Ticket Revenue Sharing: Why It’s Needed For Multimodal Transport

This post is also available in: Deutsch (German)

Why do multimodal public transport associations need to share ticket revenue to the multiple operators in charge of the multiple modes of transport?

Multimodal transport ticketing problem

Any passenger who has taken public transport before smart cards showed up might remember how tedious and wasteful the outdated transport ticketing model was, especially for a multimodal journey.

With the lack of an integrated public transport system back then, the passenger had to keep buying separate tickets at different counters or websites for each mode. If many separate paper tickets had to be purchased daily, then it would be a waste of single-use paper.

That’s why it’s probably a good thing that integrated ticketing solutions like smart cards were introduced. The benefits of integration have been proven by Klaas De Brucker (2017), who used Multi-Criteria Analysis as a tool to enhance Intermodality and promote Ticket Integration in Public Transport.

While the professor affirmed that ticket integration allowed passengers to use multimodal transport with a single ticket, which made journeys smoother, he still identified some problems with the integrated ticketing system. Such problems were identified using the multi-criteria analysis (MCA) of case studies in Europe and interviews with relevant stakeholders about their objectives and concerns.

The most important concern of the stakeholders to raise here is the matter of ticket revenue sharing. Due to the presence of multiple operators for multiple transport modes, it has been difficult to pinpoint how much revenue an operator should earn without knowing how much the respective mode was used. And it wouldn’t be fair to the operators who don’t get what they should be getting.

This is especially problematic when passengers change their routing plans due to unforeseen circumstances. This is why we should know not only the value of a public transport line per passenger but also the actual journey the passengers take.

In addition to the study, smart cards are also subject to loss, damage and even nonsense. I can recall a nonsensical problem I faced as a regular passenger of a cashless public transport system.

The smart card had to be topped up at the train station. But to get to the train station, I had to use a bus. And to use the bus, I needed enough money on my smart card to pay the bus fare. But if I didn’t have enough money on my smart card, how then could I go to the train station to top up the smart card without hailing a taxi?

Back to the ticket revenue sharing problem, we propose looking at what solutions can help with the ticket revenue sharing to the respective operators.

What problems did transport ticket integration solve?

  • The tediousness of buying separate tickets at different counters or websites for different modes.
  • The waste of single-use paper from having separate tickets.

What is the problem with multimodal transport ticketing although it made journeys smoother?

  • It is difficult to make decisions about ticket revenue sharing.
  • Smart cards are subject to loss and damage.
  • Smart card reload models might not make sense in practical applications.

Ticket revenue sharing solutions

In case you didn’t know, revenue sharing is simply the concept of the transport association allocating a tariff-based proportion of ticket revenue to each transport operator. The tariff can be computed according to square kilometres occupied, passenger kilometres transported or earning power. The former 2 tariff parameters could be based on occupancy and route data while the latter could be based on ticket sales data.

It seems that this revenue sharing concept has been on a researcher’s mind for as long as someone’s husband’s existence. Dan B. Rinks (1986) came up with and studied 5 Revenue allocation methods for integrated transit systems and narrowed them down to what he called a “general revenue-sharing model based on ridership”, which basically refers to revenue sharing based on occupancy data.

A person counting money
Ticket revenue sharing could be based on occupancy, route and/or ticket sales.
Image Source: Sharon McCutcheon

The revenue sharing concept is also a thing in the Verkehrsverbund (VV), what the integrated regional public transport associations in Germany, Austria and Switzerland are called. As you would guess at this point, the VV have integrated their operations, ticketing, planning, marketing and customer services for cities and states. And guess who’s in charge of revenue sharing? The VV executive body.

However, the revenue sharing decisions are different for each VV. Some VVs and their operators receive earnings according to the contracts between the local jurisdiction and the operators. Other VVs and their operators receive earning shares based on a combination of supply and demand measures.

On the flip side, the tariff can even be computed using mobile transport and ticketing apps based on distributed ledger technology (DLT), whereby the blockchain records the purchase on a distributed ledger used by multiple operators and splits the payment among the relevant operators.

Matthias Felder of DB Systel’s Blockchain and DLT Solutions made the case for a blockchain-based mobility platform project he and his team have been working on. In his presentation, he claimed that current revenue sharing practices waste time, money and energy, and need a trustworthy network, which can be made possible using blockchain.

Check DB Systel’s video for the gist of it.

However, he told me that the project is still in the prototyping phase due to its high complexity and the Covid-imposed setbacks for their planned market tests. Despite the challenges, he remains optimistic and hopes that the project will go live in 2022. *Fingers crossed*

But even if blockchain-based mobile apps are not widely received, even a cheap student-made app solution like BlueGo (not an ad) in Augsburg, which doesn’t require additional infrastructure, can do the trick in automatically tracking where passengers board and alight.

Specifically, BlueGo recognises the passenger’s real-time route, calculates the cheapest tariff and books the tickets automatically. This means that a technology like this can make the work of the public transport associations or VVs much easier by feeding them the real-time data and all they have to do is check the occupancy proportions of the routes and trace the routes back to the operators.

Ticket machine in Berlin

Transport ticket apps would also mean that passengers spend less or no time at the ticket machine.
Image Source: Claudio Schwarz

How does the ticket revenue sharing concept work?

The ticket revenue sharing concept follows occupancy, route and/or ticket sales based tariffs. For the Verkehrsverbund bodies, the ticket revenue sharing decisions could be based on contractual agreements between the local jurisdiction and the public transport operators, or supply and demand measures.

What solutions make ticket revenue sharing easier?

  • Blockchain-based mobile transport and ticketing apps that can compute the tariffs.
  • Any mobile app that can automatically track passenger route choices, entries and exits in real-time without requiring extra infrastructure.

No wonder ticket revenue sharing is needed for multimodal transport

Before the adoption of smart cards, the lack of an integrated transport system was marked by the tediousness of buying separate tickets for different modes and the waste of single-use paper.

However, the transport ticket integration via the smart card model overlooked the issues of potential loss, damage, nonsensical reload procedure and unfair ticket revenue sharing.

Ticket revenue sharing decisions could be based on occupancy, route or ticket sales. They could even be based on contractual agreements or supply and demand measures. Or better yet, a cheap student-made mobile app like BlueGo or a sophisticated blockchain-based mobility app like the one DB Systel is prototyping.

If any of these solutions work optimally in solving the problems paper tickets and smart cards couldn’t solve, then why not consider using them to make life easier for passengers and operators?

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