Passenger revenues up 18% in FY15, but volumes flat

PASSENGER EARNINGS: Other transporters pose a challenge

Earnings from passengers might have risen in the past year on the back of a 14 per cent increase in fares announced in June 2014, but the Indian Railways is clearly losing business to alternative transport services such as inter-city buses and airlines.

In 2014-15, the Railways’ total passenger revenues went up 18 per cent to Rs 43,002 crore, while passenger volumes saw a marginal drop of one per cent to 8,350 million passengers.
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The total passenger count for 2014-15 also missed the previous budgetary estimates of 8,645 million for the year by three per cent. For 2015-16, the government expects total passenger revenues to rise 17 per cent to Rs 50,175 crore, and volumes to increase a modest three per cent to 8,601 million passengers.

  In terms of segments, both the premium (air-conditioned or AC) classes and non-AC classes in 2014-15 showed an 18 per cent rise in earnings to Rs 12,199 crore and Rs 30,803 crore, respectively. Both classes also saw a one per cent drop in passenger volumes to 117.75 million and 8,232.25 million, respectively. For 2015-16, the government estimates AC classes to see 19 per cent higher revenues to Rs 14,469 crore and three per cent higher volumes to 121.29 million, while non-AC classes are expected to see a 16 per cent rise in earnings to Rs 35,706 crore and volumes are projected to swell three per cent to 8,479.71 million.

Rail fare hikes have come at a time when diesel fuel prices have fallen almost 20 per cent in the past year, but the government is yet to pass on the benefits to the passenger. As reported by Business Standard on December 18, 2014, the government is raking in the benefit of lower diesel prices by not revising the fuel adjustment component (FAC) of passenger fares and freight rates. The FAC was slated to be reviewed this month along with the Budget announcements.