A simple offer made complicated

The Deutschland-Ticket will slash travel costs and accelerate digitisation, but it’s an enormous task

 
Public transport in the town of Ausburg, Bavaria

 
By Marc Bichtemann

Pay £43 a month and have unlimited use of all local and regional public transport in the country. Sounds like a good offer? Dear reader, I present to you the Deutschland-Ticket.From May 1, 2023, Germany will, with a bit of luck, offer this monthly subscription for 49 Euros, excluding only long distance trains (IC, ICE, EC) and intercity coach services such as Flixbus.

Just before the Easter holidays, the German parliament paved the way for the Deutschland-Ticket – the new name for the initially titled 49 Euro ticket.

If you’ve followed the news here in Germany, you could be forgiven for thinking, “Again? Didn’t they already approve this months ago?”

Unlike the 9 Euro Ticket last summer, the Deutschland-Ticket has faced quite a few more hurdles in the German legislature system, including approval from the EU that this kind of state help isn’t contravening any laws. Each time one of these steps had been taken, it was accompanied by the headlines that the Deutschland-Ticket is now good to go.

The Deutschland-Ticket has somewhat unsurprisingly become a bureaucratic monster and political football

Reality is quite different – the Deutschland-Ticket has somewhat unsurprisingly become a bureaucratic monster and political football. Because of this it didn’t start at the beginning of the year as initially intended and may well not be implemented everywhere in Germany by the new target date of May 1, 2023.

The reasons behind this are as complicated as the German fare and reimbursement systems that make public transport a real whopper to get one’s head around. (I have been trying for the last 18 months and would still consider myself a novice).

A political football

The current federal government wanted the Deutschland-Ticket to build on the success of the 9 Euro Ticket, a monthly ticket introduced for a three-month period in 2022 in response to the unfolding cost of living crisis. It aimed to bring a clear and simple offer, allowing people in Germany to use all local and regional public transport across the country for an initial cost of 49 Euros a month.

It also intended this ticket to be a purely digital offer and therefore another boost to Germany’s efforts to digitisation and bureaucracy reduction.

A number of German state politicians however rubbished the idea. Mainly because it wasn’t theirs but also because they saw the upcoming debate about the costs. In any case, after much debate, they settled for a subscription offer, still for 49 Euros per month, which can be cancelled on a monthly basis and can, for a limited period until January 1, 2024 also be issued as a paper ticket.

It is worth noting that there are local elections this year and the grassroots politicians have a small but loud base of voters who “have no access to digital channels”.

Those of us who have been in the industry long enough know that a surprisingly large number of people can check in for a Ryanair flight online but have to have a paper bus ticket to not be left by the roadside on the way to the supermarket.

Who’s going to pay for it?

Then there is the issue of funding. This battle between the German States and the federal government is ongoing. Funding requirement is about 3bn Euros for the first year to cover the expected fare box losses of the transport operators. Though this sum has now been split 50/50 between federal and state funds, the bone of contention is the ‘Nachschusspflicht’ (a real contender for the German word of the year as it has dominated the Deutschland-Ticket debate). The question is, who provides the money if the compensation payments end up exceeding the 3bn Euros estimate?

Add to that, that neither side wants to give the official “instruction” to make the Deutschland-Ticket a reality and we are in the German version of a Mexican stand-off. Remember, the Deutschland-Ticket is not a three-month experiment but intended as a permanent offer.

Whichever side blinks first is the one underwriting the new ticket and therefore responsible for carrying any extra cost.

The effect on the operators

Without this clear instruction, the numerous transport associations and their members are quite understandably refusing to accept or even sell the ticket. These are often family-owned coach and bus businesses who are at risk of bankruptcy should the drop in revenue not be quickly und fully compensated.

As of today, an agreement has been reached that the federal government will ensure funding until September 2023 – not exactly the long term security needed by the transport providers. But as one politician said to me: “a solution will be found – we can’t really get out of this anymore anyway”.

The issue of capacity increases has been largely ignored. In many areas, peak time services are near or at capacity. The Deutschland-Ticket is more likely to drive modal shift in the commuter traffic than the 9 Euro Ticket which increased leisure traffic but did not do much for the regular traveller.

Making it happen

Politics and reimbursement sorted – let’s go? Well, no. Most of the smaller transport associations and their members do not currently have the digital means to sell the Deutschland-Ticket and have to install those sales channels. Estimates for enabling the background infrastructure range from a few thousand Euros to several hundred thousands… for each business.

Then there are the ticket checks. The VDV (Germany’s equivalent to the CPT) has defined a standard to enable everyone to validate tickets issued across Germany (something that we couldn’t do during the 9 Euro Ticket era). Here too are significant costs to be expected. Enabling the technology (scanners) on the existing ticket machines of a medium sized operator (circa 70 vehicles) was quoted to be around 70,000 Euros.

There is currently no assurance that these costs will be covered.

The Deutschland-Ticket will be a great step forward for public transport in Germany – though not quite as simple as the summer success of the 9 Euro Ticket. It will provide huge savings for the travelling public, reducing the monthly travel cost by up to 75% and make journeys easier.

The hard work to make it happen will be done by the countless heroes in the back offices of public transport providers, city and local council officials and a good number of software engineers

The hard work to make it happen will be done by the countless heroes in the back offices of public transport providers, city and local council officials and a good number of software engineers. Being digital only from next year may just boost the overdue digitisation in bus, tram and rail that Germany desperately needs.

 
SIDE NOTE: DB Navigator is ‘oven ready’

The well known DB Navigator app of Germany’s state rail operator Deutsche Bahn, will be enabled to sell the Deutschland-Ticket directly. Most transport associations already retail their tickets on the app, for which DB takes a sizeable commission (about 6%). Now, for a one-off five-figure sum (and the aforementioned 6% commission), each transport association can also retail the Deutschland-Ticket via the app.

It’s an expensive way to go but the advantage of this is that revenue is channeled back directly to the transport providers rather than ending up in a big national pot before having to go through a long process that easily rivals the Rail Settlement Plan. It also means that the transport providers have a digital offer “oven ready” when ticket sales start in April.

 
ABOUT THE AUTHOR: Marc Bichtemann is managing director at Kahlgrund-Verkehrs-Gesellschaft (KVG), a public transport operator in central Germany. He previously worked in the UK as managing director of bus operator First York and in various management roles with Virgin Trains East Coast.

 
This article appears in the latest issue of Passenger Transport.

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