Insight - Ticket to ride.

(From Financial Director)

Byline: Patrick Hook.

By Christmas, the Oyster Project should be up and running, at which point London will have become the latest and largest city in the world to embrace smart card technology in its public transport system. And, by then, the financial markets will have been able to take an early view on whether the scheme is likely to prove the money-making venture that Transys, the consortium running it, hopes it will be.

It is likely to be a tense six months for financial director John Stout and his team. "We have done a great deal of market research over the past four years," says Stout. "We know that travellers in London are keen on the idea of using smart cards in place of the present magnetic strip paper tickets. The large number of ticketing outlets, including the internet and phone, means people will not have to queue to renew their season tickets. They can simply top up the value on their smart cards when they choose."

The consortium's confident expectation that it will earn about GBP1bn over the 17-year life of the contract is predicated on the notion that extra business (or ridership) will be generated through the use of smart card technology. As such, the system will have to be user-friendly. If the travelling public find it irksome, or if the new technology fails to live up to its expectations, revenue stream may suffer. "It was precisely for this reason that we began with a large-scale trial of the technology and conducted public attitude surveys," says Nicole Carroll, business development director at Transys. "Since August last year, 80,000 TfL (Transport for London) staff have been using the smart cards and we have managed to sort out the few gremlins that were in the system. Nine out of 10 people interviewed for the survey have welcomed their use."

Perhaps, but it would be well to bear in mind that contactless smart card technology is a relatively new medium in the transport sector and, although it is being increasingly used in public transport systems throughout the world, London is in a category of its own in the size of its venture.

And much is dependant on the good will of the customer. If the technology were to break down, or fail to perform in the manner expected of it, not only would there be great disruption but, over time, a growing reluctance by the public to use the system in the numbers needed to generate a profit.