Indian Railways withdraws IRCTC convenience fee sharing decision; Here’s why

By: |
October 29, 2021 2:47 PM

On Thursday, IRCTC, in a regulatory filing, had said that with effect from November 1, it will share the revenue earned from convenience charges collected by it in the ratio of 50:50.

IRCTC, railwaysThe corporation began charging the fee again during the novel coronavirus crisis mainly to boost its revenues during the slowdown.

In a bid to protect Indian Railways’ catering and ticketing arm- Indian Railway Catering and Tourism Corporation (IRCTC) and after taking stock of “market sentiments”, the national transporter has decided to reverse its decision demanding 50% revenue share from convenience fee from ticket bookings on the official website of IRCTC, according to sources quoted in a PTI report. On Thursday, IRCTC, in a regulatory filing, had said that with effect from November 1, it will share the revenue earned from convenience charges collected by it in the ratio of 50:50. IRCTC’s shares plunged 25% to Rs 685 a piece in Friday’s opening deals, a day after Indian Railways’ decision to ask for the revenue sharing arrangement.

A top source quoted in the report has said the Railway Board has decided to reverse its decision keeping in view the market sentiment as well as the fact that the revenues of IRCTC have suffered a lot during the Covid pandemic induced lockdown. Also, the fact that the revenue earned by the national transporter through this arrangement was not worth the losses suffered by the corporation. According to the report, sizable revenue was generated by the convenience fee charged from customers, for both Indian Railways and IRCTC.

In the financial year 2014-15, when the revenue sharing was 20-80, the catering arm of Indian Railways received majority of the revenue of Rs 253 crore. The following year, the revenue generated from this was an amount of Rs 552 crore with a share arrangement of 50-50. With a similar revenue-sharing model in 2016-17, the fee generated an amount of Rs 362 crore as earning for the IRCTC-Railway combine. However, the convenience charge was discontinued thereafter and till 2019, the duo did not earn any revenue from it.

The corporation began charging the fee again during the novel coronavirus crisis mainly to boost its revenues during the slowdown. However, Indian Railways gave up its share. In fiscal 2019-20, the catering arm of railways earned Rs 352 crore from convenience fee while in the financial year 2020-21, it earned Rs 299 crore. Till the month of August this year, the IRCTC had earned an amount of Rs 224 crore. The convenience charge is not part of the Indian Railways fare. It is for the service offered by the e-ticketing corporation of booking a ticket on the web.

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