Railway Fares Hiked up to 50% in new Dynamic Pricing Model

Presented in the form of a dynamic pricing model — except that the new structure will not see any decrease in fares — the Railways will offer only the first 10 per cent of berths at current prices.

The government Wednesday announced, in effect, a major fare hike of up to 50 per cent in base fares for most passengers travelling in premium train services — Rajdhanis, Shatabdis and Durontos. This brings the segment in direct competition with low-cost airlines in terms of pricing. Presented in the form of a dynamic pricing model — except that the new structure will not see any decrease in fares — the Railways will offer only the first 10 per cent of berths at current prices.

The remaining 90 per cent will be sold at prices starting at 10 per cent higher than the base fare and ending at 50 per cent more for AC-II tier and 40 per cent for AC-III tier.

These “Flexi fares”, will be effective from Friday but will not affect those who have booked their tickets already.

The hike will be applicable across the board — even impacting non-AC classes in Duronto — but will exclude First AC and Executive Chair Car classes in all premium trains. There are 42 Rajdhanis, 46 Shatabdis and 54 Durontos currently in operation.

The hikes have been effected in base fares; add-on fees, including catering, reservation and superfast charges, and service tax, will remain at current rates.

According to the new formula, the first 10 per cent of berths will be sold at current base fares, with 10 per cent hikes for every subsequent 10 per cent of berths sold up to the halfway mark. The structure then gets staggered — the last 50 per cent of berths in AC-II tier will be sold at a flat 50 per cent more than base fare; the last 60 per cent of berths in AC-III tier will be sold at 40 per cent more than base fare.

Typically, base fare constitutes between 78 and 86 per cent of the total fare depending on sectors and classes.

According to current booking patterns in premium trains, the first 30-40 per cent gets sold out within minutes when bookings open 90 days before the date of journey, leaving the tickets that would now come under higher slabs for those who book even a day later.

For instance, when it comes to the Mumbai Rajdhani, an AC-II tier passenger will now have to pay a maximum of Rs 4,055, while the current rate is Rs 2,870 — a 41 per cent increase when add-on charges are levied. In AC-III tier, a passenger will now have to pay a maximum of Rs 2,736 while the current rate is Rs 2,085 — a 31 per cent hike, including add-on charges.

In comparison, a Mumbai-Delhi air ticket booked on Wednesday on a budget airline for December cost Rs 2,857.

While official sources said that the move has been cleared by the “highest level” of the government, Railways officials described the latest decision as an “experiment”.

“This is on experimental basis. Like any move, this will also be reviewed after three-four months. We expect a mop-up of not more than Rs 500 crore from this hike,” Mohammad Jamshed, Railway Board Member (Traffic) told The Indian Express.

“The very low-priced air tickets that you see are earmarked for very few seats while the majority seats are sold at high prices as the journey date comes closer. Our prices remain far lower than that,” said Jamshed. The Railway Board believes that the move will also negate the illegal sale of tickets in premium trains by touts.

The Railways’ passenger revenue target for the current fiscal is Rs 51,000 crore as against Rs 45,000 crore in the last fiscal, an increase of Rs 6000 crore