It’s time for public bus transport 2.0

Vineet Toshniwal | Updated on October 05, 2020 Published on October 05, 2020

Digitising the entire ticketing process must be the first step. This will not only cut costs for transit companies but also enhances safety as the transactions will be contactless

Covid-19 has been a black swan event for almost all businesses. It has brought Darwinism to the fore. It’s not only the strongest but the most adaptive that will. Covid has forced businesses to go back to the drawing board and reassess their strategy, costs, revenue models and forced them to become more digital, consumer-centric, and data driven in their approach.

The public transportation industry is now going to be the backbone of economic revival in India. The industry, which was so far a monopoly supported by the government with budgetary grants and projected as a loss leader for the sake of public good, is facing a mortal threat. The industry has a high fixed cost component with depreciating assets like buses, massive manpower on permanent employment with high operating costs like fuel, and a fare structure — decided by the political class and used as a populist instrument — which is completely out of sync with its cost structure.

However, the Covid-triggered shutdown has opened a window wherein the industry can leave its past behind and start afresh. The private transportation business is in a mess as cab operators will find it unviable to service EMIs, fixed costs and make a living while the demand for such services is deeply impacted due to the upper-middle class taking to the ‘work from home’ culture and cutting down on social travel. Public bus transit can use this window and quickly move to fill in the void.

In order to do so, bus transit companies will have to adopt technology rapidly and take a long term transformation-driven approach. First, the entire ticketing process has to go completely digital, eliminating paper and cash-based ticketing. This will cut costs and provide a consumer experience on a par with that of Ola and Uber. Here, digital QR-based tickets, offline tap and pay cards, virtual cards on phone, and SMS based digital tickets can play a very big role. This will create a virtuous cycle.

Dynamic pricing

Digitisation means data. This data can be used to analyse the bus routes on a real-time basis for occupancy analysis, route profitability, demand-led services and move to a dynamic pricing model. Dynamic pricing will lead to better crowd management and significantly reduce peak hour overcrowding. Moving consumers away from the spot ticketing model to subscription-based model by providing various combinations of products like travel wallets, trip wallets, weekly and monthly passes will vastly improve the working capital of corporations by bringing in advance float income.

Bus transit companies can act as anchors to seed a cashless micro-payments ecosystem in the city as has been done successfully in cities like Hong Kong by Octopus cards or Singapore by Ez-Link. With their captive use case, a massive number of consumers will adopt the offline contactless card-based payments. This can be seamlessly extended to retail as the RBI is now focussed on promoting offline contactless payments in retail. Retail and transit coming together will create a virtuous loop.

Post-Covid retail is now facing its worst crisis of evaporating footfalls. Retail can create combo offers for consumers wherein the latter can be given cashback for their travel, thus both industries can support each other.

Apart from the revenue, cost, and commerce angle, there is a big safety aspect also. The current ticketing process is a high contact one, wherein cash and coins are exchanged along with paper tickets. This puts staff of corporations like APSRTC and TSRTC at massive risk and becoming super spreaders. Ensuring contactless ticketing will protect both staff and consumers alike.

Eliminate conductors

Once the first wave of digitisation is completed and all consumers move to digital tickets, bus corporations can pursue a long term goal of eliminating conductors from buses, as is the norm globally. This will vastly improve their bottomline and revenue-to-expense ratio. To achieve transformation, corporations have to adopt a partnership approach with leading consumer-focussed fintechs and banks who can do some heavy lifting at the consumer end, while corporations benefit by deploying cutting-edge technology. This move will positively impact the lives of over 200 million Indians who take public transit for their daily commute and create a multiplier effect in the economy.

A cash-strapped government with dwindling revenues will not be able to subsidise and run public transit as before. This may result in collapse or poor levels of service, leading to public unrest and hampering free movement of people. Hence the government must mandate transit companies to draw up plans to be self-sustainable with a sense of urgency and encourage consolidation if needed between States. Transportation is an essential consumer requirement not a matter of state pride.

The writer is Founder and CEO, CityCash

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Published on October 05, 2020