On 29 May, 22:09, Paul Corfield wrote:
On Fri, 29 May 2009 20:31:27 +0100, Scott
wrote:



A mate and I got into a discussion about how the revenue from the
Oyster card is allocated between participating operators. *If I make a
journey on a bus at a cost of £1, I assume the £1 goes to the bus
operator (possibly with deduction of a service charge). *If I then
travel on the tube at a cost of £2.20, logically this money would go
to London Underground. *This brings the total spend to £3.20. *Next I
travel on DLR with a fare of £2.20. *I then make a second journey on
the tube. *This money can go to London Underground. *Total spend *is
now £5.40. *Now suppose I go on DLR with a fare of £2.20. *This makes
a total of £7.60. *At this point the price cap kicks in and the cost
is limited to £5.80. *I then get on another bus (£1).

Who gets paid what? * Does the first bus operator and London
Underground get paid in full, DLR in part and the second bus operator
not get paid at all? *Or do they all have their payment scaled back on
a *pro rata basis? *Or do none of them get paid the actual fare and
they all take a share of the total Travelcard revenue?

Or looking at it another ways If I only make one journey, on a bus,
does the bus company keep the £1 or do they get a pre-determined share
of the total Oyster money instead?

As others have stated the fare revenue for TfL provided or contracted
services goes to TfL directly. *Payments are made to the operators (such
as bus companies) based on a contracted fee which is adjusted up or down
according to the performance of the service. *I believe DLR works on the
same basis with Serco who operate the service being paid on a
performance adjusted fee basis. *

As Mizter T indicated there are two sections where infrastructure is
also privately provided on DLR so a separate fee is paid the consortia
who built and maintain the Lewisham and Woolwich extensions. I believe
this is also a performance (availability) based fee although the
Lewisham line was originally based on a "shadow toll" whereby there was
effectively a ridership based incentive as an amount would be paid for
every passenger carried. *However given the consortia had no right to
set DLR fares there was not really a direct linkage between ridership
and what the consortia controlled.

The Overground concession is similar to DLR whereby all revenue goes to
TfL and LOROL (the operator) is paid a fee subject to performance of the
services and a range of other service attributes. I believe there is
some financial upside for LOROL if performance reaches very high levels
and also if there are very low levels of revenue fraud.

As LUL is not operated "on contract" then it has its own budget for
revenue and operating costs but this is set by TfL and the money
collected from ticket sales still goes forward to TfL for allocation and
apportionment in accordance with the various agreements for the
different products.

I am not entirely sure what happens with the PAYG revenue as there are
parallels with the Travelcard "pot" given the use of capping but NR
participation is much lower. *Clearly many journeys are accurately
recorded via PAYG and it is possible to see which operator is used in
many circumstances. *In some cases it is not possible to see what route
is taken (Highbury to Richmond via LUL or via Overground) so there must
be an element of apportionment in addition to the ability to allocate
individual trips. *I will have a look at the TfL intranet to see if a
PAYG apportionment document exists as there was certainly a document
explaining how Travelcard revenue is apportioned (via a Travelcard
survey process which defines the modal and then operator split). *If I
find some more info I'll post a follow up.

Where Oyster travel is against a Travelcard held on the Oyster card then
the total revenue is shared as per the Travelcard Agreement factors.

You also need to bare in mind that there are other flows of money for
single and return tickets and also through tickets between LUL and NR
which have their own agreed rules for apportioning revenue and payment
of commission for the ticket selling activity. *Oyster PAYG cuts in to
this area as it will typically displace cash sales and you have the
issue of cash being paid up front and then being "drawn down" from the
card balances (at passenger level). *Nonetheless if a journey has
happened on a TOC train where PAYG is valid then some revenue has to
reach the TOC. *I do not know what the nature of the agreements is for
TOC acceptance of PAYG but I would guess it is some sort of combination
of provisions from both the Through Ticketing Agreement and also the
Travelcard agreement (given the daily capping element).

--
Paul C

Cheers for that info, I was wondering about this issue myself and
couldn't really work out how it would work. You mentioned that singles
and returns vary from travelcards, and in the same vein oyster capped
journeys also vary from oyster singles, but with Oyster you do have
more information about the journeys than travelcards, so revenue
allocation *could* potentially be more representative. LOROL, DLR, and
LUL journeys can all be grouped under their seperate headings, but I
find the revenue allocation for NR operators much more confusing, and
I'm starting to see why take-up of Oyster PAYG acceptance in South
London is taking so long, they can't quite decide how to work the
system. There are 2 main options. They could A) put all Oyster PAYG
revenue into one fares pot and then divvy it up in whatever way they
like, which would be agreed with the operator before (which probably
being discussed now) or B) allocate revenue based on which operator
was used for the journey, so if the Oyster is used on LUL and NR
equally, then it would be half and half, or if the journey was 3/4 LUL
and 1/4 NR then the revenue from that individual journey would be
divvied up on the same basis. Obviously it is easier for multiple tube
line journeys, because they are all LUL, and this revenue doesn't need
to be allocated per line because it is all grouped. NR is a lot more
complicated and I can't quite work it out, whether the powers that be
have thought this through or not remains unknown.

The easiest way to solve the problem would be to adopt a LOROL style
approach to ALL suburban services in London, whereby the service
frequency and operations are determined by TfL and operated under
contract by the respective TOCs. This way they would remove the
revenue-risk nonsense from the TOC and the fares etc would be
determined by TfL and collected for TfL.

The more difficult (by far) option would be to allocate fares on a
similar basis to the national rail model, whereby fares (oyster or
otherwise) are based on the route taken and the operator on that
route. So if the route was Southern only then southern would get the
revenue from the single fare. (This analysis only concerns single
fares at this point). Then if the route was operated by multiple TOCs
then you would divvy up the fares based on the same theory as national
rail tickets which divide the fare based on the number of seats and
services provided on that route etc. This would be difficult, to say
the least, but at least *possible* ish.

Oyster capping however would add another complication to the mix
because the single fare which previously would have been wholly
allocated to a particular TOC would now be reduced since the oyster
reductions for further journeys are 0. To be honest it would be easier
at this stage to *give up* as it were, and simply adopt a travelcard
revenue allocation method. But maybe it could be possible to only
divide up the total revenue between the operators used and the
operators not used on this occasion get nothing? Not sure if this
would make the revenue allocation skewed on Oyster/non-Oyster routes
though.

Southern seem to be gaining oyster readers at many of the stations I
have visited recently, so they are going to be accepting oyster PAYG
soon presumably, the main barrier to implementation being revenue
allocation, and not lack of Oyster readers.

Well, that's my tuppence worth, I would go on, but that's enough I
think!!!!