Memorandum from FirstGroup plc (TPT 23)
INTRODUCTION
First is a UK based international transport
group with bus and rail operations spanning the UK and North America.
In the UK we are the largest rail operator.
We operate the First Great Western, First ScotRail, First Capital
Connect and the First Trans Pennine Express franchises and the
UK's only open access train service, Hull Trains. We carry more
than 250 million passengers every year.
We are also the largest bus operator in the
UK. We operate approximately 9,000 buses operating across 40 towns
and cities across the UK. We carry 2.8 million passengers every
day.
INTEGRATED TICKETING
1. Is ticketing sufficiently integrated across
different modes of transport and between different geographical
areas?
Ticketing Across Modes
1.1 Our bus and rail operations work extensively
with each other and other industry partners to deliver integrated
transport.
1.2 The most significant development in
recent years has been the introduction of PlusBus, allowing customers
to purchase one day's travel on a local bus network as an add-on
to their rail ticket in a single transaction. This initiative
is very much a creation of the bus and rail industry and has recently
achieved national coverage across all major UK towns and cities
(195 locations).
1.3 The add-on cost is usually priced attractively
to incentivise take-up. Unlimited bus travel for the day in Manchester
for example is available for a £1.70 add-on and Norwich for
£1. Recent development of the scheme has included the introduction
of PlusBus season tickets. These are currently available to 103
destinations with more due to be added.
1.4 PlusBus is underpinned by the highly
sophisticated rail revenue allocation system which gives every
destination a unique code and ensures each operator is automatically
allocated the correct amount of money for the ticket purchased.
1.5 Otherwise many of our bus and rail companies
are active participants in multi-modal ticketing schemes in large
conurbations, typically offering unlimited bus and rail travel
for various zonal combinations. Examples include Metrocard in
West Yorkshire and Zone Travel Master in South Yorkshire.
1.6 Where demand exists it is not unusual
to see other modal combinations in integrated ticketing. In our
First ScotRail franchise for example, shipping services to the
Western Isles are supported by the ability to buy through tickets
from the rail network.
TICKETING BETWEEN
DIFFERENT GEOGRAPHICAL
AREAS
1.7 Within the rail industry ticketing integration
across geographical boundaries is possible by means of the Ticketing
and Settlement Agreement (TSA) in which all Train Operating Companies
(TOCs) providing franchised train services are required to participate.
This agreement allows through tickets for rail journeys throughout
the UK to be booked with one transaction, with booking offices
offering an impartial retailing service to customers, regardless
of which TOC is selling tickets. This means it is simple to buy
a ticket from York to Penzance.
1.8 Bus travel is inevitably more localised
and the issue here is ensuring ticketing complies with natural
travel to work, business or leisure trip patterns rather than
administrative or bus company boundaries. In West Yorkshire we
have a number of companies: Halifax/Huddersfield, Leeds and Bradford.
Rather than a separate day ticket for each company a combined
day ticket is available for £3.30 which recognises the interdependence
between the four locations.
1.9 Concessionary fare areas, particularly
where there is no countywide scheme, and therefore rely on discounts
only for limited district council boundaries, are an obvious problem
in this respect but any remaining difficulties will be solved
in April 2008 with the introduction of the nationwide English
scheme to match those in Scotland and Wales.
2. Does the Government have an adequate strategy
for developing the integration of ticketing systems?
2.1 In many ways, the rail and bus sectors,
often prompted by common ownership, have shown leadership on integrated
transport such that a prescriptive Government strategy has not
been required. The aforementioned PlusBus initiative is a case
in point and numerous other local initiatives are in place; the
Holmfirth Connection, Heathrow Reading Railair and Bristol Flyer
airport link illustrate just a few FirstGroup bus/rail schemes,
many of which are long standing.
2.2 However, Government does have an important
role in setting the tone and in providing the right conditions
in which integrated transport can flourish and we believe the
Government has delivered in this respect. Some examples are discussed
below.
2.3 Government has used its powers to exert
leverage through franchise agreements by, for example, requiring
train operators to participate in existing multi-modal products
and many new franchise agreements include a requirement to provide
an Integration Manager which provides a good focus for developing
and improving integrated ticketing. The requirement that all TOCs
operating franchised rail services are part of the TSA cannot
be underestimated in terms of the maintenance of a fully integrated
fares and ticketing system for National Rail.
