Rajdhani fare scheme not on busy routes

The Indian Railways' flexi-fare scheme for Rajdhani trains is proposed to be modified and limited to trains that usually have spare capacity. If the move goes through, passengers on busy routes like Delhi-Mumbai will not be offered discounts.

A proposal to modify last year's scheme has been put up. It has recommended a differential pricing system rather than offering across-the-board discount on all Rajdhani trains.

"An across-the-board discount benefits travelers who are not price sensitive and results in a loss of revenue for the Railways. These discounts will attract price sensitive passengers," an official said.

The Railway board is, however, yet to decide on launching flexi-fares during the current fiscal year though there was an encouraging response last year.

Last year, Indian Railways offered a 10 per cent discount to passengers traveling in AC-I and AC-II coaches in the 20-odd Rajdhanis during the lean season between July15 and September 15.

Time sensitive passengers had already shifted to airlines and railway passengers are relatively more price sensitive. So, such a move should improve train occupancy on these lines, said transport analysts.

Last year, the flexi-fare scheme resulted in a 15 per cent increase in earnings, while the number of passengers in this segment went up by 27 per cent compared with the corresponding period in the previous fiscal.

Due to an encouraging response to the scheme last year, the interim Budget presented in January 2004 had mentioned that a similar scheme would be introduced this year too.

However, even with the lean season drawing to a close, no announcement has come from Rail Bhawan.

It is vital that the railways offer schemes to draw passengers away from airlines, say analysts. While many do not consider the apex fare schemes introduced by airlines competition enough, the entry of low-cost airlines is expected to hit the profitability of the railways in a big way.

Only the air-conditioned classes are profitable for the Railways. While AC I travelers are not very price sensitive and opt for rail travel for reasons like time convenience, comfort and leeway to carry extra luggage, the AC II passengers can be poached by the low-cost airlines.

Most Rajdhani passengers book their tickets up to two months in advance for peak season travel.

Since the low fares are offered by airlines if bookings are made in advance, there is a real threat that these rail passengers may find it lucrative to shift to low-cost airlines, analysts say.