CONDITIONS OF PARTICIPATION – CENTROCARDTICKETING SCHEME (‘Scheme’)

(Centrocard Agreement) – JANUARY 2016

This is a West Midlands Passenger Transport Executive (Centro) Scheme for the provision of multi-operator, multi-modal ticketing for use on buses, trains and the Metro in the West Midlands County area, known as nnetwork.

Centro manage and administer the Scheme. A Centrocard Operators Group (COG) determines the principles of the Scheme including the allocation of sales income. Centro chair COG, promote nnetwork, carry out surveys and distribute the sales income.

1.PARTICIPATION

1.1.Participants in this scheme will be required to accept all valid tickets without additional payment on their rail, Metro and registered local bus services operating within the West Midlands County (and certain adjoining villages as stated in Appendix B), including any tickets issued under the previous ‘Conditions of Participation: Centrocard Bus/Rail Scheme March 2001 Revision’. For tickets included in the scheme and exceptions see Appendix B.

1.2.Only participating CentrocardTicket Scheme operators who comply with these Conditions may display the nnetwork logo and are entitled to a share of the nnetwork sales income.

1.3.The Bus Sector of COG may agree categories of local bus services operating within the WestMidlandsCounty area on which nnetwork tickets are not accepted (e.g. Night Services or where a tendering authority has instructed that such tickets must not be accepted). At the time of commencement of this Agreement, the only categories of local bus service on which nnetwork tickets are not accepted are night services, special events (e.g. Football Services; Fireworks etc etc) and those where a tendering authority has instructed that such tickets must not be accepted. All exceptions to acceptance must be clearly identified to the public as such.

1.4.Any Bus operator who wishes to participate in the Scheme and to receive a share of the revenue may apply to join the Scheme by giving to Centro 42 day’s notice, prior to the date on which it wishes to commence its participation (the "Initial Date"). Rail and Metro participation is negotiated as part of the conditions for franchise/contract.

The operator must:

(a)Complete and return the Application Form (Appendix F) available from Centro.

(b)If applying to join the Scheme on or after 21 February 2016,provide confirmation that they have ITSO ticket machines enabled with version 2.1.4 software or later in place on its services (bus & Metro operators only) from which Centro is able to directly access through its Host Operating Processing System to generate Smartcard Data for the purpose of fulfilling audit requirements. Referred to as Required Technology from here on in.

(c)if applying to join the Scheme prior to 21 February 2016(bus & Metro operators only) either -

i)provide confirmation that they havethe Required Technology, as referred to in clause 1.4 (b) in place on its services.

ii)or provide a plan to demonstrate that they will have the Required Technology, as referred to in clause 1.4 (b) in place on its services.

(d)agree to:-

(i)the audit of multi-operator ticket journey data submitted to Centro.

(ii) the use of mystery shoppers;

(iii)(where appropriate) the audit of any nnetwork sales made in order to verify returns;

(iv)Centro comparing operator returns with appropriate data held by Centro.

(v)reimburse Centro, where required to do so, for the costs of survey if, following the completion of a full investigation, it has been concluded that previous passenger submissions on the OP1 were overstated and where Centro has advised the Operator in writing of the survey cost in advance of the survey being undertaken . Centro will then distribute these costs back to the other operators in the relevant sector pool of this Centrocard Agreement

(vi)update the Required Technology on their services accordingly if by unanimous decision COG change the definition of Required Technology in clause 1.4 (b) either by specifying:

(a)that Operators must use particular technology and/or software on their buses to facilitate the use of nnetwork Tickets, and

(b)a timeframe within which Operators must ensure that they have the particular technology and/or software specified in clause 1.4 (b) in place on their buses.

(vii)comply with the requirements for smart ticketing configuration as set out in Appendix G.

The objective of these conditions is to secure proper professional standards for participation in the Scheme. As part of their scheme management / administration Centro will undertake these checks on a regular basis, report all findings to COG and take appropriate action.

