Flaws in implementing Dynamic Pricing leads to faster Loss of premium travel base of Railways to Airlines!

Dynamic pricing has made Trains 15 per cent more expensive than Airlines!

On December 20, Suraj Rastogi, a traveler went looking for a train ticket for a journey between Guwahati and Pune.

The only option was a Suvidha train with 45 seats on AC III class. The price tag?  Rs 6,590 for a 52-hour journey.

A three-hour flight option, for the same day, was available for Rs 4,790/-

RailYatri – a data analytics and traveller survey engine, says that the Indian Railways (IR) is losing its premium travel base faster than ever before. Much of the blame falls on the pricing schemes implemented in the last few years.

Historically, Shatabdi, Rajdhani and Duronto are among the premier trains, catering to travellers willing to pay for added comfort, reliability, and timeliness. These premier train passengers have already seen fares increase by nearly 70 per cent in the last few years (without taking dynamic pricing into consideration).

RailYatri findings show that premier travellers understand the rationale behind dynamic pricing. The issue is with implementation. “We can’t blame them, because the existing slab-pricing implementation is indifferent/not adaptable to the ground reality,” said Manish Rathi. “It may be called dynamic pricing, but there is nothing dynamic in it. A good dynamic pricing implementation should encourage demand when it is needed and increase the value of the service when the demand is higher,” he adds.

Dynamic pricing has made Trains 15 per cent more expensive than Airlines.

The emerging rule is higher the class, lower the distance travelled. Long distance (above 1,000 km) premium travellers are increasingly opting for air travel over trains. Even at the same costs, flights provide added advantages, with simpler booking processes, shorter travel hours, no wait-lists and lesser delays.

RailYatri research indicates that 8-12 per cent of travellers migrated from trains with dynamic fares.

The percentage is similar to the number of wait-listed travellers. This implies these trains are now running at less than full capacity.

With January to March being a relatively lean season, the demand is expected to drop further.

Migration of the last-minute/mid-distance traveler

If flights are taking away premium long distance travellers, buses provide alternative options for distances less than 1,000 km.

The biggest selling proposition of bus travel is its near guaranteed supply. It is possible to walk to a counter and book a bus ticket for immediate travel. While the flat-bed sleeper bus replicates the train experience, the improvement of road networks has reduced travel time, too.

Wait-list in non-premium trains has increased

At least 48 trains ply between Kanpur and New Delhi. However, it is not unusual to see Shatabdi with 500 seats vacant even as all other trains have longer wait-lists. This shows the market is highly price-sensitive and some premium traffic has spilled over to other trains.

Unless addressed, the demand for subsidised classes will continue to increase.

This being the segment that is contributing to losses, the question remains about the Railway’s ability to attract profitable customers.

Loss of Pricing Power

There is growing convergence of pricing across trains, buses and flights. For the first time in the Railways’ history, fare determination is being driven by market forces.

The Railways is used to determining its own fares, but those days are coming to an end. Players who cannot work within market-determined pricing will be punished by consumers, who will simply stay away.

The way forward

We understand the need to serve budget travellers even if they contribute to losses. However, for economic viability it is equally important for IR to retain its once profitable loyal customer base.

Here are a few suggestions:

i) Overhaul dynamic fares – pricing is science;

ii) IR needs to stop spreading itself thin. Selling secondary items such as rooms, taxis, etc while bleeding the customer base does not make sense;

iii) Revisit quotas. Quotas take away seats from the market and create uncertainty for the traveller, who then looks for other options.

Source:RailNews

Dynamic Fare may derail Railways as it soars close to airfare 

Mumbai: Dynamic pricing on Suvidha Special trains has proved counterproductive for the Railways as most trains are running below potential, especially the two-tier air-conditioned coaches, due to the higher tariff.

Suvidha Special trains have a minimum fare equivalent to tatkal fares which increase after every 20% of seats/berths in a train are booked, subject to a maximum of three times the tatkal fare.

So, in this dynamic pricing, fares keep on increasing as per demand and vacancy. The initial 20% of seats are sold at the base fare plus tatkal charges. For the next 20%, fare is 1.5 times the base fare plus tatkal. Fare for last 20% is thrice the base fare plus tatkal.

A senior railway official said, “For 2A, the demand is pretty poor as the fare is sometimes higher than airfare.”

A review of two trains was conducted by Central Railway to assess the demand. It was seen that overall occupancy for 04419 LTT-Nizamuddin was 40% but for 2A it was 28%and for 3A it was a good 45%.

For LTT- Mandaudih, the occupancy for 2A was 32% as against 44% for 3A. The overall occupancy was 43%.

The official said that 3A class is a money-spinner although the occupancy is not excellent. For LTT-Nizamuddin and LTT-Mandaudih, the earnings for 3A were 70%.

