INTRO: With smart card ticketing being tested in London, Manchester, Paris and Hong Kong, the concept is generating considerable interest among transport operators. But investing in contactless fare collection has risks as well as benefits, suggest Matthew Lawson and Bill Steinmetz from the Railway Technology Strategy Centre at London’s Imperial CollegeTHIS SUMMER sees the launch of smart card ticketing covering suburban railway, metro, bus and ferry operators in Hong Kong. With three million tickets expected to generate over four million transactions a day, Creative Star will be by far the largest commercial application to date of what is widely seen as the future standard fare collection technology.Operators are looking at stored-value smart cards to overcome two fundamental problems with today’s fare collection methods. The first is the need for cash, or near-cash, payment, which puts public transport at a psychological disadvantage compared to the private car. Although cars are expensive to run, the high fixed element makes their marginal cost seem cheaper than the ’out-of-pocket’ expense of buying tickets. With stored-value tickets, expenditure up front replaces the perceived need to pay for each trip individually.The other major benefit is lower running and maintenance costs. Despite advances in vending and validating technology, the cost of existing systems is high. Staff are often needed to sell tickets, and vending machines need regular attention. There are also hidden costs from congestion caused by ticket queues at stations or on vehicles.Creative Star General Manager Barry Chambers says maintenance savings were a powerful incentive for the five Hong Kong operators to choose smart cards. The complex readers for magnetic tickets require constant maintenance, and smart card readers are estimated to have life-cycle costs around 25% lower. Processing speed is also valuable; Hong Kong MTR’s Nathan Road corridor remains one of the busiest metro routes in the world. Passing a contactless smart card over a reader is quicker and less awkward than extracting a ticket from a pocket, wallet or purse and feeding it into a gate mechanism. This can boost the throughput of station barrier lines without expensive civil engineering.One of the main reasons behind Paris Transport Authority’s move to smart cards is the need to tackle fraud problems. RATP has annual ticket revenues of FFr7bn, yet it estimates that 12% of tickets in use at any one time are not valid. Smart cards are difficult to forge, as each card has a known identity specific to a single user. Multiple operatorsThe power and flexibility of smart cards can be critical. The five Creative Star operators all have different fare structures, and the cards must be able to cope with many variations. This is also the main factor behind the trials in Britain. Bus deregulation and fragmentation of rail services have added complexity to the division of ticket revenues in all the big conurbations.London Transport’s Travelcard is valid on the Underground, 10 ex-British Rail franchises, and over 30 operators running bus services under contract. No less than 65 bus operators receive subsidies from Greater Manchester Passenger Transport Executive, together with reimbursement for use of concessionary travel permits. Revenue assignment in both cities is currently undertaken on the basis of market surveys, which are not always representative and sometimes lead to disagreement. London and Manchester are testing stored-value smart cards to generate precise records of the number of passengers using a particular service. This will allow operators to be remunerated on the basis of the traffic actually handled. The data-gathering capability can also be used to monitor travel patterns. Modal interfaces can be analysed in detail, and hard figures on passenger usage can be produced to support investment cases.Smart cards enable yield management techniques such as variable fare rates, which can be used to disperse peak demand. Flattening the peaks can alleviate overcrowding, lower operating costs and push up revenue. But such a policy has a large social impact, and research is required to understand the local elasticity of demand in relation to fares.Uncertainty and riskAlthough trials have shown that smart card transactions are quicker and more reliable than with magnetic tickets, few operators have moved to full-scale implementation. This suggests that practical difficulties remain.Some problems are managerial. Introducing a new fare collection system is always complex, and the pioneering smart card projects involve multinational consortia of operators, hardware suppliers and card manufacturers. Multi-party decision-making presents many opportunities for delay. For example, one of the consortia bidding for London Transport’s Prestige project collapsed when one company felt that its objectives were not being met. IBM, Arthur Anderson, British Telecom and Olivetti also withdrew, leaving just one of the original four groups still bidding – Transis. It is worth noting that the Prestige consortia were asked to bid on a design, build and maintain basis, in line with the British government’s Private Finance Initiative – which placed