Railway flexi-fares should offer incentives, not just hike rates for travellers.

This is a flawed approach: Rajesh Dixit

The Railways introduced flexi-fare pricing of tickets for premium trains, including Rajdhani, Shatabdi and Duronto. The apparent motive is to garner additional revenue in times of financial distress on account of the Seventh Pay Commission payout. The Railways will garner about Rs 500 crore in current financial year and Rs 1,000 crore for the full fiscal. As is evident, the passengers would have to shell out 50 per cent more at the higher end to help the Railways meet its obligations. That makes the whole approach flawed as the passengers would have to shell out more without getting any improved facilities in return.

The Railways has more than 14 lakh employees on its payroll. It spends roughly about 55 per cent of its annual revenue on salary and pension obligations. That the Railways claim there would still be a 35 per cent subsidy component on these premium trains is highly misleading. The fact that the Railways despite, being an operational organisation whose primary task is to run passenger and goods trains, is a highly bloated bureaucratic entity begs for deeply-rooted reforms.

A number of committees in the past recommended the Railway Board’s restructuring. But till date no government has shown any appetite to touch the big fat rail bureaucracy. The flexi-fare system is essentially a kind of surge pricing, which is being practised by airlines and app-based cabs. But they are in a business environment where there are a lot of competitors. Here, the Railways is in a monopolistic business with no competition to put pressure on pricing.

The Railways is trying to ape the airlines, where safety norms are much more stringent than in trains. In fact, the Railways does not intend to invest any part of the additional funds it would mop up by the flexi-fare system for better safety standards in such trains. The Railways has claimed the flexi-fare system would end the clout of the touts who indulge in bulk booking of tickets. Thus, the Railways admits it has failed to check the menace of touts. There is no reason why passengers should foot the bill for the failure of the Railways. Since touts flourish with the apparent connivance of railway officials, they would end up pocketing tickets at the lower pricing, with genuine passengers left with no option but to pay the price at the highest level of 50 per cent more of basic fare.

The Railways would have done a lot better if it had gone for an across the board minimum passenger fare hike and revised the fare of the sleeper class and unreserved class, which have not been touched for ages. The NDA government, however, does not have the courage to take tough decisions and thus chose to help private airlines by making the fare of premium trains relatively uncompetitive than what is being offered by the air carriers. Rajesh Dixit is a leader of the Samajwadi Party

Flexi-fares will correct anomalies: R.C. Acharya

For the past two decades, populist rail budgets didn’t allow passenger tariff on the Indian Railways to keep pace with inflation. The decision to introduce flexi fares is welcome as it will correct this anomaly. An across-the-board hike of 14 per cent in passenger tariff made in June 2014 was after a gap of almost a decade, but the losses from passenger business continued to rise to Rs 34,000 crores for 2015-16, which had to be cross-subsidised by freight earnings. Where’s the scope for incentives amid such huge losses?

An additional income of Rs 500 crores anticipated from the present initiative would enable the Railways to somewhat balance its books without having to resort to a mid-term hike of freight tariff. Flexi-fares or dynamic pricing has been a standard feature the world over, specially with airlines that end up charging exorbitantly high fares from hapless passengers. The Railways’ scheme involves each 10 per cent increment in booking on 131 select premium trains, inviting a 10 per cent hike in base fares, but with a cap of 50 per cent!

The first few days have been highly encouraging with hardly any sign of passengers migrating to airlines as had been predicted by its critics. Genuine passengers have already realised that airlines are not going to keep their fares at rock-bottom levels in spite of competition and almost on all busy routes even at the 50 per cent extra charge, the three-tier rail fares will continue to be much lower than the airfares during the peak season.

The incentive is that the Railways is offering almost 100 times the airlines capacity and thus the passengers will continue to enjoy options. In spite of the vast network of national highways it will continue to be the preferred mode of travel for distances over 700 to 800 km given the state of traffic in crowded cities and towns which the highway traveller will encounter on the way.

Not only the comfort of airconditioning, dust-free and safe environment, but also the luxury of choice meals on the move makes rail travel a popular choice for discerning passengers, who are looking for value for money. An added advantage is avoiding the hazards of road accidents and law and order problems en route which act as serious impediments in such road journeys, which are best undertaken by the adventurous or those who have exhausted all other options. Interestingly a few back-of-the-envelope calculations reveal that on the highly-popular Delhi-Kolkata route, while a three-tier ticket by Rajdhani would cost less than Rs 3,000, during the usual Durga Puja rush one would have to shell out almost double even on one of the budget airlines. It is more or less the same story for other popular routes, such as Delhi-Chennai, Delhi-Mumbai and Delhi-Bengaluru, etc.

R.C. Acharya is former member of the Railway Board