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Making Indian Railways more competitive

20 Oct

Most travellers in India know that the start of a festival season is a testing time. If you have not planned well in advance, getting train tickets for a safe and comfortable journey is almost impossible just before and during the festival season. Those with money can fly, but exercising that option could mean shelling out an exorbitantly high fare for a travel that would have cost less than half in the normal course. That scenario, however, has changed. For almost all short-distance routes (between 400 and 700 kilometres), air tickets even at higher prices are now difficult to get during the festival season, while the pleasant surprise is that train tickets are available with relative ease.

Last Friday marked the start of a week-long festival season of Dussehra. Most schools, colleges and many corporate offices are closed for many days during the week. The rush for train tickets, therefore, should have been huge. But the experience of many rail travellers during the weekend was that many coaches were travelling with many vacant seats. One entire coach with 56 seats in the executive class chair car category, for instance from Lucknow to New Delhi, had only four paying passengers. For the same weekend, an air ticket for the same sector was simply not available. An interesting point to be noted was that the easily available executive class train tickets were only a couple of hundred rupees less than the airline fares for the same distance.

What was really happening? And does this have a lesson for the Indian Railways and its traffic management team? To understand the changed scenario, it is important to remember a few recent developments affecting India’s travel industry. Thanks to falling crude oil prices, airfares have come down significantly in the last one year. Till recently, an executive or first class air-conditioned train fare would actually be costlier than an air ticket on the same route. But that situation has been reversed. Air tickets are now just a few hundred rupees more expensive than such train fares for short distances.

Secondly, the Indian Railways has stepped up its efforts to provide more railway connections between cities to tap the growing market for travellers. Especially for sectors whose distance is between 400 and 700 kilometres, there are now more train options than the flights available on the same sector. It is the combination of these two developments that has seen a rush for air tickets even though train fares are only marginally lower than air fares. As a result, plane tickets are not available and trains are not running at full capacity.

The lessons that the Indian Railways must learn from this are obvious. It must opt for a dynamic fare-fixing system. While offering more trains to increase capacity and options for passengers, especially on short-distance sectors, is a good idea, its traffic managers should recognise the reality of an increasingly competitive market where airlines are luring their customers with lower airfares. In the days of relatively higher crude oil prices, airlines could seek recourse to fare discounts only up to a point as they did not want to financially bleed themselves. But now they enjoy greater flexibility to offer discounted fares because of lower aviation turbine fuel prices. The Indian Railways has already promised to introduce a dynamic fare structure on certain routes, but it must expand its coverage if it wants to retain its top-end customers, who account for a huge chunk of its total passenger revenues.

Technological upgrade can certainly help to an extent. The online ticket sales platform can be upgraded to get more value per seat it is offering to passengers. But more importantly, its managerial workforce, including the network of divisional railway managers, must show greater enterprise and commitment to make the Indian Railways a more market-savvy organisation that can offer better services at competitive fares.

The running of the Indian Railways should ideally be segmented into two categories. There is a huge need for building capacity in the Indian Railways. That goal has to be achieved with the help of setting up new projects and building new capacities through necessary investments – a task that has begun in earnest, even though decision making for such projects needs to be decentralised to impart greater speed to their execution.

The second and equally important category of work pertains to the operational aspects of the Indian Railways. It is in this area that there is the need for improvements in management and marketing techniques. This would include better trains, attractive fares and modernised stations. Without them, more trains are likely to run at low capacity, even as airlines woo the railway passengers.

– A K Bhattacharya

http://www.business-standard.com/article/opinion/a-k-bhattacharya-making-indian-railways-more-competitive-115101800733_1.html

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Posted by on October 20, 2015 in Uncategorized

 

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