The move of Indian Railways to introduce dynamic pricing in passenger fares was long overdue. It allows the railways to change passenger fares frequently, depending on demand, and this is made easier by computerisation. There is also considerable unmet demand for reserved accommodation on most trains on busy routes. Reservation, which is available up to 90 days before the scheduled date of a journey, is virtually impossible to get if you need to undertake it at short notice. Tatkal booking, by paying a little more than the normal fare, was a help for those undertaking emergency travel when it was first introduced. However, this has now ceased to be a meaningful option, as it is quite common for wait-listed passengers with Tatkal tickets not to get a place on the train eventually. Conversely, upper class reserved accommodation goes partially empty in off-peak seasons, signifying wastage of capacity already created at great cost.
All this represents a missed opportunity for the railways to earn additional revenue at virtually no extra cost. The populist reluctance of successive railway ministers to raise unreserved second class passenger fares should have nothing to do with dynamic fares for reserved rail travel. India’s poor cannot afford a reserved seat even on the rare occasion when they can afford to undertake a long train journey. Inability to charge more from those who are able and willing to pay is terrible, particularly when it is easy to devise enabling systems.
The passenger reservation data of the railways has been electronically captured ever since computerised reservation was introduced across the network. Within the last decade, data mining and business analytics have become a mainstream information technology offering across segments, with a lot of development work for it being done in India. With the help of these tools it is possible for the railways to have a clear idea, based on past patterns of demand, of the seasonal nature of passenger traffic. Armed with this information, the railways can get sufficient time to plan their traffic and deployment of rolling stock. For example, repair schedules can be dovetailed with demand projection so that additional coaching can be made ready during periods of peak demand. Further, dynamic freight rates can be used to offer incentives to cargo movers so that they do not book rakes during peak festive seasons or school summer holidays, when freight rates can carry a premium.
The technology for dynamic pricing is not only widely available but is being intensively used by the private airlines. The railways should have cottoned on to the idea long ago. Doing so would improve capacity utilisation and give them additional revenue as well. Currently, passenger fare changes are announced along with the railway budget, which the minister of the day uses as a tool for personal grandstanding. It is hardly likely that someone, who is keen on exploiting an event for personal political mileage, will make unpopular announcements during that event. So, it is much better to take the decision out of high public visibility on “technical” grounds. It is perfectly feasible to visualise a railways minister grandly announcing, to great applause from the benches, in his budget speech: we have decided not to raise passenger fares which will henceforth be both raised and lowered periodically in response to seasonal changes in passenger demand.
