fares consistent across all modes
FARE PRODUCTS
Single Fare “2 Section” fare available for single mode journey (approx.. 3km, or two consecutive train stations)
Single Trip: 2 hour journey comprising any number of individual trips
Daily Fare / Cap No maximum daily spend (weekdays)
Period Product / Cap 28-Day Pass
FARE MEDIA
Smartcard Metrocard (MiFare DESFire EV1)
Single Tickets Paper tickets (Single trip only)
FARE LEVELS (AS AT JULY 2016)
Smartcard Cost $5.00, non-refundable
Full Fare “Single” $1.92 – $3.54
Concession Schemes • 9% to 51% discount for Seniors, Children
• 39% to 67% discount for Students
Temporal Pricing / Discounts • 23% to 45% discount for off-peak travel (weekdays 0901-1500, all day Sunday /public holidays)
• Free travel for Seniors (weekdays before 0701, 0901-1500, after 1900, all weekend/public holidays)
Channel / Media Discounts • 33% discount on Metrocard fares versus regular singletrip paper tickets
SALES CHANNELS
On-system Channels Ticket Vending Machines, on board
Off-system Channels Third party retail, Website, Call Centre, Infocentres
Auto top-up Yes
FARES AND TICKETING REFORM
Ticketing system Metrocard launched 2012
Fares Structure and Products
FARES AND TICKETING RESEARCH REPORT | 61
HOBART (INCLUDING LAUNCESTON AND BURNIE)
Table 20: Tasmania metropolitan public transport and ticketing overview
SYSTEM OVERVIEW
Modes Covered Bus
Annual Patronage 10.1 million
Annual Fares Revenue $10.4 million
Cost Recovery 30%
105
FARES STRUCTURE
Spatial Section based fares (13 sections, 3 bands (1-4, 5-10, 11+)
Modal Not applicable
FARE PRODUCTS
Single Fare Single trip comprises any number of individual trips within 90 minutes of initial boarding
Daily Fare / Cap $9.00 Daily Cap (Full fare)
Period Product / Cap Not available
FARE MEDIA
Smartcard Greencard (MiFare DESFire EV1)
Single Tickets Paper tickets (Single trip only)
FARE LEVELS (AS AT JULY 2016)
Smartcard Cost $5.00, non-refundable
Full Fare “Single” $2.56 – $5.36
Concession Schemes • 31% to 67% discount for Adult Concession
• 50% to 76% discount for Child/Student concession
Temporal Pricing / Discounts • 50% discount on daily cap for off-peak travel (weekdays after 0900, Saturday, Sunday, public holidays)
Channel / Media Discounts • 20% discount on Greencard fares versus single paper tickets
SALES CHANNELS
On-system Channels On board
Off-system Channels Third party retail, Website, Call Centre, Metro shop / depots
Auto top-up Yes
FARES AND TICKETING REFORM
Ticketing system Greencard launched 2009
Fares Structure and Products
105. 2014 Investigation into the Pricing Policies of Metro Tasmania Pty Ltd
FARES AND TICKETING RESEARCH REPORT | 62
CANBERRA
Table 21: Canberra public transport and ticketing overview
SYSTEM OVERVIEW
Modes Covered Bus
Annual Patronage 17.8 million
Annual Fares Revenue $24 million
Cost Recovery 16.2%
106
FARES STRUCTURE
Spatial Flat fare
Modal Not applicable
FARE PRODUCTS
Single Fare Single trip comprises any number of trips with transfer made within 90 minutes
Daily Fare / Cap $9.00 daily cap
Period Product / Cap Monthly cap (calendar month) 40 paid trips
FARE MEDIA
Smartcard MyWay (MiFare Classic 1k)
Single Tickets Paper tickets (Single trip only)
FARE LEVELS (AS AT JULY 2016)
Smartcard Cost $5.00, non-refundable ($0 for Seniors MyWay)
Full Fare “Single” $2.98
Concession Schemes • 50% discount for Seniors
• 50% to 65% discount for Students
• Free travel for Children and over 70s
