Indian Railways flexi fare system slammed; CAG says passengers quitting trains

Indian Railways flexi fare system was slammed by the CAG who said the transporter's premium trains have lost passengers and they are being 'forced' to take to the skies instead.

The Comptroller and Auditor General of India (CAG) report for the year ending March 2017 pulled up the Indian Railways saying it may have earned a lot more revenue from the flexi fare system, but then pointed out that the number of people actually taking these trains have plummeted. This pointed to a disastrous future if the trend continues. The flexi-fare system was introduced in premium trains like Rajdhani Express, Shatabdi Express and Duronto. Passenger earnings in this category of trains increased to Rs 552 crore, but these trains carried 6.75 lakh fewer passengers during September 9, 2016 to July 31, 2017 period, compared to the corresponding period in 2015-2016.

The CAG report said, "Wherever dynamic/enhanced fare was introduced, the occupancy was very low. However, this aspect was not taken into consideration while introducing the flexi fare system in all Rajdhani, Duronto and Shatabdi trains irrespective of demand and occupancy."

It added, "Even in AC 3 class, which was one of the most profitable classes, the occupancy dropped significantly after the introduction of flexi fare and the vacant berths increased from 0.66 per cent in pre-flexi period to 4.46 per cent in post-flexi period."

The end result was that these premier trains carried 2.40 crore passengers during the period (September 9, 2016 to July 31, 2017) as compared to 2.47 crore passengers during previous period (September 9, 2015 to July 31, 2016). 

That the Railways passengers were voting with their feet as far as the flexi-fare system was concerned is clear from the fact that "The occupancy of mail and express trains in the routes of premium trains run was found to be much more than the premium trains during the months test checked (October 2016 and February 2017). As such, passengers preferred to travel by mail and express trains over Rajdhani, Shatabdi and Duronto trains despite a higher travel time".

And indicating that the scheme was a dud, the report said that a comparison with airfare for 13 sectors indicated that flying was cheaper than taking a train on many of these routes when compared to the cost and time taken.

It said, "While in airfares the prices of tickets increase with increase in demand, in flexi fare, there is a fixed increase in fares after every 10 per cent of the tickets booked irrespective of the demand. By paying a higher price for an air ticket, a passenger is ensured a confirmed seat, but a passenger who purchases a waitlisted train ticket by paying a higher amount does not have an assurance of confirmed ticket. 

Thus, charging a higher fare without providing confirmed seat/berth would force passengers to explore other available alternatives".

Worst of all, CAG added that, the introduction of flexi-fare system did not lead to punctuality of trains improving.

Flexi fare structure in Rajdhani, Duronto and Shatabdi trains was first raised in August 2016 in order to generate additional revenue of Rs 5,800 crore in passenger earnings. 

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Indian Railways picked the Rajdhani, Duronto and Shatabdi trains as they had a high average occupancy and contributed about 12 per cent of total Passenger Reservation System (PRS) earnings. The flexi fare system can lead to a 50 per cent increase in base fares.