1.5.Centro will notify an operator of the Initial Date from which it can participate in the Scheme.

1.6.Revenue from the Scheme will be distributed to participating operators in accordance with Appendix C.

1.7.COG is chaired by Centro and consists of representatives nominated from participating operators Operator representation and voting arrangements are shown in Appendix A.

1.8.Each sector of COG may elect a representative for their individual mode (bus, rail & Metro respectively) who will act in day-to-day liaison with Centro regarding the management of the scheme. The representatives shall normally serve for two years, but be eligible for re-election.

2.TICKET TYPES

2.1.The current range of ticket types within the Scheme is specified in Appendix B1.

2.2.Centro may from time to time introduce new or withdraw existing nnetwork tickets following agreement with COG.

2.3.It is the intention that all nnetwork products will be available on ‘smart media’ asdefined in Appendix E clause 1.3.An indicative roll-out plan for products on this media will be agreed with COG.

2.4.The detailed design of tickets is agreed between Centro and COG. COG may delegate this function to the Operator Representatives.

2.5.All participants in the scheme must receive at least 56 days’ notice, unless otherwise agreed by COG, of any agreed change to Appendix B prior to its introduction together with comprehensive documentation in respect of:-

  • Pricing
  • Availability
  • Revenue allocation arrangements
  • Sales Outlets

3.TICKET PRICES

3.1.Prices of nnetwork tickets are set in accordance with Appendix D.

3.2.The pricing arrangements may be amended at any time, but only with the agreement of COG. All participants in the scheme must receive at least 56 day’s notice, unless otherwise agreed by COG, of any agreed change to Appendix D prior to its introduction.

4.SALES AGENTS

4.1.Centro will agree a retail strategy with COG to ensure that sales of nnetwork tickets are maximised within the target markets, in a cost effective manner. Tickets are currently available through accredited WM Card Systems sales outlets, and through Rail Settlement Plan accredited outlets within the area of availability. Sales revenue and data is passed to Centro net of commission, any agency management charges; within 28 days of each Centro period end date.

4.2.Centro may, with agreement from the COG, enter into contracts with other bodies for the purpose of selling nnetwork tickets.

4.3.One Day ticket variants may be sold on bus, train and Metro by operators with appropriately certified equipment / systems that are fully auditable, subject to the prior agreement of COG and Centro. Sales revenue and data is passed to Centro net of commission, and any revenue that 'lies where it falls'- within 28 days of each Centro period end date.

4.4.Centro and participating operators may propose other outlets for consideration by COG in accordance with the agreed retail strategy

5.MARKETING

5.1.Marketing and promotional campaigns are determined by COG and undertaken by Centro. The maximum level of marketing expenses (net of Value Added Tax) is agreed by COG at the start of each financial year (which shall commence on 1st April) and is charged (net of Value Added Tax) to the appropriate revenue pool by Centro.

5.2.Each sectors contribution to the agreed total marketing pot will be based on the modal share of revenue (i.e. if Rail receive 54% of total revenue they will contribute 54% of the total marketing pot). For the purpose of deductions, the total marketing pot will be split into Rail value, Bus value and Metro value – These values directly represent the amount contributed by each mode.

5.3.The agreed level of marketing costs is not to be exceeded without the agreement of COG. Only marketing costs actually incurred shall be deducted from the sales revenue pool prior to distribution of net revenues.

5.4.The cost deducted from each sectors marketing pot (the sectors individual contribution to the total marketing pot) will be based on the elemental value of the individual ticket marketed (i.e. if COG agree to spend £10,000 on a campaign for nnetwork One Day which has a modal elemental value of 38% bus, 59% rail and 3% Metro, then each mode would contribute that percentage of the £10,000).

5.5.Each mode can opt to increase marketing spend for specific campaigns that are of greater benefit to that individual mode. The spend for this additional campaign must be deducted from that modes net revenue and not the agreed marketing pot.