Temporal Pricing / Discounts • 20% discount (full fare) off-peak (weekdays 0900 – 1630, after 1800, all weekend/ public holidays)
• $5.45 weekend/public holiday cap for full fare
• 4% discount (Concession) off-peak
• $2.02 weekend/public holiday cap for Students
Channel / Media Discounts • 5% discount on MyWay fares when using auto top-up
SALES CHANNELS
On-system Channels
Off-system Channels Retail, Website, Call Centre
Auto top-up Yes
FARES AND TICKETING REFORM
Ticketing system MyWay launched 2011
Fares Structure and Products
106. Budget Statements, Territory and Municipal Services Directorate, ACTION 2015-16
FARES AND TICKETING RESEARCH REPORT | 63
APPENDIX B
AUSTRALIAN CITIES COMPARISONS
Table 22: Product range
CITY MODE / OPERATOR SINGLE MULTI
RIDE
PERIOD PASSES OFF-PEAK
(1)
DAILY WEEKLY MONTHLY ANNUAL
Brisbane All modes/Translink
✓ ✓
Sydney myTrains/ TfNSW
✓ ✓ ✓
myFerry/ TfNSW
✓ ✓
myBus/TfNSW
✓ ✓
Canberra ACTION Bus/TfC
✓ ✓ ✓ ✓
Melbourne All modes/PTV
✓ ✓ ✓ ✓ ✓
Hobart Bus/Metro
✓ ✓ ✓
Adelaide All modes/Adelaide Metro
✓ ✓ ✓
Perth Trains/Transperth
✓ ✓
Note: (1) The information provided in this table does not include weekend or public holiday products
Source: PwC Analysis
Table 23: Full Fares ratio to single full fare
CITY MODE / OPERATOR MULTI
RIDE
PERIOD PASSES SINGLE
OFF-PEAK
DAILY DAILY
OFF-PEAK
WEEKLY MONTHLY ANNUAL
Brisbane All modes/ Translink N/A N/A N/A 9.0 N/A N/A 0.8
Sydney Train/ TfNSW N/A 1.8 - 4.4 N/A 7.2 - 8.0 N/A N/A 0.7
Ferry/ TfNSW N/A 2.1 - 2.6 N/A 8.0 N/A N/A N/A
Bus/ TfNSW N/A 3.3 - 7.1 N/A 8.0 N/A N/A N/A
Canberra ACTION Bus/TfC N/A 3.0 N/A N/A 40.0 N/A 0.8
Melbourne Metropolitan / PTV N/A 2.0 N/A 10.0 33.6 - 37.2 390.0 N/A
Hobart Bus/Metro N/A 1.7 - 3.5 1.0 to 1.8 N/A N/A N/A N/A
Adelaide All modes/ Adelaide Metro N/A 2.8 - 5.2 N/A N/A 34.4 - 63.4 N/A 0.5 - 0.8
Perth All modes/ Transperth N/A 1.2 - 6.9
(1)
1.2 to 6.9
(1)
N/A N/A N/A N/A
Note: (1) Comparison of daily off-peak fare and peak fare with 15% SmartRider discount
Source: PwC analysis
FARES AND TICKETING RESEARCH REPORT | 64
Table 24: Fare capped products
CITY MODE / OPERATOR MODE / OPERATOR
DAILY WEEKLY MONTHLY
Melbourne All modes / PTV Daily caps vary
by zones traversed
N/A N/A
Sydney All modes/ TfNSW Capped at AU$15 Capped at AU$60 N/A
Canberra ACTION Bus/TfC Capped at AU$9.00
(1)
N/A N/A
Hobart Bus/Metro Capped at AU$10 N/A N/A
Notes: (1) Weekday cap; $5.45 at weekends / public holidays
Source: PwC Analysis
Table 25: Capped trips schemes in Australia
CITY PTA / SMARTCARD TRIPS CAP
WEEKLY MONTHLY
Brisbane Translink / go card 9 journeys, then free
(1)
N/A
Sydney TfNSW / Opal 8 journeys, then 50% discount on fares N/A
Canberra TfC / MyWay N/A 40 journeys, then free
Notes: (1) From January 2017, to be changed to 8 journeys, then 50% discount on fares
Source: PwC Analysis
Table 26: Concession discounts
CITY MODE / OPERATOR CONCESSION TYPE
SENIORS STUDENT CHILD
Brisbane All modes/Translink 50% 50% 50%
Sydney All modes / TfNSW 50% 50% 50%
Canberra Bus/TfC 50% 50% - 65% 100% (Free)
Melbourne All modes/PTV 50% 50% 50%
Hobart Bus/Metro 37% - 69% 53% - 79% 53% - 79%
Adelaide All modes/Adelaide Metro 9% - 51% 39% - 67% 9% - 51%
Perth All modes/Transperth 60% 62% - 94% 60%
Source: PwC Analysis
FARES AND TICKETING RESEARCH REPORT | 65
Table 27: Family and group fare products
CITY MODE / OPERATOR ‘FAMILY’ GROUP
Sydney myTrains/ TfNSW ✓
Previously Family Funday Sunday –
at least 1 adult + 1 child to qualify
for $2.50 per person for unlimited
travel all day on Sunday. Now Opal
offers $2.50 cap to all (not charged if