The official added that on June 10, a Mumbai-Delhi flight ticket in economy class was available from Rs 3,806 for June 15. On the other hand, 2A ticket for the same date in 04419 LTT-Nizamuddin was available at Rs 3636.

A senior railway official said, “How can we expect a passenger to pay the fare equivalent to airfare for train journey?” There are five 2A coaches in LTT-Nizamuddin. CR has now asked the board to allot 3A coaches instead as demand is very poor for 2A.

For 01087 LTT-Manduadih Suvidha special on June 17, the ticket prices for 2A as quoted at Rs3,216 on June 10. Manduadih is the terminal station for Varanasi, the air-fare was Rs 4,800 for the same day flight.

An official said, “The Suvidha train dynamic fare concept is good for 3A but for 2A it is expensive because fares are high.”

Source:RailNews

No.623/2015-16

02-12-2015

Secunderabad

Six Special Trains between LTT Mumbai and Kazipet

In order to clear extra rush of Passengers, six special trains will be run between LTT Mumbai and Kazipet as detailed below. These special trains will run as special fare trains and booking for the same will be open at 08:00 hrs o­n 3rdDecember, 2015.

Train No. 01093 LTT Mumbai -Kazipet Special Train will depart LTT Mumbai at 11:30 hrs o­n 11th, 18th and 25th December, 2015 (Fridays) and arrive Kazipet at 15:00 hrs o­n the next day.

In the return direction, Train No. 01094 Kazipet- LTT Mumbai Special Train will depart Kazipet at 17:45 hrs o­n 12th, 19th and 26th December, 2015 (Saturdays)and arrive LTT Mumbai at 23:15 hrs o­n the next day.

Enroute these special trains will stop at Thane, Kalyan, Igatpuri, Nasik Rd, Manmad, Nagarsol, Lasur, Aurangabad, Jalna, Parbhani, Purna, H.S.Nanded, Mudkhed, Bhokar, Himayat Nagar, Kinwat, Adilabad, Pimpalkutti, Wani, Majri Khadan, Chandrapur, Balharsha, Sirpur Kagaznagar, Bellampalli, Manchiryal, Ramagundam, Peddapalli and Jammikunta stations in both the directions.

These special trains will have 18 coaches viz, o­ne AC II Tier, two AC III Tier, seven Sleeper Class, six General Second Class and two Luggage cum Brake Van Coach

Railways to Generate Revenue from High Density Routes 

CHENNAI: Indian Railways is considering introduction of dynamic fares for all classes in all trains on the lines of air fares. The plan was mooted after the success of premium trains and Suvidha though fares were expensive, sometimes touching levels that are just 50% lower than air fares on many of the short routes. 

As passenger traffic has been dipping in the last few years across the country, railways is looking at different ways to generate revenue from passengers on high-density routes. Different suggestions are being mooted by the commercial wing of railway zones because railways has limitations in expanding its network. Passenger earnings went up by 8.5% in April-September period when compared to the corresponding period last year though the number of passengers dipped.

Sources said that railway ministry was discussing two options - introduction of dynamic fares, which will increase and decrease depending on the demand for tickets, and to introduce special fares for tickets booked closer to the departure date. 

An official said that railways was working on different proposals to include in the budget. "The aim is to generate revenue and provide easy access to tickets for a large number of people. Under the current booking system there is duplication of booking wherein people or agents book tickets in multiple number of trains to ensure confirmed berths. Dynamic fares and tweaking of cancellation policy will boost revenue to railways and help genuine travelers." 

A senior railway official said that different options were being considered at different meetings. "A decision will be taken to form a policy only after considering all aspects of a proposal. The premium policy has changed from running premium trains last year to operating Suvidha special trains. This has been a success." 

The experience of Suvidha special trains in Southern Railway and on certain routes in South Western Railway under which Bengaluru falls have been encouraging. The patronage in spite of the cost of tickets showed that people were ready to pay to get a berth on trains. As most of the high density routes, for example Chennai-Madurai and Chennai-Thiruvananthapuram, have huge demand for seats and travelers are not cost conscious. 

"The new cancellation and refund rules may be expensive but are designed to eliminate agents booking tickets. Under the existing practice, agents book tickets on many trains and will cancel and get their refunds after the train departs. Now, the left over tickets will be open for booking under current booking," said an official. 

The half-yearly performance of Indian Railways report for the period April to September this year shows that railways plans to generate 17.8% of the funds from internal resources. The report says that earnings from passenger operations have steadily increased in the last three years, from Rs 18,077 crore in 2013-14 to Rs 23,100 crore this year. 

Officers are encouraged to come up with new ideas. Railways minister Suresh Prabhu has been delegating powers at functional level and meetings of officers of different zones are also being held frequently. 

