Railway Board chairman and former Air India CMD Ashwani Lohani wants to emulate the dynamic fare system followed by airlines in Railways.
The Railway Ministry is planning to introduce the dynamic pricing system, which is being offered by airlines and hotels in premium trains—Rajdhani, Shatabdi and Duronto— by replacing the existing flexi-fare system.
Accordingly, the fare may be discounted in case the train is not fully booked. In the case of airlines and hotels, first the prices are low, then the prices go up and then later the passengers get discounts on the remaining seats/rooms if these remain unoccupied.
The government believes that though revenue increased following the introduction of the flexi-fare system, the Railways lost many passengers as several berths remained vacant. At times, railway fares are almost the same, or in some cases even lower, than airfares. As a result, a large number of passengers have started taking flights instead of trains.
Though premium train passengers account for only 0.35% of all passengers who travel by train in a year, their share in passenger revenues is 13-14%.
The Lohani-headed Railway Board has set up a six-member committee to review the existing flexi-fare system. It will examine all options and recommend the best options keeping in mind passengers and railways’ interest, said a Ministry official.
The committee consists of Railway Board officials along with NITI Aayog advisor Ravinder Goyal, Air India ED Meenakshi Malik, rransport economics professor S. Sriram and revenue director of Le Meridian, Iti Mani.
A 1980-batch Indian Railway Service of Mechanical Engineers alumnus, Lohani took over as Railway Board chairman in August this year.
The Ministry had launched the flexi-fare system in September 2016, which led to an increase in fares up to 50%. Under this system, the fare increases from 10% to 50% with every 10% of the berths booked. The committee is going through the impact of implementation of the flexi-fare system in terms of the revenue generated, impact on passengers in terms of their choice of the railways as a means of transport with increased fare.
The Railway Board has also asked the committee to look into ways to offer add-ons to passengers like loyalty benefits or deferred benefits for better patronage of the scheme, the official said, adding, it will also explore if some amendments can be brought into the existing flexi-fare system to offer passengers flexibility of rates during the peak season, lean season or during the weekdays or weekends or festivals.
Depending upon the committee’s recommendations, the Railways may start offering discounts on tickets if trains were not fully booked.
The official said the existing flexi-fare system is only meant for price increase.
“However, just like airlines and hotels, where a passenger gets a discount at the last minute, the railways can also offer discounts on routes which have low occupancy, in order to attract passengers,” he added.