weekly cap limits already met)
N/A
myFerry/ TfNSW
myBus/TfNSW
Melbourne All modes/PTV V/Line (on paper ticket) N/A
Perth All modes/Transperth ✓
Family Rider gives a group of up
to 7 people unlimited day travel (does
not state that they need to be related)
Source: PwC Analysis
Table 28: Time dimension to transfers on single tickets
CITY TRANSFER TIME
DIMENSION
DETAILS TRANSFER PERIOD
Brisbane Yes goCard allows transfers up to 3 times across all zones. The journey must
be completed within 360 minutes and the final trip of the journey must
start within 210 minutes from the start of the first trip. There is a 60
minutes time limit between transfers.
Paper ticket allows for unlimited transfers within 120 minutes for travel
within 1 to 10 zones. For travel within 11 zones or more the time limit
is 210 minutes. Return journeys are not permitted when using a single
paper ticket.
goCard:
210 minutes
Paper:
120 minutes
(1-10 zones)
210 minutes
(10+ zones)
Sydney Yes All transfers between modes are charged as separate trips but, within 60
minutes, count as 1 journey for capping. All transfers between the same
mode, within 60 minutes, count as a single journey for capping purposes,
and as only 1 fare.
60 minutes
Canberra Yes All transfers between modes and on the same mode are counted as part
of the same single integrated fare if made within 90 minutes
90 minutes
Melbourne Yes All transfers between modes and on the same mode are counted as part
of the same single integrated fare if made within 120 minutes
120 minutes
Hobart Yes All tickets allow free transfers within the sectional range of the ticket for
up to 90 minutes form the time of the first boarding.
90 minutes
Adelaide Yes All transfers between modes and on the same mode are counted as part
of the same single integrated fare if made within 120 minutes
120 minutes
Perth Yes For journeys up to 4 zones, transfers are allowed within 120 minutes
from the time of initial boarding. For trips covering 5 to 9 zones, the time
limit is 180 minutes.
120 minutes
(1-4 zones)
180 minutes
(5-9 zones)
Source: PwC Analysis
FARES AND TICKETING RESEARCH REPORT | 66
Table 29: Smartcard cost
CITY MODE / OPERATOR INITIAL CARD DEPOSIT
(IN AU$)
1
REFUND
(IN AU$)
1
NET CARD COST
(IN AU$)
1
SE Queensland All modes/Translink 10.00 10.00 0.00
Sydney All modes/ TfNSW 0.00 0.00 0.00
Canberra ACTION Bus/TfC 5.00 0.00 5.00
Melbourne All modes/PTV 6.00 0.00 6.00
Hobart Bus/Metro 5.00 0.00 5.00
Adelaide All modes/Adelaide Metro 5.00 0.00 5.00
Perth All modes/Transperth 10.00 0.00 10.00
Source: PwC Analysis
Table 30: Channel incentives
CITY MODE / OPERATOR AUTO TOP UP OR ONLINE
TOP UP CAPABILITY
AUTO TOP UP OR ONLINE
TOP UP CHANNEL INCENTIVE
Canberra ACTION Bus/TfC
✓
5% discount on fares when using auto
top up or BPAY
Perth All modes/Transperth
✓
25% discount on cash fares when using
auto top up, 15% otherwise
Source: PwC Analysis
FARES AND TICKETING RESEARCH REPORT | 67
APPENDIX C
OVERVIEW OF FARES SYSTEM DESIGN
FARES SYSTEM DESIGN
A transit fare system comprises four components:
1. Fare structure: the spatial structure that supports the fare system (e.g. flat, distance-based, time-based, zonal);
2. Fare products: the range of tickets available (e.g. single, multi-ride, periodical) and associated business rules
(e.g. concession availability, transfers, etc.);
3. Fare levels: the price of each fare product; and
4. Fare media: the technology used to process ticket transactions (e.g. paper tickets, tokens, magnetic stripe, smartcard).
