Oct 23, 2016

Indian Railway faces revenue loss of Rs 200 crore as holidaymakers prefer to fly with airlines offering cheap deals

  1. Despite surge pricing in Express trains Railways’ revenue collection in the first half of October has declined by Rs 232 crores
  2. Occupancy in these trains has been hit by 15 to 20 per cent after flexi fare scheme was introduced
  3. Domestic airlines have introduced cheaper deals to popular holiday destinations like Goa, Kochi and Mumbai
The much-criticised flexi fare scheme introduced in premium trains to boost Railways’ revenue has done just the opposite. 
Despite surge pricing in Rajdhani, Shatabdi and Duronto Express trains during the festive season, Railways’ revenue collection in the first half of October has declined by Rs 232 crores as compared to the previous year. 

The trend is likely to continue during the winter vacations - Christmas and New Year festive season - as a majority of seat booking in Rajdhani and Shatabdi Express trains are vacant for the months of December and January. 
Despite surge pricing in Rajdhani, Shatabdi and Duronto Express trains during the festive season, the revenue downtrend is likely to continue during the winter vacations as a majority of seats are vacant in December and January

These include trains to destinations like Goa, Kerala, Mumbai, Kolkata, Amritsar, Lucknow and Chennai, among others. 

A senior railway ministry official said occupancy in these trains has been hit by 15 to 20 per cent after flexi fare scheme was introduced. 

The ministry was expecting a significant rise in revenue collection but the result has been quite disappointing. 

“The flexi fare scheme has backfired. Occupancy in trains has gone down substantially as passengers are getting flight tickets at cheaper rates. The railway ministry will review the scheme only after three months,” said the official. 

A number of trains like Mumbai Rajdhani, August Kranti Rajdhani, Sealdah Rajdhani and Trivandrum Rajdhani have a large number of vacant seats during mid-December. 

Normally these trains would have a long wait list, but a slump is seen, as major domestic airline companies have introduced cheaper deals on their tickets to popular holiday destinations like Goa, Kochi and Mumbai, at prices as low as Rs 3,000. 
Airline companies have made a significant dent into railways’ passenger share

Similarly, Shatabdi trains to Amritsar, Lucknow and Kanpur have shown low occupancy during this period. 

According to data, railways collected Rs 4,072 crore from October 1 to 10 this year which declined by Rs 232 crore in 2015-16.

Last year, railways’ revenue during this period was Rs 4,304 crore. 

Sources said the ministry was expecting to generate Rs 1,000 crore from surge pricing in one year of which Rs 200 crore was expected in the month of October alone. 

However, the airline companies have made a significant dent into railways’ passenger share. 
A comprehensive data also shows that railways’ income from all sources has reduced by Rs 3,854 crore so far this financial year

The Indian Railways runs around 12,000 trains with 22 million passengers and operates 8,000 trains to ferry around 3 million tonnes of freight per day.

A comprehensive data also shows that railways’ income from all sources has reduced by Rs 3,854 crore so far this financial year. 

This includes income from freight which is a major source of railways’ revenue. 

During the first six months of 2015-16, the railways had collected Rs 84,747 crore, but this year the income has reduced to Rs 80,893 crore during the same period. 

Officials said the decline in revenue collection is a cause of worry for the railway ministry as it comes despite introducing alternative measures to augment revenue collection. 

While the Railways has planned large scale commercial exploitation of its unused properties, it has also created a directorate of non-fare revenue. 

The mandate of the directorate is to explore new ways of generating money, mainly by harnessing its advertisement potential, without interfering with the passenger fares. 

However, a major loss in freight revenue forced the railways to introduce surge pricing in premium trains from September 9 this year. 

Under the surge pricing scheme, fares will increase with every 10 per cent of the tickets sold in Rajdhani, Duronto and Shatabdi trains. 

It will translate into a fare hike of up to 50 per cent in such premium trains and may fetch Indian Railways Rs 1,000 crore every year. 

The flexi-fare system is applicable in AC 2 tier, AC 3 tier, and AC chair car in the three trains, besides sleeper class in Duronto express trains. 

First AC and Executive Class have been kept out of the new system because of its prevailing high tariffs. 

Close on the heels of surge pricing, luxury trains like Humsafar and Tejas Express trains, likely to be launched in a couple of months, will have fares that nearly 20 per cent higher than the normal Mail and Express trains. 

This, experts believe, may also be a deterrent for passengers as is evident from poor occupancy in India’s fastest Gatimaan Express.
Source - Daily Mail