Railways to introduce airline pricing model

The much-hyped dynamic pricing system which has invited a lot of criticism earlier for the Indian Railways may soon be converted into an airline-like model. Now the railway fares would go down during the lean seasons.

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Newly-appointed Railway Board Chairman, Ashwani Lohani, said the Railways is relooking at the new pricing system. Lohani was earlier the chairman of Air India when he moved to the Railway Board in August and, therefore, he has seen the airline pricing model closely.

Lohani said, “I personally was not happy with the way dynamic pricing has been structured. We have to really look at the way airlines are doing it.”

The system of pricing also known as “flexi-fare or dynamic pricing” was launched on 9th September 2016, for 142 premium trains which included Rajdhani, Shatabdi, and Duronto.

The pricing system which was based on the models used by cab aggregators had faced a lot of criticism as it led to low occupancy levels because a number of airlines became a cheaper option for passengers.

“The dynamic fare in airlines is really dynamic. It goes up and also comes down, decided by the demand and supply scenario. If a festival is coming up, demand goes up, the fare goes up, while it goes down as well. Airlines also provide offers like one plus one when there is less demand. We have to look into something similar,” he added.

Under this pricing model, only the first 10% of the tickets sold in the premium trains will be available at the original listed price. After that, for every 10% ticket sold, the fare will go up by 10%. However, after the sale of 50% of tickets, when fares are 50% more than the original prices, there will be no further hike.

Last year the flexi-fare system was in place for six months where the railways made an additional revenue of about INR 240 crore. The occupancy of trains dropped considerably. While occupancy was 95% in the Rajdhanis, it was 75-77% in the Shatabdi and about 82% in  Duronto in July 2017.

Lohani also added that an effort was being made to improve the passenger services. As part of this, Indian Railway Catering and Tourism Corporation (IRCTC) is all set to take over the catering operations of trains which have pantry cars to serve food on board. However, he said, the first priority for railways would be the safety of the passengers.

“We have to realise that we have an inadequacy of infrastructure. We will not permit any unsafe conditions in our tracks in railway stations. We will be having sufficient funds for the same.” Lohani added.