Smart Card Ticketing in Trondheim Deliver Substantial Benefits to Society



Smart Card Ticketing in Trondheim Deliver Substantial Benefits to Society

Authors

M Welde. Norwegian Public Roads Administration. NO

Description

Systematic evaluations of smart card ticketing systems for public transport are few and far between. The paper presents a cost benefit analysis of a recently implemented smart card system in Trondheim, Norway.

Abstract

Electronic ticketing on public transport based on smart cards is gaining momentum worldwide. The implementation of smart card systems is, however, a complex process that includes legal, economical and technological issues. It is widely recognised that smart cards can deliver benefits for public transport operators, but due to its complexness implementation can come at considerable cost. Therefore, it is more than likely that a commercial appraisal from the perspective of the public transport operator will reveal costs higher than benefits and hence economic non-viability.

However, very few, if any, investments in public transport are profitable from a pure commercial perspective. Investments are motivated by the positive externalities generated by the service, the potential for user scale economics (often referred to as the Mohring effect) and the alleged public good characteristics of public transport. When deciding whether or not to implement smart card ticketing systems we should hence evaluate the investment from a social perspective, that is, quantify costs and benefits to society as a whole following the principles of social cost benefit analysis.

The paper presents the experiences of the Norwegian city of Trondheim which has recently implemented a fully interoperable electronic smart card system. A social cost benefit analysis of the scheme is presented focusing on net overall benefits deriving from effects on passengers, the bus company, local transport authority and the rest of society. It is also estimated, using regression analysis, what effects the new ticketing scheme has had on bus dwell time and passenger numbers.

The main conclusion in the paper is that the smart card ticketing system in Trondheim delivers a positive net present value. For bus passengers the main benefit lie in time savings from time saved boarding buses and paying for tickets. Although a small time saving for the individual, all passengers already on the bus will save time at every stop when passengers pay using smart cards so total time savings for passengers are significant and constitute the main proportion of estimated total benefits. This is an example of user scale economics. Further passenger benefits include increased time table reliability and reduced need for cash. The bus company is benefiting from reduced delays and increased reliability because of less time spent at bus stops. This could allow the bus company to reduce the number of buses or increase the service level to passengers.

The paper demonstrates that economic evaluation of smart card ticketing schemes using the principles of social cost benefit analysis is desirable and possible. As commercial non-viability often represents constraints to the implementation of such schemes, this is valuable information to all that is currently working on smart card ticketing strategies. The paper further discusses the limitations of current methodologies in providing an efficient framework for evaluating the economic impacts of such schemes.

Publisher

Association for European Transport