Examination of Witnesses (Quesitons 1-19)
MR CHRIS
AUSTIN, MR
DAVID MAPP
AND MR
RICHARD MALINS
14 NOVEMBER 2007
Chairman: Good afternoon, gentlemen.
Firstly, we do have a little bit of housekeeping of our own; Members
with an interest to declare?
Clive Efford: Member of Unite.
Mr Martlew: Member of Unite and GMB.
Mr Clelland: Member of Unite.
Graham Stringer: Member of Unite.
Chairman: There is a slight lack of imagination
here! Gwyneth Dunwoody, Aslef.
Mrs Ellman: Member of Unite.
Q1 Chairman: Can I ask you gentlemen
firstly to identify yourselves for the record, beginning on my
left.
Mr Mapp: I am David Mapp, the
Commercial Director for the Association of Train Operating Companies.
Mr Austin: Chris Austin, Director
of Public Policy for the Association of Train Operating Companies.
Mr Malins: Richard Malins, I am
a director of my own business, Transport Investigations Ltd.
Q2 Chairman: Did Mr Malins or Mr
Austin want to say anything specific before we begin?
Mr Austin: No, Chairman.
Q3 Chairman: In which case you know
how concerned this Committee has been in the past about ticketing.
Can you tell us what you understand as the Government's present
strategy on integrated ticketing?
Mr Austin: Yes, the strategy was
set out in the Government's White Paper published in July and
covers around a seven-year period making provision for smartcard
and ITSO smartcard ticketing and other forms of electronic ticketing.
Q4 Chairman: Mr Austin, can we spell
out ITSO, I do not think many people listening will have much
of an idea what it is.
Mr Austin: It is a bit of a mouthful.
It is Integrated Transport Smartcard Organisation.
Q5 Chairman: We will allow you ITSO
from now on since we have it on the record.
Mr Austin: It covers that and
it covers other forms of electronic ticketing, and other forms
of ticketing which are convenient to passengers, and proposes
a way of continuing to develop those over a seven-year period.
Q6 Chairman: Do you think the Government
is doing enough to encourage rail operators to develop integrated
ticketing arrangements, particularly in relation to buses and
coaches?
Mr Austin: I think it is. I think
the important thing is to set the framework and to allow the operators
then to work within that to develop policies to produce the results
that are required. In some cases there may be help needed, and
indeed there has been Government funding for ITSO in the development
of proposals and some research work as well, but the rest other
less complex systems like PlusBus for example have been introduced
entirely by the operators on their own initiative without the
need for Government support.
Q7 Chairman: The difficulty about
that is when the National Passenger Survey asked about ticketing
sales facilities at stations and by phone, one in five passengers
thought they were either "poor" or "very poor".
Do you think that is an acceptable level of customer satisfaction?
Mr Mapp: The National Passenger
Survey does indeed ask a question about ticket buying at stations.
The overall score from the last wave in the spring of this year
was that 67% of customers interviewed were either "fairly"
or "very" satisfied with the ticket buying at the station
which they had used.
Q8 Chairman: How was the question
phrased, in the same way? Are we comparing like with like?
Mr Mapp: I cannot remember the
exact wording but effectively it asks customers in the context
of the station which they have just bought their ticket from to
rate how satisfied they were with ticket buying at that station.
Q9 Chairman: What are rail companies
doing to improve this?
Mr Mapp: There is a whole range—
Q10 Chairman: Even 67% is not what
you would call a raging success, is it really?
Mr Mapp: 67% is the average. There
are some elements of the market which are significantly more satisfied.
Longer distance travellers for instance were 80% satisfied with
ticket buying at stations. I should also emphasise that the National
Passenger Survey question is specifically related to stations,
and stations now account for less than 60% of all sales. Over
40% are through the Internet, through call centres, through travel
agents and other channels, so the question itself only relates
to a proportion of overall ticket sales. We are not complacent
about the 60%, or indeed the 80%, and there is a whole range of
initiatives that we are pursuing to improve our customers' experience
of retailing across the network. In particular we have invested
significantly in the Internet to the extent that Internet sales
represent 14% of all sales in total and nearer 30% for longer
distance train operators. There has been significant investment
in the ticketing on departure network which now covers 500 stations
and through which about £500 million worth of sales pass.
There have been round about 900 new self-service ticket machines
installed at stations in the past three years. We are participating
fully in the development of smartcards, in particular ITSO smartcards
but also the Oyster scheme in London as well. Looking further
ahead there is active development work underway looking at print
at home tickets and also barcode tickets on mobile phones. We
certainly are not complacent. There are many things that we are
doing which we hope will improve retailing for customers in the
future.
Q11 Clive Efford: The industry appears
to be reluctant to make a major investment in smartcards. What
do you think the Government can do to encourage you to invest
and make the business more attractive?
