No dynamism here

The proposal of the Railways to introduce a dynamic pricing model on Shatabdi, Rajdhani and Duronto trains is not a well-thought out one and it is just as well that the public monopoly service provider has clarified that it is an experimental move that will be reviewed after three months. All that the dynamic pricing experiment will end up doing is drive upper class passengers to airlines as the fare difference between the two modes of transport will turn either non-existent or minor. And what’s the projected gain for the Railways? A piffling ₹500 crore in terms of incremental revenues this fiscal. You don’t need a financial analyst to tell you that the cost-benefit equation here is unfavourable to the Railways. To be sure, the problem is not with the concept of dynamic pricing itself but with its application in a market where the service provider is a monopoly and where after a tipping point in fares, consumers have a superior alternative. Dynamic fares in airlines work because flying is the only option for someone who places a premium on comfort and time.

The desperation of the Railways to increase passenger revenues is understandable though. It is a fact that passenger fares are ridiculously under-priced, especially in suburban commuter trains. There is no relation whatsoever between the ticket price and the cost of service. Yet, dynamic pricing cannot be the solution to this problem. The answer is to rationalise fares across the board to reflect the cost of service. If the strongest government in recent times with absolute majority in the Lok Sabha cannot display the political will to carry out this reform, which other government can? In fact, it is time that the bluff is called on the issue of rail fares being ‘politically sensitive’. The fact is that passengers, whether long-distance travellers or commuters, do not hesitate to pay a higher price for road travel through private buses or taxis but protest when rail fares are raised. The problem then has to be with the quality of service rather than with the price. It is instructive to note here that commuters who enjoy subsidised prices on suburban trains willingly pay a premium on metro rail trains, which are also a form of commuter transport.

It is high time that a regulatory authority for rail tariffs is constituted. This will not only infuse transparency in a monopoly set-up but also make it easier for tariff revisions to be carried out as such a body will not be seen as a part of the government. The Railways should also think in terms of evolving a structure for targeted delivery of subsidised fares to those who deserve it. Such a step will make it easier to rationalise fares across the board and also sell it politically.

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