Private trains fares: Who will decide what ticket price to charge passengers for world-class trains?

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Published: July 9, 2020 2:22 PM

Indian Railways in its Project Information Memorandum has stated that the private entity that has been awarded a cluster of routes will have the freedom to decide what fare it has to charge railway passengers.

The private entities would be selected through a two-stage process of competitive bidding,

Private trains fares: Indian Railways is all set to introduce private trains on its network, in the coming years! According to Indian Railways, passengers can look forward to world-class travel experience in modern trains, with reduce journey times. But who will decide the fares of these private trains? Indian Railways in its Project Information Memorandum has stated that the private entity that has been awarded a cluster of routes will have the freedom to decide what fare it has to charge railway passengers. Railway Board Chairman VK Yadav has indicated that a regulatory body may be set up to keep track of the fares being charged by private sector for running these trains.

For undertaking the project, the private entities would be selected through a two-stage process of competitive bidding, consisting of Request for Qualification (RFQ) as well as Request for Proposal (RFP). The bidders will be shortlisted based on their financial capacity, and they will be required to offer share in the Gross Revenue at RFP stage for undertaking the project of running private trains.

The Gross Revenue refers to the amount printed on ticket-fare; amount from preferred seat options, baggage/luggage, cargo/ parcel, the amount from on-board services like catering, content on demand, bed roll, wi-fi (if not included in the ticket fare). It also involves the sum accruing to the concessionaire on account of branding, advertising, and naming rights. However, the calculation of the Gross Revenue will exclude the station user fee collected from the passengers, and all statutory applicable indirect taxes, levies which the concessionaire is bound to pay. The Project Information Memorandum has stated that the Gross Revenue for this project would be as finalized and specified in the Concession Agreement.

Indian Railways had identified around 100 origin-destination pairs for the operation of private trains. These origin-destination pairs have been categorized into 12 clusters such that each cluster requires the operation of about a minimum of 12 trains.

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