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The new luxury train Tejas: Destined for failure?

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Jinesh Jain
Jinesh Jain is a Management Consultant based in Mumbai. He holds diverse interests across Politics, Sports and Business. He sometimes tweets at @jineshkrjain
 

Indian Railways is the largest rail network in Asia and the world’s second largest network operated under a single management. It is also the eighth largest employer in the world with about 1.4 million staff.

An organization of this size and of high importance to massive Indian population has not really evolved as expected and a tweet posted by me on 26th Apr 2017 summarizes the core issue related to disproportionate growth of railway traffic and infrastructure since independence.

Mr. Suresh Prabhu, the Hon. Railway Minister of India, is a man with the mission to change this equation. He is relentlessly working to overhaul Indian railways with several ambitious programs such as infrastructure improvement, digitization of supply chain, faster booking of train tickets, Clean My Coach service, stations redevelopment, free wi-fi at stations, etc.

The latest feather in his cap is the launch of Tejas, a luxury train between Mumbai and Goa (Karmali). This boasts of several modern facilities such as superior seats, infotainment screens, GPS based information systems, special food menu, tea/coffee vending machines, CCTV cameras, smoke and fire detection systems, etc.

Tejas (meaning lustre or brilliance) certainly appears to be a finely knitted offering which will phenomenally improve the train travel experience but will this necessarily become a commercial success for Indian Railways?

Let’s compare the travel fares

    • A one-way executive class ticket from Mumbai to Goa in Tejas would cost anywhere between INR 2,585-3,090. This could go up to INR 3,460 for a Tatkal ticket
    • The 2AC class ticket in another Mumbai to Goa train Konkan Kanya express is INR 1,480 and in Jan Shatabdi chair car, it is INR 980
    • The prevailing air ticket price for economy class on the same route for the most dates in June is as low as INR 1,688 (the cost has been taken from one of the leading travel portal and it is an all inclusive cost for a no frill seat)
    • Evaluating different options, a round trip to Goa for a family of four would cost as below:
      Travel Option Apx. Round Trip Cost (INR)
      Tejas – Executive Class 21,000-27,000
      Other Trains – AC Class 8,000-12,000
      Air Travel – Economy Class 12,000-18,000
      Taxi* 10,000-16000
      Own Car 7,500-10,000
       

      *Apx 600 KMs distance one-way, costing anywhere between INR 9-13/KM.

Clearly, the fully loaded executive class travel of Tejas would be the costliest option, unless someone tries to book air travel at the eleventh hour or books for a peak holiday season. Does premium pricing work for Indian Railways?

In 2014, Premium trains were started on certain routes to provide assured booking directly to passengers (agents not allowed and only e-tickets booking) at an ever increasing dynamic price. Under the surge pricing scheme, the fares increased with every 10% of the tickets sold in Rajdhani, Duronto and Shatabdi trains. In some cases, the fares were as high as 50% of the base fare on routes such as Goa, Mumbai and Kochi. However, this model did not click with the price conscious Indian travelers. While the other trains were running fully packed, with long waiting lists, the Premium trains were running at 30% occupancy levels.

 

People, who could afford the higher fare, switched to air travel as the tickets to such destinations are often available at prices as low as INR 2,000-3,000. Mr. Prabhu has himself conceded in the past, “Railways is losing high-end traffic to air and low-end passenger traffic to roads.”

Then came in Suvidha trains, which were started to clear holidays and festival rush at a higher price. This also failed to significantly impress the travelers and resulted in about 1.5 lakhs vacant berths per day during lean season. To cover up this deficit, an Alternate train accommodation scheme (ATAS), which is also known as Vikalap Scheme, was launched in beginning April 2017.

Describing the scheme as “passenger friendly”, Prabhu said, “Some of our premier trains run with vacant berths at times and we hope those can be filled up through scaling up Vikalp scheme. It is for the passengers’ benefit.” This scheme aims to optionally allot waitlisted passengers of other trains into the next premier and special service, without any extra cost.

Tejas may not shine

The point is very clear– Indian Railways has not been successful in the premium pricing segment yet. It is more of an affordable travel medium for masses. People will either not travel or will switch to other modes of transport rather than paying a premium to Railways.

It will be a big mistake to get carried away by the initial euphoria in booking for the inaugural run. Generally, anything above INR 2,000 fare does not seem to work for the train travel, no matter how superior the services and amenities are. Even Airlines resort to discount sales, cashbacks and bonus air miles to clear inventory during the lean seasons and high occupancy is observed only when the fare is in acceptable limits. This is a harsh reality– the sooner Indian Railways accept this, the better it would be.

I personally make multiple long distance train trips every year and would be extremely happy if Tejas succeeds commercially and proves me wrong!

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Jinesh Jain
Jinesh Jain is a Management Consultant based in Mumbai. He holds diverse interests across Politics, Sports and Business. He sometimes tweets at @jineshkrjain

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