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E-tickets promise easier transit, more money

Budapest’s public transport will be switching to an electronic ticket system, which should be more efficient, harder to cheat, and also more convenient to use. The head of the company overseeing the project explains the improvements we can hope for by 2017.

Márton Hraboczki, with portraits of two of his role models.

The days of passengers wandering onto the metro without a ticket and hoping that they won’t get caught will soon be over. Like most major metropolitan underground systems in the world, riders on Budapest’s underground will have to pass through a gate. This low-tech change may be one of the more outwardly visible improvements we can expect with the introduction of the e-ticket system in Budapest, but there will be many other differences.

Time-based passes and tickets are to be purchased at vending machines, and customer service centers will be supported by online and mobile phone-based purchasing options. Budapest’s transportation authority, BKK, projects that 1.5 million personalized and anonymous smart cards will be issued to regular commuters and another nine million smart paper tickets will be issued to occasional travelers and tourists.

The system is due to be up and running by 2017, perhaps even before the end of next year. Other cities that switch to this kind of automated system have reported increases in ridership and even greater increases in revenue.

Scheidt & Bachmann, the contractor chosen for the project, is to install approximately 800 automated access gates at metro stations and designated suburban railway stations, while roughly 10,000 new ticket validators will be installed on 2,500 buses, trolleybuses and trams. Scheidt & Bachmann has already worked for BKK as a subcontractor, supplying 200 new ticket vending machines that are already operating in the capital and in surrounding towns.

The Budapest Business Journal asked Márton Hraboczki, managing director of Scheidt & Bachmann, about the state of the project.

What is the current phase of the project and when will you deliver the entire system?

We’ve just closed the planning phase, which is one of the most important phases of the project. We signed the agreement on October 8, 2014, and we have 38 months from then to build and implement the system.

When and what changes will passengers see with the new system?

They will meet the new ticket machines on the mass transportation vehicles of the Budapest transport company in the second half of next year, and that is when the installation of the new gates will also likely start.

According to international experiences, e-ticket systems bring significant savings for transport companies. What is the situation in Hungary?

Based on industrial standards, transport companies have seen on average a 15% increase in their ticket income on a year-on-year basis through introducing the e-ticket system. In some cases, this growth rate has been even higher: In Newcastle, for example, a 20% increase was reached. The Newcastle system, by the way, was awarded the best chip card system of Europe in 2015. In addition, passenger traffic grew by 8% on the underground in 2014 in Newcastle. A study revealed that passengers appreciated, most of all, the convenience and the fast service.

What does international experience suggest we should expect in the first few years, both financially and in operation?

Scheidt & Bachmann has built systems both smaller and larger than the one we have planned for Budapest, but according to our experience, a significant increase, as mentioned before, in ticket income can be expected during the first couple of years. Passengers usually get used to the new system very quickly and because the availability of e-tickets is quick and convenient, they will soon probably like it too.

An example of modern gates installed in Dublin.

What would you identify as the biggest challenge when planning the new system for Budapest, and how have you met those challenges?

This is a totally new system to Hungary; there is, therefore, no user experience. Consequently, we cannot talk about relevant local competence either. In spite of this, the experts at the Budapest Transport Center (BKK) did an excellent job, because they professionally researched the market and its tendencies, undertook a brand new innovative technology, and made technical specifications according to these. The greatest challenge, however, is to convince those non-professionals who question the technology.

What is the cost of the project and what is the expected return on investment?

The total value of the project is €91 million, which includes, in addition to the total implementation costs, a five-year-long operation period. Return on investment with similar systems is relatively fast, due to the impressive ticket-income increase following implementation. Accordingly, the loan from the European Bank for Reconstruction and Development (EBRD) is a short-term loan with a maturity of eight years.

As you said, the company will operate the system for the five years after implementation. What happens once that five-year period expires?

The operation contract can be extended for another five years.

If demand arises, can the system be further developed?

The current open payment technology will still be a leading technology in the next ten to 15 years. Further elements of the system are designed to be inter-operational, so they are open to future integration. This includes the National Unified Ticket System, the ticket sales system of the Hungarian Railways (MÁV), and near field communication (NFC) technology.

Do you plan further similarly large-scale projects in the Hungarian market?

Scheidt & Bachmann is currently not involved in designing automated fare systems in any other cities or with other transport companies in Hungary. However, as in all of our other locations worldwide, we plan long-term in Hungary.  Therefore we are constantly seeking new business opportunities. The company has already delivered the elements of similar automated fare systems to some 58 large cities, and has built complete systems in eight cities, including Boston, Dublin, Pittsburgh, and Ottawa. As for Hungary, there is a similarly large-scale project going on here at the moment, namely the National Unified Ticket System, and we are going to participate in the public procurement process for this system.