Indian Railways may replace its AC-II-tier class with the AC-III tier variety in premium trains like Rajdhanis and Durontos in sectors where the patronage of AC-II is low. Reason: the flexi-fare scheme, a dynamic pricing mechanism that makes majority of the berths in these trains up to 50 per cent more expensive than the base fare. In AC-II tier, fares are working out to be close to, if not costlier than, flight fares in many sectors.
Although the flexi-fare scheme has brought in around Rs 862 crore extra in earnings in a year to Railways, and the segment of reserved passengers has seen an over five per cent jump in numbers last fiscal when compared to the previous, it has made certain classes like AC-II and and AC- First Class in many sectors less attractive—sometimes even more expensive—for the passengers who may be shifting to flights offering similar fares.
In sectors where the AC-II fare of a Rajdhani or Duronto is close to that of low-cost flights, the national transporter is working out ways of replacing the class with their AC-III counterparts that carry more people than AC-II and incidentally is the only class wherein Railways makes a decent profit. All other reserved classes are a loss-making proposition for Railways. Railway Board Member (Traffic) Mohammad Jamshed has instructed the ministry officials to work out a plan to see where this replacement is needed to make room for more passengers in premium trains like Rajdhanis and Durontos.
Railways is pumping in more and more AC-III tier coaches into the system to not just accommodate more people but to also make some money per train run. In 2018-19, it is going to manufacture 1,000 new AC-III coaches, the highest ever. Last year, this number was 778.
As far as AC-II is concerned, Railways has been losing the price war to airlines in many key sectors ever since flexi fares were introduced in September 2016.
The AC-II fare of Bengaluru Rajdhani for Friday (April 20), for instance, has a fare of Rs 5830 from Delhi, in which Rs 1642 is the dynamic, flexi-fare component built over Rs 3284 of base fare plus other charges. That is a 50 per cent hike over base fare.
Comparatively, fare of a low-cost, non-stop flight in the same sector departing in the morning of April 20 comes to Rs 4321 if booked today. Passengers may strike deals that work out to be cheaper as well, especially if they book a return ticket. Railways being a government organisation cannot offer such commercial flexibility in pricing.
The same day, the fare of AC-II in Mumbai Rajdhani from Delhi is Rs 4,105 of which Rs 1,184 is the dynamic component, again a 50 per cent hike. Comparatively, a full-service career’s fare on that day for a non-stop flight is Rs 3,867.
After intervention by Railway minister Piyush Goyal, there is an effort to alter the flexi-fare system to ease out the hike to some extent and also make the fares somewhat attractive depending on sectors and their patronage pattern. However, whatever alteration does take place, Railways cannot afford the overall earnings from flexi fare system to be lower than what it already earns.
Sectors like Delhi to Trivandrum or Chennai and Bengaluru, serviced by Rajdhanis and Durontos see fares of the AC II tier often jump close to those offered by flights. The busy Delhi-Mumbai and Delhi-Kolkata sectors also see similar trends off and on leading to lower patronage of the AC-II tier—a spacious, less crowded upgrade to AC-III tier. This when the AC-III tier coaches are full and entail long waiting lists.
Since AC-II is a definite upgrade over AC-III in terms of berth space and in some cases even the food, some officials believe the decision may not go down well with passengers who prefer AC-II for short distances in a long-distance train, if the class completely vanishes from the product mix in premium trains.
A typical Mumbai Rajdhani has 11 AC-III coaches, five AC-II and one AC-First class coach. There are 24 pairs of Rajdhani express trains and 15 pairs of Durontos in Delhi connecting various parts of the country.