Indian Railways’ Surge Pricing Scheme flops as tourist opt for flights instead
Following surge pricing introduced by Indian Railways in September this year, seats in Rajdhani, Duronto Express and Shatabdi have been going vacant in the month of October 2016. This has resulted in decline of revenue collection considerably.
This surge pricing by the Indian Railways on its premium trains was introduced to increase revenue but instead has been doing just the opposite. Revenue Collection in the first half of October 2016 revealed a considerable decline by INR 232 crores as compared to the same period in the previous year.
When introducing surge pricing, Indian Railways had expected revenue to increase by INR 1,000 crore per year. Of this, they had expected INR 200 crore to be generated in the month of October itself. Sadly, that is not the case. Collections from October 1-10 this year stood at INR 4,072 crores as against last year’s revenue collection which stood at INR 4,304 crores.
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This is the same trend that is expected to continue through to the end of this year with a number of seats on these trains vacant for the upcoming winter vacations of Christmas and New Year.
Reports suggest that occupancy on these premium trains which ply to destinations such as Goa, Kerala, Mumbai, Kolkata, Amritsar, Lucknow and Chennai, among others have been affected to the tune of 15-20% following the introduction of flexi fare scheme. Normally these trains have long waiting lists but with passengers getting flight tickets at cheaper rates, bookings on these trains have suffered.
Railway bookings fell by 12% during the period October 1-10, 2016 with 16.5 lakh fewer passengers travelling by train while passengers are finding plane travel cheaper. The Railway Ministry has asked officials not to form any permanent conclusions to the surge pricing scheme and is said to review this scheme only after three months. The flexi fare system is applicable to AC 2 tier, AC 3 tier and AC chair car on all three trains while First Class AC and Executive Class have been kept out of this system due to already prevailing high tariffs.