12 September 2016

Comments on some of the major issues raised in the print media on the introduction of the Flexi fare scheme:

·It is “surge” pricing

ØIt is not a surge pricing. The scheme is to introduce flexi fare. The proposed scheme is predictable and transparent and the fares remain the same throughout the year irrespective of the fluctuations in the demand side. The purpose of the scheme is to recover partial cost of operations and reduce the element of subsidy from those who have the ability to pay.
·If taxi aggregators are not allowed then why should the Railways be an exception
ØUnlike the taxi aggregators who indulge in surge pricing, this scheme is transparent and predictable with the defined ceiling of 1.4 or 1.5 times with a defined algorithm.
·This scheme will take away rail passengers to other modes of transport
ØTravelling by rail has many advantages and Indian Railways are confident that its customers would continue to patronise rail transport. The Suvidha trains which are already running on dynamic pricing have been a success on many of the existing routes.
·There may be a case where even when 50% berths remained vacant but fare will be 1.5 times higher than the base fare
ØThe demand in these trains is so high that this situation is not likely to arise.
·The Suvidha trains have not been very popular and therefore the flexi fare scheme is not likely to succeed.
ØA total of 1080 trips of 114 Suvidha trains were run in this financial year, out of which 412 trips were run on more than 100% occupancy. Therefore, it is not correct to say that Suvidha trains are not very popular.
·The flexi fare scheme is likely to affect the common man.
ØThe flexi fare scheme has been introduced only on Rajdhani, Shatabdi and Duronto trains which constitute only about 1% of the total trains and 4.4 % of the total Mail/Express trains. The proposed scheme would only impact 0.65% of the total passengers. 99% of the trains which carry 99.35% of our passengers are not impacted by this scheme.
·No facilities have been increased but fares have been raised
ØDespite the financial constraints many new initiatives have been taken for better journey experience. Some of them are as under:

(i)Onboard facilities: 1. Single man responsible for all issues in these trains. 2.Destination SMS alert. 3. SMS alert in case of cancellation of trains.4. Optional catering. 5. Onboard wifi facility. 6. Onboard entertainment system. 7. Cheap insurance. 8. Onboard cleaning. 9. Mechanised laundry. 10. Introduction of modernised (LHB) coaches. 11. Introduction of Clean My Coach facility.

(ii)Station facilities: 1. Wifi facility 2. Escalators 3. Executive lounge 4. Golf Carts 5. Station directors 6. All-India 2 x7 helpline (138) 7. Concierge services at different stations. 8. Water vending machines. 9. Better cleaning at platforms. 10. Faster reservation systems.

·It is an abuse of monopoly
ØIndian Railways is in the business of transport and therefore is not a monopoly as it faces stiff competition from road and air. The argument that it is an abuse of monopoly is not correct because on one hand there is an apprehension expressed that passengers would move away to air and on the other side, railway is being called a monopoly.
·It is on experimental basis and a climb down by the Government
ØPolicy making is a continuous process and review and reform is always a part of this process, every policy is and should be reviewed regularly to take care of the dynamics of the environment and circumstances in which it operates. This policy would also be regularly reviewed.
·Indian Railways has a social obligations and it should not be operated on a profit maximisation motive
ØIndian Railways is a commercial organisation which is always willing to fulfil its social obligations. The purpose of the scheme is to reduce the subsidy component. 99% of the trains are not impacted by the proposed policy.
·There is an urgent need to put a regulator in place
ØThe Railway Minister has already announced the setting up of a Rail Development Authority with a wider scope than mere recommending tariff. The concept note was discussed with all stakeholders and further steps are underway. The flexi fare scheme has been introduced on sound economic rationale.
·Passenger fares are being increased but Rs. 1 lakh crore is being spent on one project on bullet train
ØThe high speed rail between Mumbai and Ahmedabad is a standalone project with a separate funding mechanism and this has no financial impact on the existing network. In fact, the existing network is likely to benefit from better technology, improved maintenance practices and best practices which will come to India from one of the most advanced railway.

