Transport ticketing and the cost-of-living crisis

Following Covid-19 is another crisis for the transit industry: the rising cost of living. Around the world, accelerated inflation rates are placing increased pressure on cash-strapped passengers and networks. How does this impact transport ticketing and what strategies could help? Gianluca Cuzzolin, Chairman of Calypso Networks Association, explores...

Unprecedented global price rises

 Rising prices are placing pressure on transit and ticketing to once more play its part in delivering a vital public service. The industry must help maintain essential services while facilitating affordable access, helping local economies to function all around the world.

Figures from the World Economic Forum show that inflation is at its highest since the early 1980s, ranging from a 25% rate in Israel, to almost  80% in Turkey. Rises in global fuel prices have had a big impact effect, forcing motorists to reconsider private vehicle usage. Hungary has limited the amount of petrol drivers can purchase each day, while Sri Lanka placed a two-week ban on non-essential fuel sales. With the World Bank forecasting continuing inflation and weak economic growth in the months to come, it is clear that this is another challenge that requires ticketing and transit to evolve.


Passengers and transit in the age of inflation

Poor economic health impacts passengers and networks in almost equal measure.

For passengers, any rising cost in public transport may force them to reduce journeys for both professional and leisure purposes. Workers may return to home working if they are able, and would-be tourists may postpone trips.

Transport networks may experience a sharp increase in operational costs at the same time as falling passenger footfall, resulting in lower ticketing revenues and reduced resources for long-term network investment.

Despite financial pressures, public transport can become a more attractive option than it’s been for years, providing an alternative to expensive private transport. PTOs and PTAs must make every effort to present public transport as a reliable and affordable service to reinforce its value to passengers.


How ticketing can help passengers?

So, how might planners mitigate support passengers when it comes to ticketing and payments during these challenging times?

Some are taking drastic action by temporarily offering low-cost ticketing to incentivise travel and increase public transport ridership. From June through August 2022, passengers across Germany can purchase a single ticket for all modes of city and regional transport for one month for just 9 Euros.

While this scheme has already proved popular with German passengers, critics of the plan suggest that it might backfire, predicting drastic price hikes when the programme ends and forcing planners to contend with razor-thin profit margins and fewer passengers.

It’s unlikely that the cost-of-living crisis will go away quickly. And while public transport ticketing is just a small part of the challenge, instead of offering stop-gap measures and short-term solutions, planners must instead create innovative, futureproof offerings. Consider the following three approaches that offer incentives to passengers while providing network operators and authorities more control:

  1. Offering fare flexibility

Rising prices are causing people to look wherever they can to save money. Today, passengers are increasingly agile with their travel patterns, and want flexible tickets, flexible modes of transport, and to travel affordably whenever they need to move around.

This requires networks to explore flexible ticketing initiatives that delivers the optimum balance between value for passengers and ROI for networks. As today’s travellers become more unpredictable in their journeys, fares and tariff structures must find ways to become less rigid and offer value and choice.

Open standards enable passengers to access a mix of every tariff type, including subscriptions, locally stored value and Pay-As-You-Go (PAYG). It also enables the delivery of each ticket type with the same level of high performance and data privacy safeguards. In short, they promote ticketing and transit inclusion for all passenger types and preferences.

  1. Enabling new mobility services

Planners can consider how new mobility services like scooters and bikes (Mobility-as-a-Service or “MaaS”) can integrate with established public transport modes like buses, trains and trams. Doing so would offer two benefits:

  • First, it would provide passengers with a joined-up, seamless transit experience, with a matching ticketing ecosystem that reduces complexity.
  • And second, an effective MaaS policy considers the first and last step of every passenger’s journey, enabling them to realise the better value of public transport compared to private vehicle use and costly fuel consumption.
  1. Supporting budgeting

Planners should consider the value that closed loop ticketing offers passengers. With inflation forcing more passengers to keep a closer eye on spending, and some may not want to choose open loop PAYG ticketing. Instead, some may prefer to maintain control by using a network’s own ticketing solution, which also makes it easier to access concessionary fares. This also has the added benefit of supporting passengers who are unbanked.


Open standards: helping manage costs for the ticketing community

With networks once again having to do more with less, anything that presents savings across operations is critical. Open standards provide the tools that put networks in control, optimising resource allocation to develop futureproof, secure and flexible ticket offerings that meet the needs of passengers and operators alike and maximize ROI.

Not only do open standard solutions drive down costs by reducing the risk of vendor lock in and giving operators full sovereignty and control over their solutions, but they also help planners deliver fare structures that can unlock better value for passengers.

As chip shortages continue, networks that are dependent on one proprietary vendor may struggle to meet passenger demand. Open standards provide an alternative and are maintained with PTOs and PTAs front of mind. In addition, as open standards mean PTOs and PTAs are not tied down to any particular vendor, they can place tenders for the best solution at the best price.

True open standard technologies enable networks to combine account-based (ABT) and card-based ticketing into their system. Closed loop solutions can also work alongside open loop solutions and help enable convenient, highly secure ticketing for all. Closed loop open standards also help planners easily deliver specialised tariff structures, season tickets or fare programmes.


How to do more with less

Of course, CNA, Calypso technologies and ticketing itself are not the silver bullets that resolve the global cost of living crisis – we play one small part. Yet open standards support opportunities for ticketing to help passengers and networks manage budgets. And by preventing vendor lock-in, open standards drive down costs for networks, preventing already narrow margins from shrinking further.

As an open technology supported by an active, diverse community, Calypso technology and CNA are committed to evolving in ways that recognise and reflect the needs of the entire transit ecosystem.

Part of this commitment involves prioritising Calypso product functional and security certification schemes, which can help mitigate potential cost burdens associated with their development and deployment.

We also recognise that for PTOs and PTAs working with constrained resources, access to tools that facilitate smart, innovative and cost-effective ticketing is especially critical. To help address this, CNA developed and donated Eclipse Keyple, an open-source software development kit (SDK), to the ticketing community. Open, universal and completely free to use, Keyple empowers ticketing developers to innovate and create advanced ticketing software for terminals quickly and without the heavy price tag or detailed knowledge on ticketing technology.

Finally, Calypso offers low cost ticketing solutions, including Calypso Light and the soon-to-be-launched Calypso Basic, empowering networks to provide high-quality ticketing that doesn’t depend on passing costs to passengers.


Challenges and opportunities

Public transport is not immune from the world’s crises. However, with the current cost of living crisis, there is also an opportunity. Passengers are having to rethink private vehicle usage and the transit sector must demonstrate its commitment to providing unparalleled convenience and value. By doing this, networks can convert passengers who were once casual, infrequent users, to become long-term, committed public transport enthusiasts, helping increase its customer base.

Ticketing has an opportunity to help reinforce passenger conversion by creating a smart, convenient and joined up ecosystem. For planners committed to delivering this, being part of an open ticketing ecosystem presents a more viable, sustainable approach to long-term sustainability and growth.

Get in touch to learn more about how Calypso solutions and open standards can support your network in providing flexible, cost-effective transport ticketing.