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Mobile Ticketing: Transit’s Next Big Move

Mobile ticketing is taking off and its growth in public transportation is following suit.

The global market potential for mobile ticketing is expected to have a compound annual growth rate (CAGR) of 21% over the next four years. By 2020, the overall market size is expected to hit $23 billion. As more people become comfortable with purchasing items via connected devices, the potential for consumer use cases abound. The opportunity for increased revenue from smartphone purchases should excite decision makers in the transportation industry as it is currently making an impact in other businesses.

Have Phone, Will Buy Ticket

In 1994, IBM released the first “smartphone” — a mobile phone that ran software apps with a touch screen and stylus. In 2000, the Ericsson R380 was the first to advertise its product as a smartphone, boasting a smaller, lightweight frame. These early launches were followed by Palms and Blackberrys, ultimately resulting in the 2007 launch of the iPhone. Over the past decade, hardware companies have built and deployed many models with varying features while software companies have loaded up our screens with nearly every app conceivable. The proliferation of apps isn’t slowing down and many savvy companies are leveraging apps for commerce.

In the event ticketing industry, online sales continues to drive revenue for companies, although the market share is highly fragmented. The top four companies only hold a collective 23% market share.  Live Nation, one of the largest players in the space, is building its revenue on the heels of acquiring Ticketmaster, which is offering its API across multiple apps and social sharing networks to create a more seamless buying experience. Ticketmaster started 2016 with performances on par with the concerts it books, realizing revenue growth of 18%, including a 43% jump in secondary ticket offerings. While online and mobile ticket companies jockey for market share, the growth trajectories are promising.

The movie industry is another sector that has benefited by using mobile ticketing. Fandango, which is owned by NBCUniversal, is expanding its reach beyond just movie ticketing with its purchase of Flixter and Rotten Tomatoes this year. Within the Flixter app, users can search theaters and movie times. With the addition of Fandango, would-be movie seekers can now easily purchase tickets, all while reading reviews from critics and filmgoers alike. Consolidation is improving the user experience, giving customers the ability to perform many related functions within one app. As utility grows, you will start to see more and more phone scans than paper tearing at concert and movie venues alike.

For travel apps that offering ticketing, this means the ability to plan and track transit options. This could also mean further integrations with bike sharing, social networks, and retail options. The more utility offered in a single app experience, the more likely consumers will adopt.

Mobile Ticketing Potential for Transit

Mobile ticketing has been around in smartphone circles for almost a decade. Back in 2007, United (operating at the time as Continental Airlines) launched mobile boarding passes for its flights. Since then, many airlines have followed, offering boarding passes and other mobile features, such as flight trackers and real-time gate information. Mobile boarding shows no sign of slowing — studies estimate that by 2019, 1.5 billion boarding passes will be scanned on a phone. Mobile boarding is especially popular in Frankfurt, Germany, where 1 in 5 passengers used mobile ticketing in 2014. That marked the highest percentage in the world according to a global survey from SITA. As a whole, airline adoption continues to rise, expanding to a 50% increase in adoption in 2015.

Transportation agencies began looking at mobile payments a little later than its air counterparts, mostly in European and Eastern countries. Frankfurt, Germany began offering fares via smartphones in 2010. Singapore launched a mobile app for payments in 2012. Hong Kong in 2013. Early adopters in the United States included Boston, Dallas, and San Diego. Today, mobile ticketing for transit is picking up speed. In 2016, Passport is scheduled to launch 6 major U.S. cities alone, including a major collaboration with Cubic Corporation in Miami, Florida.

While still relatively new, adoption rates in airlines and event ticketing bode well for the transit industry. Time, adaptation to passenger needs, and improved agency training should result in adoption rates that rival the airline industry. Transit agency leaders should look to the future with hope. According to the APTA 2015 Fact Book, ridership is at its highest point in the past four decades and with IBISWorld reporting a market size of $64 billion in the United States alone, the necessary factors seem to be converging for a boom in mobile ticketing opportunities. In a sector that is characterized by high capital costs, deploying cost-effective technology with rising adoption rates might serve to help agencies better deal with lower funding from federal budgets.

The market is growing. Adoption rates are rising. Familiarity is improving.

It’s time to transition to mobile and see how it can benefit your operation.