Source :TImes Of India

why Suvidha Trains,dynamic Pricing Make halt to book tickets

SER keeps fingers crossed on first Suvidha train

Kolkata: Would people want to shell out nearly Rs 9,000 for an AC-II tier ticket from Howrah to Ernakulum? South Eastern Railway (SER) that is running the first ever Suvidha train from this region on August 1, is keeping its fingers crossed. Booking for the train started from Tuesday and till Thursday evening, nearly 17% tickets across all classes had been booked. The early birds, who manage to get the first 20% bookings, will get away by paying only Tatkal fare. Those who book late and fall in the last 20% bracket would have to pay three times the Tatkal fare. For an AC-II tier berth, the fare would come to over Rs 9,000.

It is true that there is a demand for tickets on trains to south India from Kolkata. There are few trains that travel to Kerala. The only other train that will travel via Howrah to Ernakulum on that day is the Guwahati-Trivandrum Express. Confirmed tickets on this train are not readily available as it originates and terminates at Guwahati. While the Guwahati-Trivandrum Express takes over 40 hours to cover the distance, the Suvidha Express will do so in 37 hours. Indian Railways has also promised better amenities on Suvidha Expresses. These trains have replaced the premium trains that used to be run.

“Both Premium and Suvidha trains have dynamic pricing. Last year, a single Premium Special from Howrah to Yeswantpur fetched Rs 42 lakh. The average earning from other premium trains between these stations was Rs 24-25 lakh. We also ran special trains from Howrah to Ernakulum last year. The occupancy rate was between 120-130%. We expect the Suvidha Express to Ernakulum to be popular as well,” said Soumitra Majumdar, chief passenger transportation manager, SER.

The railways seems to be depending on people making their travel plans in the last minute. On Thursday evening, a private airline was offering air tickets from Kolkata to Cochin (the closest airport to Ernakulum) for Rs 5,892. The one-stop flight is scheduled to take 5 hours and 55 minutes. The Suvidha Express to Ernakulum will have one AC-II tier coach, four AC-III tier ones and 12 Sleeper Class compartments and can accommodate 1,166 passengers.

“We also plan to run Suvidha trains between Howrah and Ernakulum on August 8 and August 22. These trains will start from Howrah at 5 pm on Saturdays and reach Ernakulum at 6 am on Mondays. The train will start at 8.50 am from Ernakulum on August 4, August 11 and August 25 (all Tuesdays) and reach Howrah at 11 pm on the following Wednesdays,” said Sanjoy Ghosh, CPRO, SER.

No concessions are allowed on Suvidha trains and even children have to pay full fare. Only confirmed and RAC tickets are issued for such trains. Only 50% of the fare is refunded if tickets are cancelled six hours before the trains departure or preparation of the final chart.

Distance from Howrah to Ernakulum: 2,294 km

Lowest air fare between Kolkata and Cochin on Thursday evening: Rs 5,892

Time taken by flight (with one stop): 5 hours and 55 minutes

Minimum AC II tier fare in Ernakulum Suvidha Express: Rs 3,460

Maximum AC II tier fare in Ernakulum Suvidha Express: Over Rs 9,000

Time taken by Ernakulum Suvidha Express: 37 hours

Railways Decide to Run Suvidha Trains

These Trains will Run at Dynamic Fare System

Ministry of Railways has decided to run Suvidha trains on the following terms & conditions:

Tickets shall be issued only for confirmed and RAC passengers accommodation. There shall be no provision for waiting list in the train.

The maximum Advance Reservation period will be 30 days while the minimum Advance Reservation period will be of 10 days. Zonal Railways may decide the exact ARP for each train within this limit.

No concession shall be applicable on these trains. Full adult fare shall be changed for all passengers irrespective of their age. Also free passes/complimentary passes/warrant/concessional voucher etc. shall not be permitted in these trains.

Apart from e-ticketing the sale of tickets shall also be allowed through PRS counters.

Modification/duplicate ticket/cluster bookings/BPT will not be allowed.

Only General quota bookings will be applicable.

Upgradation option shall not be applicable in these trains.

Passenger should produce one of the prescribed Identity Card during journey for verification purpose for both e-ticket & PRS ticket.

On the basis of demand pattern, Suvidha train services may run during peak seasons like winter rush, summer rush, Dussehara rush, Holi rush and on other occasions as jointly decided by COMs and CCMs of the zonal Railways.

There shall be no First AC/Fist Class/Executive class/general class/2nd sitting coach in the train composition of Suvidha Trains.

Three types of Suvidha Trains services are proposed:-

(1) Fully air-conditioned services with or without stoppages: Base Price: (Rajdhani base fare+Tatkal charges).

(2) Mixed services having no enroute commercial stoppages on mixed Duronto pattern: Base price: (Mixed Duronto base fare+ Tatkal charges).

