Managing train passenger fare levels appears to be as big a problem for the China Railways, similar to that of the Indian Railways.
In India, while the Railway Minister, Mr Dinesh Trivedi, has called for a targeted fare hike, the World Bank experts in China have called for “greater pricing freedom for the China Railways”. In this context, they have suggested some options for the China Railways, which can be of interest to the Indian policymakers as well.
AFFORDABLE FARES
Like in India, China also has the need to maintain affordable train passenger fares. “The affordability of rail passenger fares is naturally an important concern, when the railway system plays an important role in regional and social cohesion as in China,” according to World Bank experts.
In fact, in India's context, Mr Trivedi has talked about having a variable fuel surcharge component in passenger fares. This would have been linked to fuel prices to some extent allowing for periodic revision along with deviations in fuel prices.
But the political compulsion is so high that even attempts of introducing fare hikes ranging from Rs 5 to Rs 37 for every 500 km of rail travel have not been accepted, a highly placed source, who declined to be identified, told Business Line .
Last week, Mr Trivedi said he is in favour of a regulator for the rail sector — something usually resisted by his predecessors for the fear of losing freedom.
One of the options suggested for China is that of a market-based pricing for a percentage of tickets. Such a pricing flexibility matches supply and demand for different market segments resulting in a wider range of fares both below and above the current rates, while the average fare can be kept stable, says the paper titled ‘Railway price regulation in China: Time for rethink'.
Broadly, the paper calls for a ‘defined step-by-step reduction' of the scope of passenger tariffs regulated by the State, applying regulation to only a few specific tariffs with defined terms and conditions.
HIGHER TATKAL CHARGES?
For the Indian Railways, this strategy can be applied particularly in the peak travel periods, when the demand far exceeds the supply.
This can be introduced for the air-conditioned segment travellers, who are the upper-end train users and are also airline users. The airline prices shoot up sharply during these times further increasing the gap between these two modes.
For example, in December 2011-January 2012, the air-conditioned second class train fare for the 1,800 km stretch Delhi-Bhubaneswar segment was about Rs 2,400, while airlines were charging six times the fare for last minute bookings for travel on the same route.
The Indian Railways does have a system of charging a premium on last minute bookings through its Tatkal system, wherein it levies Rs 300 extra. There may be scope for higher or even graded level of Tatkal charges — that go up close to the travel date. This option has been discussed in the Railway Ministry earlier.