Bold pricing experiments help railways fare better

The railways, in Sept last year, had introduced dynamic pricing in the Rajdhani, Shatabdi & Duronto

The Indian Railways, over the past few years, has delinked fares on a number of trains from the normal ticket-price structure, taking a step towards market-linked rates.
 

In continuance with this trend, the railways in September last year had introduced dynamic pricing in the Rajdhani, Shatabdi and Duronto trains, by which the fares increased with each 10% of the tickets sold. However, this did not earn much revenue.

The railways revised the structure after a review in December. “We decided to give a 10% discount on the last ticket purchased through tatkal after first charting,” said Mohammad Jamshed, member (traffic). The railways subsidise 57% of the cost incurred on each passenger. In the case of suburban trains, the subsidy is 64%. 

Since 2013-14, for the first time in the April-December 2016 period, the number of passengers and passenger revenue increased marginally. Around six pricing innovations for passengers are being tried. Take the case of special trains the railways runs when there is a rush on a particular route during peak times like summers and Christmas. Till November 2016, the railways ran 22,000 such trains. Fares in these trains are about 30% higher than the base fare on the same route. 

“We have earned around Rs 47,000 crore from these trains so far,” Jamshed told Business Standard. Special trains include the Suvidha trains that have dynamic pricing with no concession applicable on them. Tickets can be booked 30 days at the outside before the journey and at least 10 days before travel. The adult fare applies to all, regardless of age. Sometimes trains like the Mumbai-Katra train see fares shooting up three to nine times more than other trains. Another innovation is ‘Vikalp’ or ‘Alternate Train Accommodation Scheme’, through which wait-listed passengers of a train can opt for confirmed accommodation in others. This was launched in five major routes — Howrah, Mumbai, Chennai, Bengaluru and Secunderabad. 

 

Besides the special trains, fares on the Gatimaan, which runs on the Delhi-Agra route at 160 km per hour, is one and a half times the Shatabdi fares. Then there is the Mahamana train, which runs between Varanasi and Delhi. It is a refurbished train which has charging facilities, vacuum-cleaned space and entertainment on board. The fare on this train is 15% higher than the base fare.

The dynamic pricing system was rolled back from the Jaipur-Ajmer and Mysuru-Bengaluru sections. The review was important since the Railways were expecting additional revenue of Rs 500 crore by March 2017 from this but got only Rs 92 crore more in the first two months. “The review helped us get around Rs 134 crore in November-December,” he said.

The Railways that incurred Rs 30,000 crore subsidy burden during 2015-16 on passenger business is also showing flexibility in reducing fares. For instance, in case of Jaipur-Ajmer, the fares were reduced by Rs 50 to match Volvo bus fare of Rs 400.