Indian Railways on Wednesday launched surge pricing, on the lines of airlines, in three premium trains — the Rajdhani, the Duronto and the Shatabdi — in a move aimed at making a dent in the cross-subsidy for this segment, which is pegged at over Rs 30,000 crore. According to the new “flexi fare system”, the base fares will rise 10% with every 10% of berths, sold subject to a ceiling. It will be in force from September 9 and apply to all classes in the above-mentioned trains, except for the 1AC and executive chair classes.
With the transporter’s passenger revenue is trailing the budgeted target (down 8% in April-August) and the freight segment reporting negative growth (a slip of 13% in April-August) in a sluggish economy, it is making efforts to increase revenue not just by boosting volumes but hiking fares as well.
Passenger fare was last hiked in June, 2014, by the then UPA government. In a pre-Budget move, the fares were increased a steep 14.2% across the board.
The railways have not given any estimate of the revenue gain from the latest move. Even though the last rail Budget avoided any passenger fare increase, analysts had pointed out that the transporter had factored in a steep 12% average hike in non-suburban passenger fares.
Recently, the railways revised the cost of freight for several consumers of coal, the commodity that accounts for 45% of its receipts from transportation of goods. It raised the freight rates by 7-14% for distances between 200-700 km and imposed a Rs 55-per-tonne extra charge on both loading and unloading. At the same time, it reduced the freight for long-lead traffic by 4-13%. Although the transporter claimed the move would be revenue-neutral, analysts said revenue would increase by a few hundred crores at least.