(3) For mixed services having some stoppages enroute and running as Mail/Express: Base price: (Mail/Express base fare+Tatkal charges).

In addition to above, if demand arises zonal Railways may also plan for fully airconditioned Shatabdi/Double decker type Suvidha Trains with fare of the respective categories of trains as per above.

Suvidha trains will run on dynamic fare system. The Permissible booking pattern and charges thereon of Suvidha Trains will be as under:-

For both AC classes and non AC- classes:-

Charges* (Base fare +Tatkal) 1.5 times of (base fare+tatkal) 2 times of (base fare+tatkal) 2.5 times of (base fare+tatkal) 3 times of (base fare+tatkal)% of seat/ berth 20% 20% 20% 20% 20%

(*Other charges like reservation charge, catering charge, S/F, service tax, etc. will be taken in full wherever applicable)

Vacant berths left at the time of charting will be offered for current booking counters. Tickets at current counters shall be sold at the last price sold for that class and other supplementary charges like reservation fee, superfast charges, catering charges, service tax applicable shall be levied in full.

The information would also be displayed to the passenger during the booking in case the fare of lower class becomes higher than the higher class to exercise option to travel by the higher class.

There shall be no downward movement in the fare.

50% refund of fare subject to minimum flat cancellation charge of rupees one hundred for airconditioned-II tier/first class, rupees ninety for airconditioned III-tier/3 economy/airconditioned chair car and rupees sixty for sleeper class will be granted for confirmed/RAC tickets upto 6 hours before the scheduled departure of the train. No refund of fare after that will be granted. Such refund will be granted by filing TDR in case of e-tickets and in case of PRS counter-ticket across the counter.

The Suvidha train services shall be over and above the normal train services and special trains on Tatkal fares.

The above guidelines will be implemented w.e.f. 01 July 2015.

Source : Business Standard

50% TATKAL TICKETS o­n DYNAMIC PRICING

50% TATKAL TICKETS ON DYNAMIC PRICING IN ANOTHER 16 TRAINS

Ministry of Railways have decided that 50% of the existing tatkal quota tickets shall be sold under dynamic fare scheme. After booking of the first 50% of tatkal tickets under tatkal quota, the subsequent 50% tatkal tickets will be sold o­n dynamic pricing.  The fare shall increase by 20% after each slab of 10% berths are sold subject to the existing cap (maximum fare chargeable) o­n dynamic fare. 

This scheme is further implemented in following trains of Central Railway with immediate effect.  

1. 11005 Dadar - Puducherry Tri-weekly Express

2. 11021 Dadar - Tirunelveli Tri-weekly Express 

3. 11050 Shri Chhatrapati Shahu Maharaj Terminus (Kolahpur) - Ahmedabad Express

4. 11088 Pune - Veraval Express

5. 11090 Pune - Bhagat ki Kothi (Jodhpur) Express

6. 11092 Pune - Bhuj Express

7. 11096 Pune - Ahmedabad Ahimsa Express

8. 12051 Dadar - Karmali Jan Shatabdi Express

9. 12101 Lokmanya Tilak Terminus - Howrah Jnaneshwari Express

10. 12129 Pune - Howrah Azad Hind Express

11. 12809 Chhatrapati Shivaji Terminus Mumbai - Howrah Mail Via - Nagpur

12. 16351 Chhatrapati Shivaji Terminus Mumbai - Nagarcoil Express

13. 16381 Chhatrapati Shivaji Terminus Mumbai - Kanyakumari Express

14. 18029 Lokmanya Tilak Terminus - Shalimar Express

15. 11061 Lokmanya Tilak Terminus - Muzaffarpur Express

16. 11065 Lokmanya Tilak Terminus - Darbhanga Express

This scheme is already in force o­n 15 mail/express trains of Central Railway.

All concerned to please take note of this and avail the scheme

50% of Tatkal Quota tickets Under dynamic fare scheme

50% TATKAL TICKETS ON DYNAMIC PRICING

Ministry of Railways have decided that 50% of the existing tatkal quota tickets shall be sold under dynamic fare scheme. After booking of the first 50% of tatkal tickets under tatkal quota, the subsequent 50% tatkal tickets will be sold o­n dynamic pricing.  The fare shall increase by 20% after each slab of 10% berths are sold subject to the existing cap (maximum fare chargeable) o­n dynamic fare.

As such the scheme is implemented in following 5 trains of Central Railway with effect from 3.10.2014. 

1. 11015 Lokmanya Tilak Terminus-Gorakhpur Kushinagar Express

2. 12534 Chhatrapati Shivaji Terminus-Lucknow Pushpak Express

3. 11093 Chhatrapati Shivaji Terminus-Varanasi Mahangari Express

4. 12141 Chhatrapati Shivaji Terminus-Rajendranagar (Patna) Express

5. 11077 Pune-Jammu Tawi Jhelum Express