Commercial - 2008/09 Action Plan - Corporate Plan - About us - Translink

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7. Commercial - 2008/09 Action Plan

7.1 BACKGROUND

Integration is at the heart of Translink’s operations. Passengers want a public transport system which is integrated. This means more than buses and trains connecting; also clear branding, common information sources, through ticketing and well organised interchanges including Park and Ride facilities.

Translink is working towards delivering meaningful integration for passengers.  In addition, the network must have a coherent and effective commercial strategy to maximise passenger numbers on the services.
 
7.2 INFORMATION; CALL CENTRE AND WEBSITE

Integrated Passenger information from the call centre and translink.co.uk  will continue to be upgraded and improved. Enhanced web based mapping interactivity, fares information and further fine grading of information to individual bus stop level will be introduced.  A pilot personalised marketing campaign will be completed in 2008/09.

The functionality of the call centre will continue to be extended; handling promotions and yield management programmes.  Future functions will include sales / reservations for Enterprise services, handling the smartpass (65 and the new 60-64 concessionary travel) renewal and extension process and sales of Translink smartcard “top ups”.  

Investigation of a voice recognition system is underway to deliver further operational efficiencies and out of hours coverage.

While content on the website is enhanced and upgraded as part of a rolling programme, in 2008/09 translink.co.uk  will be redesigned and relaunched to improve functionality, attractiveness, ease of content management and accessibility.  A separate but parallel programme will deliver an enhanced high functioning intranet for all NITHC and Translink employees.

7.3 e COMMERCE

To date e commerce has been used as part of the integrated commercial offer.  It is recognised its use must be more widespread.  A formal e commerce project will accelerate the rollout of an extensive and aggressive e-commerce business development campaign schedule driving growth in passenger numbers and delivering effective yield management solutions. 

The development and growth of e commerce will be key criteria in the redesign and upgrade of translink.co.uk.

7.4 FARES and TICKETING

There is currently extensive use of smart cards within the ticketing mix, although it is restricted to bus multi journey and day tickets and concession passes.  The current ticketing equipment is approaching the end of its economic life and a project will be commenced to replace the ticketing system and develop a future fares strategy.

Key objectives for the new strategy are:

• The reduction of cash payments from buses, particularly in Belfast.  This will require a much greater differential between cash and non cash fares.
• Early development of options for ticket vending machines
• Fraud reduction
• Operational efficiencies
• Options for multi modal travel to be facilitated / rewarded / encouraged
• Investigation of options for stored value ticketing to deliver growth in passenger numbers
• Facilitation of technology extension to incorporate non PT partners to deliver growth in passenger numbers (c.f. Oyster in London, Octopus in Hong Kong)

This will be addressed in a two stage process.  In the short term the current equipment and fares / ticketing structure will be optimized and vending machines investigated.  Longer term a new stored value product could be a replacement for all multi journey and travel card ticket types delivering a quantum step forward in terms of comprehensive single journey through ticketing for all bus and rail services.  A formal project will progress to deliver a replacement ticketing system.  A project mandate and PID will be completed in 2008/09.  Capital funding allocation for procurement is included for 2010/11.

7.5 PARK and RIDE

The future of the successful P&R schemes at Black’s Road and Sprucefield will be considered during 2008/09.  These were developed as a temporary measure to ease congestion on the M1 and Westlink during a period of major road construction.

Translink is also working with Roads Service to deliver a strategic P&R facility at Cairnshill.  This is expected to be operational in 2008/09 subject to agreement on service levels and associated bus priority.

In addition, the Group is pursuing a programme of P&R developments at both bus and rail stations and “strategic” locations including:

• Whitehead (Phase 2) – completion estimated 2008
• Jordanstown – completion estimated summer 2009.
• Whiteabbey – completion estimated 2009
• Carrickfergus – completion estimated late 2011
• Greenisland – on hold until DDA project issues are resolved
• Ballymartin, Lisburn, Moira, Holywood, Bangor- schemes in development. 

7.6 CUSTOMER CARE

A new approach that has been successful in NI Railways focusing on core customer care commitments will be extended to bus services in Belfast during 2008/09. This is designed to deliver a positive travel experience for passengers and a professional, fulfilling and enjoyable workplace. We aim to have our customer service recognised as “best in class”. 