6.SURVEY AND REVENUE ALLOCATION

6.1.The principles of revenue allocation are determined by the requirements of the Competition Act 1998 (Public Transport Ticketing Schemes Block Exemption Order 2001). Within this framework, COG agrees detailed matters of revenue allocation. Centro are responsible for the administration of the process including collection of data, from whatever source i.e. survey or operator and the calculation of revenue reimbursement to each operator. Revenue allocation arrangements are described in Appendices C & D.

6.2.All participants must receive at least 56 days notices, unless otherwise agreed by COG, of any agreed changes to Appendices C or D prior to its introduction.

6.3.Centro may recover the marginal costs of surveys and administration from scheme revenue, where these are directly attributable to the nnetwork scheme; and have been previously agreed by the respective modal sectors of COG.

7.MANAGEMENT AND ADMINISTRATION

7.1.Centro will agree with COG annual sales and revenue targets, together with an action plan to ensure their achievement. These will be monitored by COG, with management information in an agreed format supplied by Centro four times a year.

7.2.Sales Agents Commission is charged to the Scheme on the basis of actual expenditure incurred. COG will be advised of the level of any charge for the management and administration of the scheme on an annual basis.

7.3.All scheme costs; (including any Centro Costs; Sales Agents & On-bus Commission; WMCS Sales Agency management charges; Rail Settlement Plan commissions and promotions) are recovered by deductions from sales revenue prior to distribution of net revenues to scheme participants. All categories of expenditure are subject to agreement in advance by COG.

8.NET REVENUE DISTRIBUTION

8.1.Payments are made 4-weekly within the Scheme for all operators, within six weeks of the respective Centro period end date.

8.2.Sales revenue is allocated to each participating mode and then the operator in accordance with the precise details explained in Appendix C. The agreed scheme costs are all deducted proportionately (relating to the percentage of modal value) from the gross adult & child revenue.

8.3.Any additional scheme costs directly attributable to one or more modes will be deducted from the Net revenue of the mode(s) involved (e.g. rail allocation surveys), but must have been previously agreed by the appropriate sector(s) of COG.

8.4. Any nnetwork revenue over-payment to an operator for whatever reason will be recovered by deduction from future nnetwork payments due. If no further nnetwork revenue is due to that operator, the sum of money will be recovered following the terms of Centro’s debt recovery protocol which may include “set off” against other payments made by Centro.

8.5.In the event of any requirement to recover material amounts of money from an operator where the circumstances are not the fault of that operator, then Centro will pay the debt back to the scheme on behalf of the operator. Centro will then after consultation with that operator, decide the most appropriate plan of repayment. The definition of materiality will be in excess of 25% of their average period payment over the preceding 12 months.

8.6.Once Centro has exhausted all avenues of its debt recovery processes (including legal action) any outstanding monies owed to Centro will be recovered from the revenue pot following consultation with a view to reaching agreement with COG.

9.GENERAL

9.1.For the avoidance of doubt, it is acknowledged and accepted by operators and Centro that the contract for individual journeys using a nnetwork ticket is between the passenger and the operator carrying the passenger.

10.TERMINATION

10.1. When an operator joins the Scheme, it confirms its acceptance of these Conditions of Participation. If an operator is in breach of the Conditions, Centro have the right to terminate that operator's participation in the Scheme in the circumstances set out in clause 10.2 below, in the case of any other breach, or non-compliance with a notice served by Centro on the operator giving details of the default provided that the operator shall have 14 days in which to remedy such non-compliance.

Centro reserve the right to terminate with immediate effect an operators participation in the scheme

10.2.1.if the operator is shown, following the conclusion of a full investigationto have committed a serious breach (as reasonably determined by Cento) of these ‘Conditions of Participation’; or

10.2.2.if the operator goes into voluntary or compulsory liquidation (except for the purpose of reconstruction of amalgamation); or

10.2.3. if a receiver or an administrative receiver is appointed in respect of the whole or any part of its assets; or

10.2.4.(if the operator is an individual) a bankruptcy petition is presented against him or any of his partners; or

10.2.5. if the operator makes an assignment for the benefit of any composition with its creditors generally or threatens to do any of these things.

