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To boost earnings from passenger bookings, Indian Railways is considering extending its dynamic pricing policy. Fares charged through this scheme include a dynamically varying premium over the ‘Tatkal’ fare of Rajdhani services, depending on the demand in peak seasons.
“There are seasonal and occasion-specific instances when the demand for travel by certain trains goes up…On such occasions, passengers are prepared to pay more to undertake their journey….Keeping this in view, a premium air-conditioned (AC) special was introduced in the Delhi-Mumbai sector, with a shorter advanced reservation period, in December 2013-January 2014…We are considering operation of this scheme on a larger scale,” Railway Minister Mallikarjun Kharge said while presenting interim Railway Budget 2014-15.
The pricing has resulted in earnings rising 48 per cent in the pilot service, compared to Rajdhani services in the same sector.
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“People who go for trains are either unable to afford air services or want to take routes not covered by air. For rail, this would mean more revenue, but to be competitive, it needs to have prices lower than airfares,” said Sabina Chopra, co-founder, Yatra.com.
With the railways planning to adopt the new pricing model on 37 premium routes, the ministry estimates earnings of Rs 45,255 crore through passenger traffic receipts next financial year, a rise of 20.7 per cent over the revised estimate for FY14. This financial year, however, passenger revenues are set to fall 11 per cent to Rs 37,500 crore, compared with the Budget estimate of Rs 42,210 crore.
The decline in passenger revenue is despite a rise in rates. It stemmed from a sharp drop in earnings from passengers in second-class coaches. While passenger earnings from upper-class coaches are projected to rise 10.6 per cent to Rs 11,176 crore this financial year over the Budget estimate of Rs 10,105 crore, passenger revenue from second-class coaches are set to decline 18 per cent to Rs 26,324.40 crore. On October 7, 2013, Indian Railways had raised passenger rates by about two per cent, under the Fuel Adjustment Component. Experts had said the rise would lead to higher fares for AC travel and second-class passengers were likely to be impacted only marginally.
Though passenger earnings have decreased compared to budgeted estimates, the share of passenger revenue in gross traffic receipts has steadily seen an increase through the past two years. For FY14, passenger earnings will account for 26.7 per cent of the gross revenue of Rs 140,500 crore, compared with 25.3 per cent in 2012-13. In 2014-15, the share is expected to increase to 28.15 per cent.
The number of passenger bookings, however, continued to decline, falling one per cent to 7,063.43 million between April 2013 and January this year. Railway Budget 2013-14 had estimated growth of 5.2 per cent in passenger bookings.