Associated with this project is the establishment of formal Group level customer service standards, internal communications campaigns, a ‘recognition’ scheme / event and the adoption of formal customer service competency qualifications for key staff.
 
7.7 CONCESSION FARES SCHEME

According to the Budget for NI 2008/09 - 2010/11 the free concession fares scheme will be extended to include those aged 60-64 years from (currently) those 65 and over.  Implementation is proposed for 2008; all associated preparation by Translink is underway.

7.8 KEY ISSUES

COMMERCIAL

Cost Pressures 2008/09
Costs during 2008/09 will rise sharply.  In addition, specific funding streams will be reduced / removed by Government.  Specifically:

• Fuel represents about 10% of overall costs.  April 2008 market fuel prices are 15-20% above the hedge prices for 2007/08.
• Wages will increase in line with Government guidelines.
• NILGOSC has confirmed it will increase the employer pension contribution by 2% from 1/4/08; an additional cost of £1.7million in 2008/09 over 2007/08 which grows to an additional £3.8million by 2010/11.  The funding of the additional employer pension contributions is £3.4million for all years of the plan which is short of the requirement by £5.0million in 2008/09, £6.1million in 2009/10 and £7.3million in 2010/11.
• Considerable efficiency savings have been reflected in the cost budgets of all companies; these represent challenging targets.
• Route revenue support of £2.1million for the bus companies will be withdrawn by DRD from 1/4/08.
• DRD have indicated that it cannot currently meet the budgeted shortfall in PSO for NI Railways of £2.8million in 2008/09, £3.0million in 2009/10 and £3.5million in 2010/11.

Commercial options
To deliver current contribution levels and financial sustainability in 2008/09, the revenue gaps may be closed through a combination of:

• Increasing passenger numbers
• Unit cost and overhead reductions.
• Service reduction.
• Fares increases.
• Reduction in profitability

The strategy in relation to these options is outlined in more detail as follows:

Passenger numbers

• All planned service developments should be delivered as in current strategies. 
• However, the significant growth benefits of many previous network developments are in 2007/08 performance – Ulsterbus Strategic Review / NI Railways / Metro -passenger number increases will slow during 2008/09.

Cost reductions

• Efficiency savings are required from all divisions for overheads and these are reflected in the budgets.
• Fuel prices have been hedged for the 6 months to September 2008 and further hedges will be opened when circumstances are more beneficial.
• Wage costs will rise in line with Government guidelines, any increase above 2% will be delivered through increased productivity / efficiency gains.

Service cuts

• Metro services will not be reduced
• The least profitable Ulsterbus services are currently town services and rural links.  The former are a key output from the RTS and improved services have been in place for 6-12 months; most show increasing use.  Although some town services may be currently loss making, the improved services will continue for at least another 12/18 months to improve contribution to overheads before considering any service reduction.  Rural links are often interdependent with school services.  Possible reductions in these are being investigated.  
• It is not a viable option to introduce NI Railways service cuts at a time when significant capital investment is being delivered by Government.

Fares increases

• Initial corporate planning guidelines had a target of avoiding a fares increase; given the upward pressure on costs, this has not been possible. 
• Metro has a simple zonal fares system (£1.00/£1.30/£1.60).  The £1.00, £1.30 and £1.60 fares will increase by 10p and weekly and monthly (and ELB) fares by 5% with Smartlink multi journey fares held.  The average increase is 3%.  This will also start to deliver the objective of widening the gap between cash and non cash fares.
• In Ulsterbus the £1.00, £1.30 and £1.60 fares will also increase by 10p.  The £1.70 town service day ticket will remain unchanged to help build passenger numbers in town services and all other fares will rise by 4%.   ELB fares will rise by 5%.
• On NI Railways an average increase of 5% will be implemented, weighted towards peak and single fares.  In addition, the Passenger’s Charter punctuality related 10% discount on weekly tickets will be removed and for monthly tickets be payable only when performance is 3% below target; to be replaced with a new per single delayed journey refund system (‘delay / repay’). 

Financial Sustainability

The financial performance and sustainability of the Group is under pressure from a requirement to dispose of property to the value of £11.6million in the next 3 years. This may make it increasingly difficult to deliver its remit.

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