Infratil's Snapper may get surge in sales as gap widens with cash fares

Wednesday 30th June 2010

Infratil, owner of the transport smart card Snapper, is predicting an increase in card sales because of an anomaly in the way Greater Wellington Regional Council is imposing fare increases.

The council has a preference for rounding cash fare increases to the nearest 50 cents because transport operators hate the delay and disruption of commuters fumbling for small coins. From September, a one-section bus fare will climb 33% to $2 while a ‘Snapper’ fare rises 17% to $1.40. For two sections, the cash price rises 17% and the card price just 2.5%.

The gap, or spread between cash and card widens to 30% from 20% and “should further encourage the move away from cash,” Infratil notes in its latest operational report. Some 125,000 Snapper cards have been issued at a price of $10 apiece, out of which Snapper keeps $8.50 to cover the costs and take a “small margin,” with $1.50 going to the retailer, says Andrew Morrow, Snapper’s head of commercial and finance.

Snapper also takes 5 cents of a 25 cent top-up fee when commuters load up their cards, charges a 1% fee to retailers for transactions such as coffee sales and an undisclosed fee to the transport operator (in this case Infratil’s NZ Bus division).

The smart card is to be rolled out in Auckland and into taxis this year.

The council’s design and development manager, Brian Baxter, says commuters can get the same-sized discount by buying weekly or monthly tickets because the council couldn’t justify imposing the one-fare increase on multi-ride tickets.

The cost of providing commuter services in Wellington, across buses, rail and ferries, runs to $150 million a year, of which fares cover about $75 million, and the rest is split about 50-50 between rates and government subsidy.

“We realized this could push people to multi-trip tickets – either monthly passes or smart cards,” Baxter says. Wellington is investigating putting an electronic ticketing system on its commuter trains.

Shares of Infratil were unchanged at $1.61 yesterday.

Businesswire.co.nz

Comments from our readers

No comments yet