Diwali gift for passengers: Railways scraps flexi-fare in some trains, reduces fares in others

In a relief for passengers, the railways has scrapped flexi-fare in 15 premium trains in which the occupancy is less than 50% throughout the year, while the scheme will be discontinued in 32 other trains during lean periods when occupancy dips to 50-75%.

The step comes in the wake of the Comptroller and Auditor General (CAG) report in July that had flagged the dipping occupancy level since the scheme was introduced in September 2016 and had recommended rationalisation of flexi-fare. Sources in the railways also said that while the national transporter will incur losses of around Rs 103 crore due the changes brought into the scheme, it hopes to recover not just the losses but also generate additional revenue by increasing occupancy through the reduced fares. The sources said that a 15-% jump in occupancy of the 15 trains in which flexi-fare is being scrapped will compensate for an estimated loss of around Rs 22.41 crore because of the changes.

An increase of 30% occupancy in the 32 trains where the scheme is being discontinued during lean periods (February, March and August) will lead to recovery of losses of an estimated Rs 40 crore, the sources said. Any further increase in occupancy will lead to additional revenue, they said. The railways has also reduced flexi-fares from 1.5 to 1.4 times the base ticket fare in 101 trains, Railway Minister Piyush Goyal said Wednesday.

Doing this will lead to a loss of Rs 40 crore for the national transporter, the sources said. "The plan is that rationalising fares would lead to increase in occupancy which in turn would ultimately lead to increase in revenue," a source said. Some trains in which the scheme will be discontinued because of low occupancy include Kalka-New Delhi Shatabdi, Howrah-Puri Shatabdi, Chennai-Madurai Duronto, Guwahati-Dibrugarh Shatabdi, New Delhi-Bhatinda Shatabdi.

The trains in which flexi-fares will not be applicable during lean periods include Amritsar Shatabdi, Indore Duronto, Jaipur Duronto, Mumbai Duronto, Bilaspur Rajdhani, Kathgodam-Anandvihar Shatabdi, and Ranchi Rajdhani among others. On September 9, 2016, the railways had introduced flexi-fare for premier trains: 44 Rajdhani, 52 Duronto and 46 Shatabdi.

Under this, the base fare increases by 10% with every 10% of berths sold, subject to a prescribed limit. There was no change in the existing fare for first AC and economy class. "As a gift to passengers this festive season, Railways has decided to reduce Flexi Fares from 1.5 to 1.4 times the base ticket fare, and to completely remove Flexi Fares from trains with less than 50% occupancy," the minister tweeted. "Win-Win Situation: The reduction of Flexi Fares is going to benefit both the passengers that can now avail tickets at cheaper rates, as well the Railways that will see a surge in demand and occupancy," he said.

The railways will, however, continue to apply flexi-fare in 101 trains in which the average monthly occupancy through the year is more than 75%, the source said. The railways will also offer graded discount in fares for all classes of current fexi-fare trains with occupancy less than 60%, four days prior to scheduled departure from originating stations. For up to 70% occupancy, the discount will be 20% on last fare, from 70-80% occupancy, the discount will be 10% on last fare, the source said. On an average, sale of 10% of vacant berths will yield around Rs 55 crore for railways, the source said.

The changes will be implemented from advance reservation period on an experimental basis for six months to be further extended after assessing the outcome, the source said. In July this year, the CAG in its report tabled in Parliament highlighted that tickets on the Indian Railways' premium trains were much higher as compared to airfares.

It stated that while the introduction of the flexi-fare system in premium trains -- Rajdhani, Shatabdi and Duronto -- has led to increase in passenger earnings in this category of trains to Rs 552 crore, they have carried 6.75 lakh fewer travellers during the period between September 9, 2016 and July 31, 2017, compared to the corresponding period in 2015-2016. In terms of absolute numbers, the premier trains carried 2.40 crore passengers during post-flexi fare period (September 9, 2016 to July 31, 2017) as compared to 2.47 crore passengers during pre-flexi fare period (September 9, 2015 to July 31, 2016), said the CAG in its report.