We will consider each of these four areas in turn.
FARE STRUCTURE
In essence, the fare structure establishes the strength of the relationship between fare levels and distance travelled. At one
extreme, a ‘flat’ fare structure establishes a single fare regardless of the distance travel, while a point-to-point distance-based
fare structure establishes a unique fare for each station or stop pair.
Table 31 below summarises the strengths and weaknesses of the core fare structures.
STRUCTURE STRENGTHS WEAKNESSES
Flat • Simplicity
• Low ticket issuing costs
• No scope for overriding
• No relationship between far and
distance travelled
• Implicit cross-subsidisation between
short and long-distance trips which distorts
travel patterns
Distance-based • Establishes strong relationship between
fare and distance travelled
• Generally perceived to be ‘fair’
• Transfers difficult but not impossible
to handle
• Calculation of fare for irregular
journeys difficult
Time-based • Simplicity
• Facilitates straightforward transfers
between services
• Late running and service cancellations
may impact on ticket ‘value’
• No direct relationship between fare and
distance travelled
Zonal • Broad relationship between fare and
distance travelled
• Relatively easy to understand
• Facilitates straightforward transfers
between services
• ‘Boundary problems’
(i.e. passengers travelling a short distance
across a zonal boundary)
Table 31: Core fare structures – strengths and weaknesses
Source: PwC analysis
FARES AND TICKETING RESEARCH REPORT | 68
From a fare structure perspective, the availability of smartcard
technology has provided the opportunity for all transit
agencies to review the fare structure employed. Specifically,
smartcard technology provides the opportunity to fully
‘close’ the fare collection system more cost effectively
via the provision of ticket validators at all system entry
and exit points.
The enhanced capacity to close the fare collection system
in this way focuses attention on the desirability (from a
policy perspective) of choosing between relatively simple
coarse fare structures, to structures that establish a more
highly differentiated relationship between fare levels and
the distance travelled. This choice is partly a function of the
degree to which simplification is a desirable objective; a
simpler fares structure is easier for customers to understand
and to be marketed. The principal policy arguments made
in favour of differentiated fares (e.g. by trip length) focus on
issues related to economic efficiency and equity
107
:
• From an economic efficiency perspective, it can be
argued that higher fare should be charged to cover the
higher operating costs associated with serving longer
trips such that those travelling longer distances are not
cross-subsidised by those travelling shorter distances;
• Also from an economic efficiency perspective, it is often
claimed that passengers of higher cost (i.e. long distance)
services are less price sensitive than those using lower
cost services and hence revenue raising efficiency
dictates that those travelling longer distances pay higher
fares; and
• From an equity perspective, it can be argued that
passengers perceive that a fare structure that establishes
a strong relationship between the distance travelled and
fare paid is fundamentally ‘fair’. Conversely, it can be
argued that it is more efficient for vehicle capacity to
be utilised fully over longer distances by making travel
more attractive to those travelling further, that such
customers generally have fewer alternative modes to
on which to travel.