Mr Austin: The investment required
is quite high and quite clear. There is a lot of ticketing equipment,
back office systems and software support required, and so far
the benefits coming from it have been less tangible. There is
some revenue generation but some of the other advantages or some
of the other potential cost savings are more difficult for us
to achieve than for example for Transport for London. The increase
in sales through smartcards and the reduction in sales through
ticket offices will in the long run allow savings to be made in
the cost of operating ticket offices. Transport for London have
realised that at some of their ticket offices. We are precluded
from doing that by regulation which controls the hours of opening
of ticket offices, so that is one area where the benefits are
much more difficult for us to realise.
Q12 Clive Efford: The information
we have is that some organisations have been critical of ITSO.
There are new technologies coming in such as contactless credit
cards; Barclaycard do one for Oyster for instance. Is that the
way forward then rather than investing in huge kit like ITSO?
Mr Mapp: I do not think the issue
is ITSO—and I should declare an interest here as a board
director of ITSO Ltd—which has developed a world standard
in smartcard technology. Whilst that has perhaps taken longer
than some people expected, in comparative terms it has actually
been developed quite quickly. By comparison the magnetic stripe
bank cards took 25 years to develop. I do not think ITSO is the
issue; the central issue has been the lack of a business case
for commercial operators to invest in the fairly expensive infrastructure
you need to support smartcard schemes. As far as the rail sector
is concerned, the current Government strategy of specifying ITSO
enablement in every new franchise is a very effective method of
leveraging in private sector investment to fill that gap, and
I think that strategy is likely to be fully effective over time.
Q13 Clive Efford: How does the rollout
of ITSO compare with for instance Oyster across London? What is
the difference?
Mr Mapp: Oyster of course had
a head start over ITSO in the sense that the Mayor and Transport
for London decided to introduce the Oyster scheme some years ago
now. ITSO has taken longer to develop partly for the reasons that
I have already articulated. It is now a franchise requirement
in several of the recently let franchises, most notably South
West Trains but also East Midlands, West Midlands, Cross Country
and East Coast as well. In each of those franchise agreements
there are commitments to roll out ITSO over the next two to three
years, so I think whilst it had a slower start than Oyster ITSO
is likely to catch up progressively over the near future.
Q14 Clive Efford: You have suggested
that ATOC could provide "the client" for a national
integrated ticketing system. What would this achieve?
Mr Mapp: I am not sure I understand
the question.
Mr Austin: I think I can help
there. In our written evidence we said that our subsidiary organisation
Rail Settlement Plan has the technology to provide the back office
support for these smartcard systems, and so whether it was rail
only or rail and bus we have the ability to do that for a national
system.
Q15 Clive Efford: And how would that
benefit either you or the travelling public?
Mr Austin: The advantage is it
would end up being a little quicker because it is a ready-made
system capable of adaptation, but of course there is a cost attached
to it.
Q16 Clive Efford: Why are only 70
of the 330 stations in Greater London capable of taking Oyster
cards?
Mr Austin: That number has increased
this week with the introduction of the London overground concession
and a further almost 50 stations have been added to the network,
and there are a further 14 or 15 stations to be added in January,
so it is expanding. The main rollout for the entire network within
London comes in in 2009. That is the timescale we are planning
to.
Q17 Clive Efford: The situation for
people in London is not satisfactory, is it? We have two systems
that are not compatible and are never going to be compatible.
How are we going to resolve this situation because it appears
that in these 330 stations across London we are going to have
two separate pieces of kit sitting side-by-side. How is that going
to be resolved in a way that is easy for the travelling public?
Mr Mapp: I think strategically
there is little doubt it would have been better to have one national
smartcard standard, and indeed it was always the intention that
ITSO would be that national smartcard standard. Nevertheless Oyster
was introduced earlier in London and it has been a success and
it is well-established. I think at the moment the proposed approach
by the Department for Transport and the Government is the sensible,
pragmatic way of addressing that, which is that that they are
in discussion with DNT and they are in discussion with Transport
for London with a view to ensuring that all Oyster equipment is
retrofitted to allow it to accept ITSO smartcards by 2010.
Q18 Clive Efford: That will mean
that the travelling public when they are confronted with a gate
will have one single pad, and whether it is an Oyster card or
an ITSO card, they will strike that same pad? They will not have
to have a pad that is half ITSO and half Oyster where you are
creating a huge amount of confusion? There will be one simple
system for the public to understand?
Mr Mapp: My understanding is that
there will be one yellow blob, yes.
Q19 Mrs Ellman: How could a passenger
feel confident that they are getting the best advice on cheap
fares?
Mr Mapp: The obligation to sell
both impartially and accurately is a regulatory obligation on
train companies through their franchise agreements and specifically
through the ticketing settlement agreement, which is the main
regulatory framework in this area. That is an obligation which
the train companies take very seriously indeed. As part of the
regulatory framework we are obliged to undertake an annual mystery
shopping survey. The survey currently includes just over 10,500
mystery shops which include stations, Internet sites and call
centres. Across a range of representative retailing scenarios
through that survey, which is conducted by an independent market
research company, they have found that in around 99% of transactions
the customer has been sold accurately the most appropriate ticket
for their journey, so for the vast majority of customers we believe
that they are sold the correct ticket for their journey. We accept
that some are not. We accept that we make mistakes and 1% of one
billion passenger journeys is a large number; and we fully accept
that.
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