Auckland's multi-million ticketing mess: Snapper won't go down without a fight

Snapper says it will take "All necessary legal steps will be taken to recover losses arising from the wrongful termination” - promising Auckland's electronic ticking mess is about to get messier.

Late yesterday, Auckland Transport (part of Auckland Council) confirmed it had fired Snapper from the city's behind-schedule $100 million ticketing project, which covers trains, ferries and two rival bus services (one, NZ Bus, owned by NZX-listed Infratil - also Snapper's parent company).

Auckland Transport said Snapper had no chance of meeting a November 30 deadline for a united ticketing system. The Wellington-based company would receive no compenstion.

The announcement came after an emergency meeting yesterday afternoon failed to resolve the a conflict between French company Thales - which is managing the project - and Snapper.

Thales maintains Snapper has failed to deliver; Snapper that the French multi-national has fallen down at its end.

Snapper CEO Miki Szikszai did not respond to an NBR request for coment, but forwarded a statement from Snapper chairwoman Rhoda Phillippo said in a statement (see RAW DATA below).

"The fault lies with Auckland Transport, the New Zealand Transport Agency and the French multinational Thales for not providing the critical components for successful integration," Snapper chairwoman Rhoda Phillippo said in the statement.

News of Snapper's sacking came after market close. Infratil shares [NZX:IFT] had risen 2 cents to $2.10, close to the top of their 52-week range ($1.70-$2.13).

RAW DATA: Snapper release

24 August 2012
Wellington, New Zealand

Wellington-based Snapper Services Limited (Snapper) today confirmed that it had received notice from Auckland Transport purporting to terminate the Participation Agreement signed in November 2010.

Snapper maintains it has been wrongly blamed for delays in the introduction of Auckland’s Integrated Fares System (AIFS).

“The fault lies with Auckland Transport, New Zealand Transport Agency (NZTA), and the French multinational Thales for not providing the critical components for successful integration” Snapper Chair Rhoda Phillippo said tonight.

“Over the course of the last few months Snapper and Auckland Transport have been discussing Snapper’s role in the AIFS project. Auckland Transport has been concerned about its ability to deliver a complex multi-party integrated fare system. “The parties had been working over the course of the last two weeks on next steps but were unable to reach agreement”.

As a result, Auckland Transport has announced that they will engage French multinational Thales to develop and roll out a bus solution for all Auckland bus operators by April 2013 at a cost of over $12 million.

Rhoda said “We are naturally disappointed by this decision, as we have invested significant capital and effort to develop the Snapper system, which is currently the only operational integrated ticketing and payments solution in New Zealand. We are frustrated that critical components for our integration work that we needed from Auckland Transport, NZTA and Thales have consistently not been made available to us. Snapper put forward a plan in April that would have delivered by 30 November, but Auckland Transport never took the decisions and steps it needed to take for that plan to be implemented.”

“Auckland Transport is being disingenuous with its attempt to position Snapper as the reason that the AIFS project is delayed. Delivery of the AIFS system was the responsibility of Auckland Transport, with their partner NZTA and their prime contractor Thales. Snapper’s role was limited to integrating with that system, and the reality is that the AIFS system has not yet been built. What Auckland Transport also fail to mention is that of their $100m spent to date on this project, Snapper has never received any compensation for its integration efforts. Auckland Transport are solely accountable for the design, systems integration and delivery of this project”.

“Snapper is ready to deliver a fully compliant and integrated system as soon as Auckland Transport address fundamental capability and project management gaps – something they are unlikely to do until they acknowledge they have a problem.”

“The ultimate cost of this decision by Auckland Transport for Auckland ratepayers is likely to be significant when compared with the commercial investment that Snapper has made to date and were willing to continue to invest until the project completed”.

“Snapper’s clear legal position is that it has not breached its contract with Auckland Transport, so Auckland Transport cannot terminate the contract.  All necessary legal steps will be taken to recover losses arising from the wrongful termination.”

The HopSnapper solution has proved to be a worthy solution as it has enabled Auckland Transport to meet its Rugby World Cup electronic ticketing commitments and improved service in Auckland. Snapper and NZBus will continue to operate HopSnapper and support the ca. 200,000 cards on issue to customers in Auckland.

Rhoda maintains that Snapper remains a successful option. “New Zealand’s regions want a choice of how they deploy integrated ticketing for their customers. The Auckland system is expensive and complex and may not be appropriate for smaller regions with less public transport patronage. Snapper will continue to offer its services in these regions where it makes economic sense. Snapper’s existing business in Wellington remains a key focus as do other projects including Parking and Mobile Payments where Snapper has established a clear leadership position with partner 2Degrees.”

In the interim, NZBus and Snapper will continue to focus on ensuring they provide excellent services for Auckland passengers.

Rhoda Phillippo

Chair, Snapper Services Limited