·It is “surge” pricing

ØIt is not a surge pricing. The scheme is to introduce flexi fare. The proposed scheme is predictable and transparent and the fares remain the same throughout the year irrespective of the fluctuations in the demand side. The purpose of the scheme is to recover partial cost of operations and reduce the element of subsidy from those who have the ability to pay.
·If taxi aggregators are not allowed then why should the Railways be an exception
ØUnlike the taxi aggregators who indulge in surge pricing, this scheme is transparent and predictable with the defined ceiling of 1.4 or 1.5 times with a defined algorithm.
·This scheme will take away rail passengers to other modes of transport
ØTravelling by rail has many advantages and Indian Railways are confident that its customers would continue to patronise rail transport. The Suvidha trains which are already running on dynamic pricing have been a success on many of the existing routes.
·There may be a case where even when 50% berths remained vacant but fare will be 1.5 times higher than the base fare
ØThe demand in these trains is so high that this situation is not likely to arise.
·The Suvidha trains have not been very popular and therefore the flexi fare scheme is not likely to succeed.
ØA total of 1080 trips of 114 Suvidha trains were run in this financial year, out of which 412 trips were run on more than 100% occupancy. Therefore, it is not correct to say that Suvidha trains are not very popular.
·The flexi fare scheme is likely to affect the common man.
ØThe flexi fare scheme has been introduced only on Rajdhani, Shatabdi and Duronto trains which constitute only about 1% of the total trains and 4.4 % of the total Mail/Express trains. The proposed scheme would only impact 0.65% of the total passengers. 99% of the trains which carry 99.35% of our passengers are not impacted by this scheme.
·No facilities have been increased but fares have been raised
ØDespite the financial constraints many new initiatives have been taken for better journey experience. Some of them are as under:

(i)Onboard facilities: 1. Single man responsible for all issues in these trains. 2.Destination SMS alert. 3. SMS alert in case of cancellation of trains.4. Optional catering. 5. Onboard wifi facility. 6. Onboard entertainment system. 7. Cheap insurance. 8. Onboard cleaning. 9. Mechanised laundry. 10. Introduction of modernised (LHB) coaches. 11. Introduction of Clean My Coach facility.

(ii)Station facilities: 1. Wifi facility 2. Escalators 3. Executive lounge 4. Golf Carts 5. Station directors 6. All-India 2 x7 helpline (138) 7. Concierge services at different stations. 8. Water vending machines. 9. Better cleaning at platforms. 10. Faster reservation systems.

·It is an abuse of monopoly
ØIndian Railways is in the business of transport and therefore is not a monopoly as it faces stiff competition from road and air. The argument that it is an abuse of monopoly is not correct because on one hand there is an apprehension expressed that passengers would move away to air and on the other side, railway is being called a monopoly.
·It is on experimental basis and a climb down by the Government
ØPolicy making is a continuous process and review and reform is always a part of this process, every policy is and should be reviewed regularly to take care of the dynamics of the environment and circumstances in which it operates. This policy would also be regularly reviewed.
·Indian Railways has a social obligations and it should not be operated on a profit maximisation motive
ØIndian Railways is a commercial organisation which is always willing to fulfil its social obligations. The purpose of the scheme is to reduce the subsidy component. 99% of the trains are not impacted by the proposed policy.
·There is an urgent need to put a regulator in place
ØThe Railway Minister has already announced the setting up of a Rail Development Authority with a wider scope than mere recommending tariff. The concept note was discussed with all stakeholders and further steps are underway. The flexi fare scheme has been introduced on sound economic rationale.
·Passenger fares are being increased but Rs. 1 lakh crore is being spent on one project on bullet train
ØThe high speed rail between Mumbai and Ahmedabad is a standalone project with a separate funding mechanism and this has no financial impact on the existing network. In fact, the existing network is likely to benefit from better technology, improved maintenance practices and best practices which will come to India from one of the most advanced railway.

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