2.4 With projects such as ITSO, Government
has taken a lead in ensuring an "open access" platform
for smartcard technology. This will not only enable interoperability
between schemes across the country but importantly will facilitate
the cost-effective supply of smartcard technology to operators.
In addition, through its underwriting the costs of the Yorcard
pilot in South and West Yorkshire it is actively helping the passenger
transport industry to understand the role of smartcards as an
affordable and reliable multi-modal ticketing channel of the future.
2.5 There is a mechanism within the Transport
Act 2000 which enables local authorities to implement ticketing
schemes where it is considered commercial provision is insufficient
to meet customer needs. However, most schemes remain operator
led, testament to the industry taking a lead in the area but also
assisted by the OFT working with the DfT to publish the Ticketing
Schemes Block Exemption. Published in 2001 (and revised in 2006)
this exempts bus and train operators from the 1998 Competition
Act where there is a public interest and certain protection processes
are put in place. This has led to the introduction of many new
schemes.
2.6 Hence, in our view, there can be described
to be a Government strategy in place for integrated ticketing
but it is largely market forces through customer demand and operator
initiative which is driving implementation.
THE USE
OF SMARTCARD
TECHNOLOGIES
3. Is the industry taking up modern smartcard
technologies adequately and appropriately?
3.1 FirstGroup was a leader in the introduction
of smartcards with the first commercial scheme in the UK implemented
in our Bradford bus operation in 1999. Since then FirstGroup bus
and rail operators have worked with local authorities on the Yorcard
project and in bus we have worked on local authority initiated
projects in York, Cheshire and Southampton and in Scotland. First
Great Western and First Capital Connect are working closely with
Transport for London in relation to the acceptance of Oyster Pay
As You Go on their services. At all our National Rail stations
in the Greater London area, we already accept Oyster Travelcards.
3.2 Smartcard technology will naturally
be implemented fastest where the customer and business benefits
are greatest. This is likely to be in metropolitan areas where
the convenience that smartcards offer will drive passenger uptake,
which will in itself create business benefits such as redeployment
of ticket issuing staff to enhanced customer service roles, less
cash handling and reduction of other time consuming back office
tasks.
3.3 In circumstances where the commercial
rationale is less strong, such as where there is a cost efficient
fares and ticketing system already in place, and in the absence
of any other business imperative, such as a franchise obligation,
it may be less appropriate to implement smartcard technology and
consideration may need to be given as to what assistance can be
provided if introduction is desirable to meet Government policy
objectives. For example in Scotland, to support the roll out of
a national concessionary fares smartcard, Transport Scotland has
provided the necessary investment to fit smartcard readers on
buses.
3.4 In relation to the smartcard back-office
infrastructure (processing transactions etc) consideration should
be given to maximising economies of scale and scope through shared
industry resources. Within this context we encourage the current
discussions between the DfT and the Association of Train Operating
Companies (ATOC) as regards establishing a back-office system
for the rail industry.
4. Does the ITSO System cater for the needs
of all passengers and transport providers?
4.1 For the customer, the ability to purchase
a variety of travel modes through a single smartcard in a number
of different locations creates a truly integrated offering. For
transport providers, it also gives a similar re-assurance that
they are investing in hardware and software that has universal
application.
4.2 Although the ITSO platform can accommodate
all existing travel products, we do not necessarily see other
payment channels being eliminated by ITSO. Smartcards are most
likely to have application for frequent users probably making
local journeys. The extent to which smartcards may have applicability
to less frequent users such as foreign tourists or very occasional
public transport users depends on the ability to store value over
long periods of time and to create a simple, cheap and easy to
understand registration process.
4.3 In the longer term other developments
in the banking and retail sectors will determine the continuing
role of ITSO. For example the concept of stored value integrated
onto existing debit cards for occasional low value cash transactions
is coming soon and the implications of this need to be borne in
mind.
5. What can be learned from the experiences
of areas such as London and Scotland where Smartcard technology
is already in place?
