Seven ways Suresh Prabhu's surge pricing can hurt you
The surge pricing for railway tickets - just the premium trains such as the Rajdhani, Durontos and Shatabdis for now is really only a fare hike by another name and is likely to have several hidden implications, said insiders in the rail travel industry. While it is likely to accentuate the role played by touts, its tradeoff with airfares could go either way, they said. Passengers may desert rail travel if the cost differential with air tickets is not too much, and airlines may jack up their fares to feast on the migrating demand, sources said.
The Railways’ move to implement surge pricing is sure to have a ripple effect on airline and long-distance bus travel and make it open season for touts
What future for air fares?
Surge pricing is certain to alter the balance of competition between the railways and airlines. Already, on some routes, airfares work out cheaper than rail tickets (if the former are booked early). This is likely to shift decisively in favour of airlines. Surge pricing will promote migration of passengers to air travel, particularly no-frills airlines. The existing ticket price on the Rajdhani from Bhubaneswar to New Delhi by Second AC is C3280. It is C3310 by Duronto. With surge prices coming into play, these prices will be higher than the cheapest airline fare, which is around C3350. Naturally, with demand increasing, airlines may duly jack up their fares, so would interstate luxury bus operators.
Lower class fares higher
Surge prices open up the possibility that the actual cost of lower class train tickets may end up higher than fares for the higher class, what with first class and executive class travel rates being untouched. The railways acknowledged this the day they announced the surge pricing policy. The online booking interface will prompt the traveller in case the ticket he is trying to buy is cheaper than first class travel and offer him the option to upgrade. At any rate, the railways’ first class travel options are likely to lose out to airlines for comfort travellers.
Surge goes only one way
Passenger associations are up in arms over surge pricing of railway tickets. Effectively, only 10 per cent of the seats will be available at the base rate and passengers have to pay more for the remaining seats even if seats remain unsold finally, said P Krishnakumar, general secretary of the Railway Passengers Association, Thrissur. Passenger organisations say surge pricing is effectively just a ploy to raise fares for 90 per cent of the berths. The fare hike for 90 per cent of the seats in fact ranges from 10 per cent to 50 per cent even if some seats are unsold in the final analysis. Seen thus, this is the steepest fare hike in the Railways’ history. The surge fares go only one way and do not fall if the final lot of seats are not taken.
Tour operators say the biggest problem with the surge pricing system is the endemic lack of transparency. “There was no transparency in the flexi-fare system when airlines introduced it. The same will apply to railways. There is no transparency about seat availability and the booking system,” said Benjamin Simon, a leading tour operator of Odisha. What the flexi-fare system does, Simon said, is it milks the desperation of the traveller. However, while airlines used cheap fares to lure passengers and build demand, the railways are using it only to profit from demand.
The present booking system does leave a window open for corruption by ticket examiners and booking clerks. This is likely to get sharper under surge pricing. Vacancies, if they exist, may benefit TTEs who take a huge cut during on-the-spot booking in trains. All one has to do is get a general ticket and bypass the surge prices by paying off the ticket examiner. In Kerala, sources in the Railway Protection Force said reservation supervisors receive a cut of C30 per head on every ticket they set aside for unauthorised procurement by touts.
ID fraud: Is that really you?
While passengers do have to furnish their ID proof, checking is often lax. While officials say most passengers would balk at travelling under fake IDs, ticket examiners are usually lenient. This gives a free rein to touts. Some agents in Bengaluru said they create fake ID cards which they hand over to the buyer.
Travel agents say surge pricing is likely to make the railway ticket tout the happiest guy around. Already active, he is likely to feast upon the official premium (10-50 per cent) charged by the Railways on all but the first 10 per cent of berths available. Currently, touts manipulate the online booking system by paying a cut to booking clerks and using fake names. Using the same methods, they can now corner the first 10 per cent of berths and sell them for the surge premium or higher. A tout at the Nampally railway station in Hyderabad said he is confident he can operate within the new system. He currently charges a 42 per cent premium. “I have an arrangement with clerks at the ticket reservation counter,” he said. One agent in Bengaluru said he currently charges a premium of C50 per ticket. Under surge pricing, he said he might be able to extract C100 or C150.