a greater level of risk on the bidders. By contrast, Hong Kong’s Creative Star contracted its entire design and supply to Colorado, a main systems integrator.There are less than a dozen companies in the world supplying hardware, and only four manufacturers of the cards: Sony, Mikron, Raycon and Icon. These companies form teams to join project consortia, and competition is intense. The current bias is towards winning specific contracts, rather than marketing the generic advantages of smart cards.With the banking industry adopting a contact smart card for its VisaCash ’electronic purse’, manufacturers are now faced with a split between contact and contactless technology, although common cards are promised. There is uncertainty as to how the industry will develop, but it seems likely that transport will hold the key to the critical mass of cards held.With smart cards costing as much as £5 each, it is difficult to cater for occasional travellers and journeys outside the smart card area. At present it is often cheaper to run a second ticketing system in parallel, but the cut-off point will fall as large orders and economies of scale bring down the card price.Staff may be resistant to change. Any financial case for smart card investment would certainly include significant labour cost savings, as fewer maintenance and ticket-checking staff would be required. The highly skilled development and maintenance work might well be contracted out to the suppliers. Other disincentives include the high capital cost of a comprehensive system, the potential difficulty of extracting useful information from the volume of transactions involved, compared to the smaller trial samples, and the concerns of civil liberty groups over the security of personal information accrued by smart cards. Future perspectives Despite the different reasons for initiating development, Hong Kong, Paris, London and Manchester are all confident that smart cards will be a powerful force in the future. Creative Star believes the technology cannot be bettered for large urban networks, in terms of cost and customer service, but acknowledges that the business case varies from city to city. As yet, some operators see little incentive to invest. Deregulation of the British bus industry gave rise to hundreds of small companies, who rejected the ’anti-competitiveness’ of multi-operator passes and reverted to cash fares. Since then the industry has consolidated, with three national groups now accounting for 55% of turnover. Thus smart-cards may become more attractive, although most operators are waiting to see how Prestige progresses. Britain’s railway industry is going through a similar transition, and the Train Operating Companies do not see smart cards as a high priority. A typical franchise length of 10 years or less will mitigate against large investments for long-term benefits.There is fierce competition between manufacturers looking to ensure that their card becomes the industry standard. A club of smart card users is taking shape in France, hoping to sell the concept to other European operators. And once smart cards are widely accepted in urban areas, it is likely that low-cost versions will be developed for neighbouring regional operators. To see who might become the most dominant player in the longer term, it is instructive to look at the battle between Microsoft and IBM in the personal computer market. It may be expected that the software company delivering the most flexible packages will come to dominate the smart card business.The smart card industry is still relatively young. Performance is improving rapidly, but practical application raises complex managerial and operational issues. There are potential disincentives whilst the technology is still at the development stage. The personal computer, fax machine and the Internet all took off much slower than the introductory hype suggested. Nobody doubts the huge benefits that smart cards can offer, but getting them established will not be as easy as some people imagine. oCAPTION: AES Prodata has already installed its OSP-1000 smart card processors at stations in Australia, ahead of the company’s major contract for Hong Kong’s Creative Star projectTABLE: Table I. Smart card project summariesCity Hong Kong Manchester London ParisProject Creative Star — Prestige -Promoter 5 operators L T RATPProject Contracts let Initiated Initiated Initiated started June 1994 Sept 1992 1992 1993Current Launch due Specifications To launch To launch status in July 1997 under review by end 1999 in 2000Cards 3 to 4 million 500 000 2 to 3 million 5 millionTransactions/day 4 million 1 million n/a 10 millionMarket (cards) 5 million 2·5 million n/a n/a