FARE PRODUCTS
Overview
Three core fare product concepts have traditionally been
employed by public transport operators. These are:
• Single: The most common product type offered
by transport operators is the single ticket product
designed to accommodate the immediate travel needs
of the customer;
• Period pass: Typically, transport operators have also
offered a range of passes for specified amounts of travel
such as daily, weekly, monthly or annual products; and
• Multi-ride: Offers a discount versus singles for
pre-purchase (typically 10 single trips) but does not require
a commitment to travel frequently.
A summary description of the generic advantages and
disadvantages of the three core fare products are provided in
the following Table 32. The extent to which the three product
types are appropriate must be considered in light of the
policy objectives set out by the relevant transit operator. For
example, period passes will typically reward more frequent
users of the system (commuters) and help to reward loyalty
of use. However, if such a pass comes with a high upfront
cost of purchase, then it can be harder for those users with
lower incomes to access these lower (average) fares per trip.
107. Transit Cooperative Research Program (2003) Fare policies, structures and technologies: update report 94 Washington DC: Transportation Research Board
FARES AND TICKETING RESEARCH REPORT | 69
PRODUCT TYPE DEFINITION CUSTOMER
PROPOSITION
OPERATOR BENEFITS CUSTOMER
DISADVANTAGES
OPERATOR
DISADVANTAGES
Single Ticket or value for
use of single trip on
day of travel
• Minimum up-
front outlay or
commitment
• Typically requires
less knowledge
of system or of
what the most
appropriate ticket/
product is
• Often priced
at premium
• No discounts
for customer
• No customer
incentives for
greater system use
• Inconvenience
of selling and
purchasing ticket
each time trip
is made
• Additional ticketing
selling costs
• Reduced
opportunity
to develop
customer loyalty
Period Pass Unlimited rides
within specific origin/
destinations within
specific time period
(e.g. daily, weekly,
monthly, annual)
• Unlimited rides
within a specific
period means
level of effective
discount increases
as more trips
are made
• Better refund/
replacement
proposition –
longer term passes
easier can often
be replaced if
lost/stolen
• Improved
convenience
compared to
singles
• Can generate
increased
patronage and
‘loyalty’ among
customers
• Can generate
more income
(but it is very
dependent
on price)
• Improved cash flow
– revenue captured
in advance
• Reduced ticket
selling costs
• Purchase price
maybe too high for
some passengers
(e.g. lower income)
• Customers may
not be certain of
travel patterns
and that purchase
of a product is
appropriate (see
sections 2.2.1
and 2.2.2 on caps
and frequency
discounts)
• Operators may
experience revenue
dilution as a result
of: (a) customers
generally taking
more trips than the
‘break-even’ trip
rate and
(b) potential for
customers to
share passes
(legally or illegally)
Multi-ride Multiple trips (usually
10) are pre-purchased
at a discount rate
• Convenience of
purchase (i.e. a
number of rides
may be purchased
at the one time)
• (Usually) not time
based – rides may
be redeemed
at customer's
discretion
• Reduced ticket
selling costs
• Reduced level of
fraud or revenue
dilution compared
with period passes
(i.e. no inherent
benefit of ‘sharing’
ticket)
• Needs system
of validation to
decrement value
(i.e. magnetic
stripe or smartcard
reader)
• Up-front cost of
ticket (typically
equivalent to 10
trips) to achieve
discounts may be
prohibitive for low
income earners
• Reduced
opportunity to
generate loyalty
compared to
period products
Table 32: Core fare products – advantages and disadvantages
Source: PwC analysis
FARES AND TICKETING RESEARCH REPORT | 70
With the advent of smartcard ticketing, the features of the three core product types can actually be delivered in a number of
different ways, as summarised in Table 33. In addition, whilst the dimensions that will apply in the fare structure are a quite
separate choice (as discussed at length in section 2), those structural dimensions must be front of mind when the choice of
products is being made.
