Flexi fare gives railways a revenue boost

This system has earned Rs 260 cr since September from 142 premium trains against Rs 21 cr past year

A move that was criticised is now ringing the cash register for loss-making Indian Railways (IR).

The dynamic fare system, termed ‘flexi fare’, it had launched last September for 142 premium trains has earned Rs 260 crore, nearly 13 times more than the expected Rs 21 crore it had earlier estimated from these till end-February. This rise is despite a shortfall in number of estimated passengers by 1.1 per cent in this period, compared to the same time a year before.

"The has been a huge success. We are planning to continue this pricing system in the 142 trains,” said Mohammed Jamshed, member (traffic) at the Railway Board.

IR had got flak for adopting a system similar to the surge pricing mechanism followed by taxi aggregators and the aviation sector. It was introduced as an experiment in 42 Rajdhani trains, 46 Shatabdi and 54 of the Duronto. These had narrowed the gap between air fares and rates of these premium trains; in some cases, air fares became a lot cheaper than taking the trains. 

"There was a minor drop in the number of passengers compared to last year. However, the occupancy rate of all the trains put together increased from 101 per cent  from April to February 2015-16 to 102 per cent during the same time this year," Jamshed added.  

Suresh Prabhu, the railways minister, has already told the Rajya Sabha that there is no proposal to extend the system to other mail, express or superfast trains. And, that the Rs 30,000-crore loss in a year on passenger fares cannot be recovered through this route. By IR estimates, only 0.35 per cent of their total of passengers are affected with introduction of a flexi fare system.

From April to February 2016-17, the occupancy rate in Rajdhanis was 95 per cent, in the Shatabdi at 75-77 per cent, the Duronto at 82 per cent and in Suvidha trains at 70 per cent. 

To improve these, IR is set to launch a Vikalp or alternative accommodation system in more numbers of trains from April 1. Under the scheme, wait-listed passengers will get confirmed berths in alternative trains on the same route. 

This will help in filling about 150,000 berths remaining vacant on a daily basis on major routes, including premium and special trains, during the lean season.

Interestingly, IR has been able to arrest the declining trend in overall number of passengers, increasing it by one per cent overall till end-February. "This might help us in adding another Rs 2,000 crore on passenger revenue, from Rs 45,000 crore in 2015-16 to Rs 47,000 crore in 2016-17," says Jamshed. 

Faced with many vacant seats, said a PTI report on Tuesday, IR is mulling to reserve 50 per cent berths in premier trains, including Rajdhani, for normal fare by making changes in the prevailing flexi-fare system. 

Getting back on track

• Dynamic pricing was introduced on Sept 9 last year in 42 Rajdhani trains, 46 Shatabdi and 54 Duronto trains
• According to estimates, about 0.35% of the passengers carried by the Indian Railways are affected because of the flexi-fare system 
• The national carrier’s revenue from Sept 9 to Feb 28 in these 142 trains zoomed to Rs 260 crore, which would have been only Rs 21 crore without the scheme
• From Apr to Feb 2016-17, the occupancy rate in Rajdhanis stood at 95%, Shatabdi 75-77%, Duronto about 82%, and on Suvidha trains, about 70%
• From April 1, the government is launching Vikalp or alternative train accommodation system in premium trains as well