London
5.1 Oystercard was introduced en masse
in London in October 2003 and FirstGroup has been close to the
product as an operator of contracted bus services in London and
franchised train services where Oyster Travelcards have been valid
from the start.
5.2 TfL is best placed to observe on successes
and failures but from our point of view the key issue is that
the absence of ITSO compatibility of Oyster will cause difficulty
as ITSO rolls-out on other parts of the National Rail network
and other modes of transport. In addition to the costs incurred
in retro-fitting ITSO technology such an approach is likely to
create a certain level of customer confusion. This illustrates
the need for a national standard like ITSO.
Scotland
5.3 Scotland is yet to go live but some
interesting lessons have emerged from the process so far:
— Technical complexity has led
implementation timescales to being a lot longer than originally
anticipated.
— The procurement of a replacement
fleet of smartcard enabled ticket machines for all of Scotland's
local bus services has led to production efficiencies and therefore
capital cost savings.
— The procurement and manufacture
of the smartcards through one agency (Transport Scotland) has
given them the same look and feel which is good for bus driver
recognition and has eliminated the risk of manufacturing inconsistencies
between different suppliers.
REVENUE PROTECTION
AND THE
POWERS OF
TICKET INSPECTORS
6. Is the legal framework within which ticket
inspectors function appropriate?
6.1 Railway revenue protection staff work
within the framework of the Railway Byelaws and the Regulation
of the Railways Act 1889. Under these byelaws they may require
a person refusing to pay the appropriate fare to give their name
and address. Staff will often use appropriate agencies to verify
the name and address given. After that rail companies will follow
normal debt collection approaches, starting by writing to request
payment.
6.2 Bus operators have powers to inspect
tickets but there is a difference in the sanction that can be
imposed. Under the Railways Act 1993 and Penalty Fares Regulations
1994 rail companies in England and Wales (and buses inside Greater
London) have the power to impose on the spot Penalty Fares. The
current penalty fare is £20. (The fare is a set maximum for
all TOCs and is approved by the Secretary of State.) Bus companies
have no powers of arrest or sanction of penalty fares. Some of
our companies overcome this where a standard fare of £20
is advertised but only applied if the ticket holder does not have
the appropriate ticket for the journey being made.
6.3 The power of bus companies is therefore
severely curtailed compared to rail and the ability to secure
a conviction for fare evasion relies on police intervention. Understandably
interest tends to be low because individual journey offences tend
to be low value and this means the deterrent of a criminal offence
rarely occurs. We do therefore consider the legal framework in
buses to be inappropriate.
6.4 The railway penalty fare of £20
was last increased in January 2005 (up from £10) The issue
here is getting a balance between the level being set at a rate
which is a sufficient deterrent against one which is so punitive
(perhaps £50) that the chances of an inspector extracting
this are lessened particularly without the potential of conflict.
Overall though we consider the legal framework to be appropriate.
7. What appeal mechanisms exist for passengers
and are they adequate?
7.1 For railways, it is a requirement of
any penalty fares scheme that an independent appealsprocess is
instituted. All railway penalty fares schemes currently use the
Independent Penalty Fares Appeal Service (IPFAS) which operates
under a DfT approved code of practice to assess issues such as
whether appropriate discretion was used, was there appropriate
warning of the scheme posted at stations and whether the scheme
was applied consistently Most operators set a 21-day limit for
appeals to be made.
7.2 We consider this to be adequate. As
noted, the code of practice has strict criteria for considering
cases and it is not unusual for appeals to be successful if these
have not been met.
7.3 For buses the appeal process is not
regulated or set down in statute but in FirstGroup would typically
involve a senior manager in the company conducting an investigation
where all the evidence is considered including the interviewing
of witnesses. This is rare but when it happens most disputes are
usually settled amicably.
7.4 If an individual is not satisfied with
a company response then a further appeal is possible to the Bus
Appeals Body (BAB). This is a non-statutory body set up by the
Confederation of Passenger Transport and Bus Users UK to deal
with appeals arising from UK Bus and Coach operations which are
not covered by any other statutory body. We consider this to be
sufficient because although the findings of the BAB are not binding
failure to abide with them can be taken into account when the
relevant Traffic Commissioner is deciding whether an operator
is of "good repute" for registration and licensing purposes.