PRODUCT TYPE HOW PRODUCT IS DELIVERED POLICY DIMENSIONS
Single • As a specific purchased product
• Via Stored Value Travel / e-purse (uncapped)
• Via Stored Value Travel/ e-purse (capped)
Policy is decided separately to
products, but the policy dimensions
help inform the choice of products:
• Temporal (time of day)
• Spatial (distance / location)
Period
(including Daily)
• As a specific purchased product
• Via a $ cap
• Via a trip frequency cap
Multi-trip • As a specific product (offering multiple separate trips)
Table 33: Dimensions for product delivery
Source: PwC Analysis
FARE LEVELS
Typically, the two factors that most heavily influence fare levels are:
• The level of cost recovery that the transit operator is trying to achieve (or the level of subsidy available to support cost
recovery); and
• The willingness of customers to pay the fare (usually measured through the fare elasticity).
There are of course other policy objectives that are impacted by any fare level policy choice; increasing the level of farebox
income and cost recovery will usually come at the expense of patronage.
The case studies in section 2 provide examples of how fare policy objectives are applied in Singapore and Hong Kong.
FARES AND TICKETING RESEARCH REPORT | 71
FARE MEDIA
Historically, the core products outlined above were supported by a mix of paper, token and magnetic stripe fare media.
As the use of smartcard media becomes the accepted norm in the majority of jurisdictions, its benefits are well known and
have common acceptance with customers. Principally, smartcards provide the technical capacity to introduce wide ranging
reforms that cannot be supported by traditional fare media, including:
• Fare Structure: the practicality of establishing distance-based fare structures is significantly greater;
• Product Range: the traditional ‘ticket’ concept is potentially redundant (in section 4.2.1 we discuss how fare capping has
been applied in a number of Australian jurisdictions); and
• Fare Levels: facilitates flexible and transparent pricing arrangements (e.g. transfers).
In practice, few operators have chosen to embrace wide ranging change on the back of introducing smartcards, with the
standard approach generally being to migrate the current fare structure to a new media. That is not to say that the flexibility
offered by smartcard has not been embraced in new or modified offerings; rather that evolution rather than revolution has been
in vogue.
• Productivity improvements
• Faster throughput
• New sales channels
• Faster loading
• Reduced subsidies
70s-80s
Electro-Mechanical
with Paper Tickets
• Productivity improvements
• Faster throughput
• MIS
• Reliability
• New sales channels
• More product options
• Reduced subsidies
• MIS
• Transit integration
Mid 80s-90s
Magnetic Stripe
Ticketing
• Faster throughput
• MIS
• FARES FLEXIBILITY
• Non-transit apps
• Reliability
• CONVENIENCE OF E-CASH
• NSW Sales and
payment options
• ”It’s modern”
• Non-transit apps
• TRANSIT INTEGRATION
• Fares flexibility
• MIS
Mid 90s-00s
Transit
Smartcards
• Multi-apps and sharing
of costs
• Payment flexibility
• Convenience
• Convergence
• Common payment
• Convergence
• Cost sharing
• Market appeal
Mid 00s >
Emerging Electronic
Payments
(Banks & NFC)
Operators Customers Government
Figure 20: Historic trends and benefits of fare media
FARES AND TICKETING RESEARCH REPORT | 72
The introduction of T-Money in Seoul was a notable exception to this, as shown in Figure 21 below.
Seoul Metro provides an example where a new smartcard fare system supported
the re-introduction of distance-based pricing
Figure 21: Seoul fare structure changes on the back of smartcard introduction
Seoul is a notable example of increasing the complexity of its fares system, counter to the wider trend of simplifying fares
(discussed in section 3.1.2). Whilst new fare media such as those discussed in section 6.2.4 are of growing interest, there
remains significant opportunity for continued innovation particularly within smartcards.
A distance-based structure
(i.e. fixed fare for first 8 kilometres
plus a distance component for each
additional kilometre) was used
Technical limitations with the fare
collection system in place at the time
necessitated that the metro employ
a zonal-based structure that divided
Seoul up into seven districts
The functionality provided by the
new contactless smartcard ticketing
system (i.e. ‘T Money’) was employed
to re-introduce a distance-based
fare structure
From
Mid
2004
Pre
Mid
80s
Pre 1980s
to
Mid 2004
FARES AND TICKETING RESEARCH REPORT | 73
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TRANSPORT FORUM
LEVEL 6
7 MACQUARIE PLACE
SYDNEY NSW 2000
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www.ttf.org.au
