Author: Ana Stanca
Demand Generation Leader, Enghouse Transportation
Every business needs a steady stream of revenue, but for transit agencies, it’s much more than a balance sheet issue. Mass transit’s health and survival are vital to growing, thriving, and connected communities, supporting a healthy urban environment, and creating equitable opportunities for everyone.
With post-COVID transit revenue still at decidedly unhealthy levels — and federal relief funding running out — this is a pivotal moment for transit agencies.
These new approaches can help your transit agency stay in the black and fully deliver on the promise to your community.
COVID has cast a long shadow over the U.S. public transit industry. Federal relief has gotten systems through the past few crisis years, but that money is running out, with North American ridership still at only about 70% of pre-pandemic levels. According to the American Public Transportation Association, ridership stood at 2.28 million for the U.S. and Canada in the second quarter of 2023 vs. 3.21 million in the same quarter of 2019.
For many agencies, the current “fiscal cliff” (PDF) driven by this loss of ridership is just the latest in a long history of revenue challenges. U.S. agencies are often forced to navigate a web of funding sources, subject to changes in political administrations or budgetary priorities at the local, state, and federal levels. Meanwhile, the sprawling nature of many U.S. cities means agencies need extensive infrastructure and operational investments to provide comprehensive service coverage.
To fortify their financial models for the long term, transit agencies must take steps to make their systems more comprehensive, reliable, and accessible while diversifying their sources of income.
Here are three ways today’s technology can help achieve these objectives.
For riders, service reliability is one of the most critical factors in deciding whether to use transit. Customers need and expect to know when their ride is coming — and that it’s on time. To keep a system healthy and producing revenue, agencies must prioritize providing frequent, predictable service and sharing real-time vehicle information.
Mobile payment solutions — also referred to as Automated Fare Collections (AFC) — are one important way to reduce dwell times and increase the efficiency of a transit system. These payment systems take the guesswork out of fares for customers, who can simply tap their phone or card on a validator to have the best fare deal automatically charged to their account. Validation happens almost instantly, so riders can get onboard quickly and without confusion.
And other reliability-focused features can be integrated into the same apps that passengers use to plan and pay for their trips. For example, customers can use the app to see exactly where their transit vehicle is on a map and when it’s expected to arrive. And if a problem arises, they can use the same app to contact customer service and get immediate answers — either from a human agent or an AI chatbot programmed to answer questions.
Transit agencies seeking to broaden their revenue sources beyond ticket sales can find many win-win opportunities in corporate partnerships. The possibilities are limited only by the imagination, but here are a few examples.
Account-based ticketing enables a range of reward schemes that local retailers can wholly or partially sponsor. For example, when a customer makes their 10th or 20th tap on the transit system in a month, they could see a notification that they’ve earned a coupon for 10% off groceries or a free drink at a coffee shop.
Popular local attractions can reward customers for arriving via transit. For example, a passenger who gets off a train at a station near the zoo may get a notification on their phone informing them that they’ve earned 20% off that day’s admission. Or a sports fan who takes transit to a game may become eligible to bypass the crowds by entering the stadium through a special fast lane.
With an account-based system, transit ticketing could be entirely shifted to the retail vertical, similar to how many outlets now sell gift cards. This relieves the transit agency of needing to provide ticket vending machines, ensures that the transit system remains accessible to unbanked customers who may not have smartphones or credit cards, and also drives business for the partner retailers.
As customers register for perks and transit loyalty programs, they can be asked to share some personal information and preferences at their discretion. This data enables highly targeted marketing and loyalty schemes — allowing “narrowcasting” rather than ads broadcasting at much higher revenue levels.
Because programs like these are plug-and-play software modules, they can be changed or removed, new promotions tried, and new partners added without impacting the rest of the system.
Traditional transit modes can seem inconvenient and impractical for Americans accustomed to driving a car directly from their front door to their destination. The sprawling nature of U.S. cities means that transit can rarely bring a passenger from door to door. But many other services exist to help people bridge the blocks or miles between transit and their final destination.
Door-to-door services, or what APTA calls “shared mobility,” combines public transit with private services. These include rideshare services (such as Uber and Lyft), shuttle services, scooter rentals, bike sharing, and park-and-ride lots that let passengers drive themselves to the nearest transit turnstile.
With mobile ticketing and smartphone app integration, transit agencies can blend these services into their own, making a complex journey feel like one seamless experience. For example, a customer could plan a trip in which they drive to a park-and-ride lot, catch a train downtown, and then ride a scooter to their final destination, paying for each trip segment with a tap of their smartphone in the same app. Co-branding and cooperative pricing discounts can further increase the appeal of these trips.
When convenient and flexible multimodal trips are available to commuters, transit agencies can take it further by getting employers on board. Corporate/transit partnerships can allow companies to offer environmentally friendly commuting as a workplace benefit, with all the travel for an entire company billed in one invoice at the end of the month. This may be an attractive option for companies whose workers currently use corporate vehicles, face lengthy commutes, or pay a premium for parking.
Smartphone technology and account-based ticketing enable several solutions that provide financial relief and advanced tools to help transit agencies become a more dynamic force in shaping resilient, adaptive, and forward-thinking urban landscapes.
Enghouse Transportation has decades of experience providing advanced solutions to the transit market. To see how Enghouse can turn your revenue goals into reality, request a demo today.