8. Are the rights of passengers and the powers
of ticket inspectors well-balanced?
8.1 In the case of rail where revenue protection
inspectors have a considerable array of powers but passengers
are protected by a strong code of practice backed-up by statute,
the answer to this is probably yes. For the bus industry the difficulty
in levying on the spot fines is an issue and, as noted, the courts
process is a difficult route. Attracting the interest of the police
to bring a prosecution is the first hurdle but the whole process
can be extremely cumbersome and expensive for what often amount
to low value amounts.
9. Do operators of public transport take
adequate measures to protect fares revenue?
9.1 Given that virtually all UK FirstGroup
bus and rail operators take revenue risk, we have every incentive
to maximise revenue collected and minimise fare evasion. Levels
of evasion are typically less than 3% and much off this quantum
will be due to finding a level beyond which the costs of collecting
an extra percent of revenue is uneconomic.
9.2 Revenue collection measures are generally
welcomed by customers, providing adequate facilities are provided
for purchasing tickets. Honest customers do become annoyed when
they see others travelling without paying especially because advances
in technology in terms of self service and staff operated ticket
machines as well as the internet have greatly improved the ease
of buying the correct ticket for the journey.
9.3 As an illustration of our commitment
to revenue protection, on taking over the WAGN and Thameslink
franchises in April 2006 we are investing over £5 million
in revenue protection measures including installing additional
Automatic Ticket Gates and the employment of additional revenue
protection inspectors.
9.4 In our UK Bus Division we still employ
around 100 inspectors on ticket checking duties despite the fact
that virtually all our fleet is One Person Operated and customers
have to pass the driver through a single door on entrance or exit.
These mainly look for fraudulent use of period passes or evidence
of counterfeiting.
CONCESSIONARY FARES—THE
RIGHT STRATEGY?
10. Is the Government's concessionary fares
strategy, including the proposed scheme for concessionary bus
travel, adequate?
10.1 From a customer perspective, the introduction
of a truly national bus concession for the over 60s is a major
step forward although the discretion to continue local enhancements
has the potential to cause ongoing confusion.
10.2 The next step would be to mandate other
modes particularly to encourage journeys that are more logically
made by a combination of bus-rail or bus-tram rather than all
bus. In addition, the differing nature of discretionary rail schemes
across the country often causes confusion for concessionary card
holders, who are sometimes unclear about how far their card takes
them and what level of discount it offers.
10.3 From an operator perspective, the principle
of "no better, no worse off" cannot be disputed, but
its application has been problematic with scope for disagreement
between operators and local authorities. It might be appropriate
to see the administration of concessionary fares handled at a
national or regional level rather than by the plethora of local
district councils that currently fund the schemes. The current
mechanism causes much duplication of effort and hinders the introduction
of standard or consistent parameters for reimbursement. Replacement
of this with a single tier or regional concessionary authority
would largely eliminate these issues. Having said that, the priority
at the moment is for all to focus on successful implementation
of the 2008 national scheme under the existing framework.
11. Are concessionary fares schemes sufficiently
integrated across different modes of transport and different geographical
areas?
11.1 Historically the benefits offered by
concessionary fare schemes have varied by area according to what
each Travel Concession Authority (TCA) wishes to offer its citizens.
Integration across geographic areas will cease to be a problem
from April 2008 when the new national bus scheme applies in England.
Scotland and Wales already have their own national schemes so
the only remaining issues will be travel between the countries.
Even this is being tackled in the legislation passing through
Parliament at present and will therefore be resolved.
11.2 Rail concession schemes are discretionary
for TCAs and therefore there is little geographic integration
across rail and modal integration between bus and rail is patchy.
A greater degree of consistency would benefit both customers and
transport providers—and, as noted in 10.2, may result in
more logical journey opportunities. However, this has to be achieved
in a sustainable way. As demand for rail travel continues to grow,
and expansion in capacity remains constrained, operators increasingly
have a responsibility to balance supply and demand. It seems inevitable
that any widespread expansion to rail of concessionary travel
would have to avoid the morning and evening peak.
March 2007
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