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The future of fare pricing

|   Fare-Collection-Systems

In an interview with Toby Holmes, VP North America Sales for Scheidt & Bachmann, we discussed fare-pricing strategies and their transformation.

In the rapidly evolving landscape of public transit, fare-pricing strategies are undergoing a transformation. To shed light on the future of fare pricing, we sat down with Toby Holmes, VP North America Sales for Scheidt & Bachmann in North America and a passionate advocate for innovative transit payment solutions.

Toby, thank you for joining us. In a post-COVID era, public transit agencies are all trying to entice riders back to regular use. Could you start by sharing your insights how fares and ticketing products can be helpful?

Post-COVID, our public transit partners are facing the challenge of new travel habits, hybrid work schedules and a focus on equitable access and customer experience. Innovative fare pricing can be an effective approach to adapt to these shifts. We already see fare capping becoming more standard with the rise of account-based ticketing systems. But this is just one example for the evolution of fare pricing.

Let’s stay with fare capping for a moment. Can you explain how it works and its significance in the current transit landscape?

Fare capping is a game-changer. It allows all passengers, including pay-as-you-go riders, to enjoy the benefits of a pass product once they reach the fare equivalent of a daily, weekly or monthly pass – be it in a stored value model or using contactless EMV open loop. This not only addresses economic equity concerns by eliminating upfront costs barriers to pay for a pass all at once, but also encourages the use of electronic transit accounts, reducing the need for cash and providing data that is useful to understand and improve service and operations.

How is such advanced fare capping applied in real-life? Can you share experiences from a specific project?

A great example is the best-fare model calculations we do for one of our US customers. Here, fares are consecutively capped once the fare equivalent of a three-day, five-day, weekly or monthly pass is reached. Data shows that this option attracts riders to use public transit more intensively and encourages them to use their transit smartcard instead of cash. We also see improvements for our transit provider partners such as reduced operations on traditional sales channels resulting in reduced cost of labour, cash collection, consumables, and reliance on hardware.

Will fare collection become even more complex with new fare strategies?

Yes, but let’s not forget that as transit systems become more complex, fare collection must remain easy to understand in order for passengers to find it worthwhile. This helps avoid overloading the passenger service helpdesk and helps attract new customers, win riders back and also care for the front-line riders who do not have alternatives and rely on public transportation. But while the customer experience remains simple, fare models themselves can continue to grow in complexity with fares that often need to be modified quickly.

What further influences do you see that may impact fare capping and flexible fares?

New commuting patterns are one effect that we see. Remote work and hybrid schedules where people switch flexibly between workplaces have disrupted traditional commuting patterns. Monthly passes may no longer make sense for many riders. In response, there's a demand for even more flexibility and new models.

You said earlier that innovative fare strategies can help to bring even more passengers onto the transport network. Would you say that fares can be used to influence passenger behaviour?

Absolutely, flexible fares can help to encourage desired behaviour, to optimise the capacity utilisation of public transport for example. And even beyond the transportation network they can be used to influence citizens’ behaviour towards greener and more climate-friendly cities.

What about ridership with concessions and special discounts – do they also benefit from flexible fares?

Important question. Yes, concessions and special discounts can also be applied with flexible fares. They do support state or federal benefit programs or special social programs, awarding discounts or even free travel on public transport for identified groups or for a period of time.

You’ve touched a great variety of scenarios – how would you summarise the trends you see?

What’s next beyond fare capping? I would call it flexible fares, which would take into account multiple parameters and conditions. Then, this must be balanced with clear communication of the values to riders. The result: a more efficient system and a better experience for riders.

Thanks for sharing the big picture on what to expect next in fare innovation, Toby. We look forward to exploring more innovative discussions in the future.

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