PASSENGERS on France’s Paris Sud-Est line are enjoying more space and a revised seating layout on the route’s TGV fleet. The first three sets refurbished by SNCF’s Bischheim works entered service at the end of last year, and the mid-life overhaul of a further 14 is due to be completed this year.As well as modifying SNCF’s first production series of high-speed trainsets for 300 km/h operation and replacing the familiar orange livery with the silver and blue applied to their Atlantique, Réseau and Duplex descendants, Bischheim is updating interiors that date from 1981.To give passengers more leg room, each refurbished set has 21 fewer seats, with a total of 110 in first class and 240 in second. Luggage racks incorporating lighting units similar to those on Eurostar have been fitted throughout. In first class, where lighting can now be set at two different levels, red carpets have been fitted and TGV Réseau reclining seats with head- and armrests in black leather installed. Groups of facing seats screened by partitions are provided in one car.In second class new seats finished in grey and green moquette have replaced mock leather green and blue coverings, and layouts have been altered to provide more facing pairs of seats. One of the five second class trailers in each set has all seats arranged in this way, and similar areas for families travelling with children have been installed elsewhere. The bar cars, previously refurbished in 1987, remain unchanged. oCAPTION: Above: In response to passengers’ wishes, there is more legroom and more face-to-face seating in second classRight: First class seating arranged with tables in refurbished Paris Sud-Est TGV
TWO DEVELOPMENTS give encouragement to the hope we expressed last month (RG 7.97 p427) that railways in the southern half of Africa are starting to benefit from the laying down of arms.A 51% interest in six management and operating concessions in Mozambique’s Maputo Development Corridor is being offered for sale as part of an industrial development strategy for the region. The six concessions cover the 93 km from Komatipoort to Moamba and Maputo, the 528 km Limpopo line from Chicualacuala to Maputo, the 69 km route from Goba in Swaziland, the harbour at Maputo, and Mozambique Ports & Railways’ (CFM) motive power workshops. Bids were due back by July 11, and the Ministry of Transport & Communications hopes to let all six by the year end. CFM will retain a one-third stake, and South Africa’s Spoornet is likely to take a share.Bidders are being asked to look at 15 to 25 year concessions and to undertake rehabilitation and investment. For example, the track between Komatipoort and Maputo needs attention if it is to handle the traffic suggested. The Mozambique’s projects are likely to be debated at the Sub-Saharan Africa Transport Policy Programme seminar on railway concessioning in Abidjan on October 13-14.The second encouraging development is the resumption of rail traffic in and out of the Democratic Republic of Congo following an agreement between Spoornet and SNCC that sees the South African motive power being restored to use. Spoornet will continue negotiations with SNCC to work out some form of permanent relationship. Badly needed revenue from copper exports should soon be flowing again. o
INTRO: New lines planned, proposed orunder construction in Australian New South WalesSydney – Canberra Very High Speed Train: bids sought from private sector with contract due to be announced by June 15.Jerrys Plain – Mt Thorley: NSW Rail Access Corp signed agreement in September 1997 for Jerrys Plain Terminal Pty Ltd to fund construction by 1999 of 16 km branch from Hunter Valley line to haul 3 million tonnes of coal a year.Sydney airport line: New Southern Railway 10 km double track loop under construction by Transfield-Bouygues consortium at cost of A$600m. The line will be integrated with the Sydney suburban network.Sydney Olympic Park branch: link to Homebush Bay for 2000 Olympics nearing completion.Sydney suburban area: Eastern Suburbs Railway 3 km underground extension from Bondi Junction to Bondi Beach planned; preferred bidder is Lend Lease Infrastructure and Macquarie Bank. Parramatta – Epping – Chatswood orbital route to start ’before March 1999’. Long term plans include lines to the northern beaches, the northwest, south and southwest.Sydney LRT: extension of existing route from Pyrmont to Lilyfield and a city centre loop from Central to Circular Quay planned.n QueenslandSurat basin coal line: proposals have been sought from the private sector as part of Surat basin development project where deposits include 4·1 billion tonnes of thermal coal; likely route for line is Moura to Wondoan. Around 35 km of line would need to be upgraded south from Moura and 170 km of new line built. QR would design the route to carry 10 million tonnes a year using 120 wagon trains hauled by four or five diesel locos.Gold Coast line: Helensvale – Nerang extension opened on December 16. Nerang – Robina opening planned for mid-1998.Brisbane airport line: 9 km single track electrified branch planned with Airtrans as developer under a 35-year BOT deal.Line to Caloundra and Maroochydore: 40 km link to these two resorts north of Brisbane being studied by Ove Arup & Partners.Brisbane light rail: plans announced for 15 km line from the Royal Brisbane hospital to the university at Santa Lucia.n Western AustraliaGeraldton – Tallerang Peak – Weld Range: planned 350 km iron ore railway serving west coast steel mill development; Leighton Holdings chosen as preferred BOT concessionaire.n InterstateAlice – Darwin: rival routes from Alice Springs and 4000 km so-called ’Steel Mississippi’ from Melbourne via Brisbane and Mount Isa being promoted by private sector groups.