11.OFFICE OF FAIR TRADING (OFT)

11.1.Centro has consulted with the OFT and believes that this scheme complies with the provisions of The Competition Act 1998 (Public Transport Ticketing Schemes Block Exemption) Order 2001.

12.NOTICE OF WITHDRAWAL

12.1.Any operator must give 28 day’s notice to Centro in writing, of their intention to withdraw from the Scheme.

13.RESOLUTION OF DISPUTES

13.1. In the event of any dispute arising out of or in connection with this Agreement, including management and administration of the Scheme, the parties will in good faith refer that dispute to Centro. The process for this will be initially advising Centro’s Concessions and Payments Manager in writing of the particular issue to be resolved.

13.2.If the matter has not been resolved by Centro within 56 days of the referral pursuant to paragraph 13.1 above, the parties will be free to pursue whatever remedies are deemed appropriate without further reference to this clause.

13.3.Any claim, dispute or difference arising under or in connection with this Agreement shall be subject to the exclusive jurisdiction of the English courts to which each of the parties irrevocably agrees to submit.

Centrocard AgreementPage 1 of 40

APPENDIX A - Constitution of the Centrocard Operators Group (COG)

For the purposes of this Agreement;

“Bus Operator” means the holder of a Public Service Vehicle Operator’s Licence who is engaged in the provision of registered local bus services in the West Midlands Metropolitan area

“Metro Operator” means the holder of the Midland Metro franchise at the relevant time

“Rail Operator” means the holder of the West Midlands Rail franchise at the relevant time

1.Representation

The Centrocard Operators Group consists of 3 sectors:

Bus Sector

GROUP A) / Bus Operators receiving in excess of 25% of the aggregate nnetwork derived multi operator Bus revenue pools. / 3 representatives per operator.
GROUP B) / Bus Operators receiving less than 25% of the aggregate nnetwork derived multi operator Bus revenue pool. / 1 representative from each of the four operators with the largest shares of the nnetwork derived Bus revenue pools, excluding those in Group A above.
GROUP C) / Participating Bus Operators, not entitled to attend in either category Group A or B above. / 2 representatives in total for all operators.
Metro Sector
Rail Sector / Metro operator.
Holder of the rail revenue risk for the West Midlands local rail services (currently theholder of West Midlands rail franchise) / 1 representative.
1 representative.

1.1.The Constitution above does not set overall nnetwork prices. Each sector is responsible for setting the price for their own element of each ticket. The Bus sector set the bus element, the Metro sector sets the Metro element and the Rail sector set the rail element. Price setting, including rounding is detailed in Appendix D.

1.2.The Bus sector market shares of nnetwork revenue shall be reviewed each year, and any changes implemented for the following year. The representatives of the smaller operators shall be subject to review every year not less than annually.

1.3.If a Bus sector representative from Group C fails to attend more than two consecutive meetings without good reason, then a letter will be sent by Centro advising that if they fail to attend the next meeting, their participation in Centrocard Operators Group shall be reviewed.

1.4.If a Bus Operator is selected as a representative through market share but has no interest in attending meetings, that Bus Operator may agree in writing and with the prior written consent of Centro (such consent not to be unreasonably withheld) to pass on its representation rights to the unrepresented operator with the next largest market share.

1.5.The Centrocard Operators Representative(s) for each sector may attend meetings, but have no additional vote in their capacity as Centrocard Operator Representative. This does not preclude him/her voting as one of the representatives outlined above (if appropriate).

2.Meetings

2.1.Meeting dates of the Centrocard Operators Group will be agreed by COG annually, for the calendar year by the end of September of the preceding year. Meetings shall take place at least four times a year and be chaired by Centro, who will provide administrative support.