Indian Railways – Should Railway’s opt for Penalties too??

          As per recent news articles, Indian Railways will unveil a new dynamic pricing policy by 31^st December, 2017.

          As of now, three zones have made presentations to Shri Piyush Goyal, Indian Railways Minister on ways and means to boost revenues from passenger traffic.

Three railway zones--the Eastern, the Western and the West Central--have prepared presentations suggesting ways to introduce dynamic-pricing.

          The common theme from the 3 Railways Zones is the introduction of Dynamic Pricing on a wide variety of passenger facilities.

          The highlights of the recommendations are as under:-

1.     The zones have suggested that passengers be offered discounts on trains reaching destination at inconvenient times, for example between midnight to 4 am, and between 1 in the afternoon and 5 in the evening.

2.    The Railway zones have also suggested that 10 to 30 per cent discount be offered for first leg as well as the last leg vacant berth.

3.    The zones have also proposed that the railways go for premium charges (10 to 20 per cent additional) for peak days and festival seasons. To leverage higher passenger volume on weekends as well as during festivals such as Diwali, Durga Puja, Chhath and Christmas, the railways might charge you more.These periods could be earmarked for additional charges, the presentations suggest.

4.    The zones also suggested that passengers be asked to pay extra for choosing high speed trains over others on the same route. The additional amount could be charged on per hour basis depending on the time a passenger saved while travelling in the faster train, the zones have suggested.

5.    They have also recommended premium charges for overnight trains, trains with pantry cars, for allowing confirmed booking through e-auction a week in advance on popular trains.

6.    The railway zones suggested differential pricing for preferred berths such as inside lower ones, cabins near doors on either side.

7.    There was also a proposal of an upgradation fee of Rs. 20 per berth.

8.    There could be a discount for choosing a less popular route or train or the one with no pantry services.

Key Points from Eastern Zone Presentation:-

Eastern Railway was formed on 14th April, 1952 by integration of the East Indian Railway consisting of Sealdah, Howrah, Asansol and Danapur Divisions and the entire Bengal Nagpur Railway.

States served : West Bengal, Bihar, Jharkhand

No. of Divisions : 4 [Sealdah, Howrah, Asansol & Malda]

Route kilometres : 2644  [West Bengal-1961, Bihar-251, Jharkhand-468

Number of Slides in the Presentation: 17

Title of the Presentation: Introduction of Dynamic Pricing- Premium and Discount - Depending on Prevailing Market Situation.

Key Recommendation 01) Each industry develops its own version of Dynamic Pricing. Needs to be IT based for quick on time response and consistency.

Key Recommendation 02) The trains on IR can be divided into three categories based on passenger amenities, punctuality and catering services-

·       Super Premium Trains

·       Premium Trains

·       Non-Premium Trains

Key Recommendation 03) A whole year can be divided into Peak, Non-Peak, and Slack seasons depending upon vacations, festivals, marriage, exam seasons etc.

Dynamic pricing for Super-Premium trains in Peak seasons should have steep hike and for Non-Peak season, the hike should be very minimal , discounted fares in  Slack season.

For Premium trains, in peak season the dynamic pricing should have gentle increase in fare. In non-peak/slack season, the dynamic pricing should have base rates along with optional discounted fare.

For non-premium trains, in peak seasons, the dynamic pricing should have a very gentle upward slope whereas in non-peak seasons, there should be deep discounted fare in place.

Key Points from Western Zone Presentation:-

Western Railway in its present form came into existence on 5th November, 1951 by the merger of its forerunner, the erstwhile Bombay, Baroda and Central India Railway (BB&CI), with other State Railways viz, Saurashtra, Rajputana and Jaipur.

Number of Divisions       : Six

States served            : Maharashtra, Gujarat, Madhya Pradesh &  Rajasthan

Number of Slides in the Presentation: 08

Title of the Presentation: INTRODUCING DYNAMIC PRICING – PREMIUM AND DISCOUNT

Key Recommendation 01) TO WIN BACK THE LOST TRAFFIC   AND MAXIMISE EARNINGS.  DEVELOP A WORKABLE MODEL TOWARDS THE ABOVE

Key Recommendation 02) ONLY THE MARKET FORCES, i.e., THE DEMAND-SUPPLY EQUATION FACTORS IN ALL POSSIBLE VARIABLES.

HENCE THE MODEL SHOULD BE HIGHLY ELASTIC - DEMAND BASED LINKED TO BOTH TIME AND UNITS AVAILABLE

Key Recommendation 03) THE ALGORITHM SHOULD ALSO FACTOR IN THE PREVAILING PRICE OF RENOWNED CARRIERS

Key Points from West Central Zone Presentation:-

The West Central Railway with its headquarters at Jabalpur comprises of Jabalpur and Bhopal divisions of erstwhile Central Railway and Kota division of erstwhile Western Railway. The formal gazette notification announcing the formation of this new zonal railway was issued on 4th July 2002 by the Ministry of Railway, Govt. of India.

Number of Slides in the Presentation: 20

Title of the Presentation: Dynamic Pricing with Premium and Discount Based on Prevailing Market Situation

Key Recommendation 01) A) Premium charges for Peak Days/festival Season

 B) Premium charges for preferred less time taking trains between same O-D Points on Similar Routes / Alternate Routes

 C) Discounts on trains reaching destination at inconvenient time

 D) Graded discount (10-30%) for first leg /last leg vacant berths, e.g.

Durg-Bhopal Amarkantak Exp between Jabalpur-Bhopal-450 Last leg

Somnath-Jabalpur Somnath Exp. between Bhopal- Jabalpur- 400 Last leg

New Delhi –HBJ Shatabdi exp between Jhansi - Bhopal—100 Last leg

Key Recommendation 02) A) Discount on Vacant berths in less patronized trains 24 hrs before scheduled departure till final charting (10-20%)

B)  Premium for allowing confirmed booking through  e-auction one week in advance on popular trains

Key Recommendation 03) Freight Traffic

A)   Containerisation

B)   On under utilised routes -  e.g. Maksi-Guna-Gwalior-Etawah (550 km) where traffic is very less and is being electrified.           Freight concession on distance basis (deflated charges) for booking via this route can be allowed to effectively utilise this route and decongest other busy routes

C)   Decongestion of busy unloading terminals/ Incentivising PFTs and underutilised nearby terminals

D)   Imposition of 10 to 15 % busy terminal surcharge at congested terminal which remains perpetually under restriction. Customers wanting to book their goods to busy /         restricted terminals should have flexibility to unload           at nearby terminals (within 100 km) subject to           charging on actuals

It would be wonderful if the Railway Minister opts for Automatic penalties too.

This would encourage passengers to embrace Dynamic Pricing without much protest

Of course, the penalties clause will only for passengers who buy tickets through Dynamic Pricing

Let us wait and watch