Railways witnesses jump in premium class travel

Bitten by the travel bug in the year-end holiday season, many more people took to the most premium and priciest segment in trains — the first class air conditioned coaches. December 2017 saw a near 16 per cent surge in AC 1st class passengers with an additional 35,658 using the train compared to the year before.

The AC-2 tier segment, which is cheaper and relatively less spacious than AC-1, didn’t remain untouched by the travel euphoria triggered by the Christmas and New Year holidays. It clocked a seven per cent jump in the number of passengers with an additional 55,437 people travelling in the month compared to December 2016.

However, it was the AC-3 tier segment that witnessed the maximum uptick in absolute numbers and moved an extra 8.56 lakh people over the same period last year, reflecting a 12 per cent growth. The incremental rail passengers in AC 3-tier were over three times the incremental passengers that moved in AC1 and AC2 segments combined. The growth does not just reflect the demand, but also the supply of higher capacity coaches, with Railways increasing the share of AC-3-tier segment.

Moreover, this is also the segment that is most profitable for the Railways. The Railways has been focusing on AC-3 tier segment, which does not compete with the airlines in price terms. The share of AC-3 segment has grown, with Railways also planning to run more of Humsafar trains – which have all AC-3-tier coaches. “The Railways plans to increase its focus on AC-3 tier segment,” Ashwani Lohani, Chairman, Railway Board, told BusinessLine recently.

That the growth in the premium segment in the year-end was buoyed by holidays is corroborated by two more factors. One, flights have registered a 17.69 per cent growth in the domestic segment flying about seven lakh extra passengers. Second, another holiday season in October, which had the festivals of Dussehra and Diwali, has seen a similar uptick. It was a peak travel month when an extra 41,199 passengers took to the lavish AC-1 train coaches. Even in AC 2-tier, an additional 3.56 lakh people got on to the coaches, reflecting 19.53 per cent growth.

The comparable growth numbers in November and September were not as high in the AC-1 segment. September actually witnessed a three per cent drop in passenger segment in the AC-2 tier. In November and September, about 2,000 odd people used the AC 1 coaches, pretty much at the same level as the previous year.

However the growth numbers in AC-3 tier, which owing to lower fares doesn’t compete with flights, largely defy the holiday boom. Despite a much higher base, the AC 3-tier clocked a whopping 24 per cent growth in October (incremental passengers numbering 14.73 lakh) followed by 17 per cent in November (over 11.66 lakh additional people). September was an exception and saw a flat growth (13,900 people, reflecting 0.18 per cent growth).

The government reckons that part of this growth could have come as Railways slashed prices in select trains through dynamic pricing, where ticket prices are linked to occupancy levels, a method commonly used by airlines. The Railway Ministry said in Parliament in the last session that it introduced some discounts that include a 10 per cent rebate in basic fare on vacant berths or seats after preparation of first chart in Rajdhani, Shatabdi and Duronto trains. It has also lowered the number of berths available under Tatkal quota from 30 per cent to 10 per cent.

Passengers, however, want even lower fares when the trains are empty, according to an online poll conducted by LocalCircles, an online survey agency.

Asked about the stiff competition AC-2 tier segments are facing from airlines, given their comparable fares on many routes, Lohani said, “A committee of experts has suggested a rejig of the dynamic pricing, on which a final decision is likely by the end of January or early February.”

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