The Indian Railways will introduce flexi-fares on Rajdhani, Duronto and Shatabdi trains from this Friday. Under a demand-driven formula, fares on these trains in the higher classes can go up by a maximum of 1.5 times the base fare.
The flexi fares will not cover 1AC and Executive Class, which means they will be applicable to 2AC, 3AC, Sleeper Class (and Sleeper Sitting) and Chair Car (in Shatabdi).
Passengers travelling by Rajdhani, Shatadbi and Duronto trains will have to shell out between 10 and 50 per cent more under a dynamic surge pricing system to be introduced from September 9, aimed at raking in Rs 500 crore more during the current financial year.
While 10 per cent of the seats will be sold in the normal fare in the beginning, it will go on increasing by 10 per cent with every 10 per cent of berths sold with a ceiling of 50 per cent.
The formula essentially means that the longer you wait to book tickets, the higher the risk of fares going up.
The total seats available have been split into buckets of 10 per cent each and the fare will creep up for every segment.
Those who buy the first bucket of 10 per cent seats will get their seats at the base fare while those who buy in the next bucket of 10 per cent seats will face an increase of 1.1 times the base fare. The fare jump for each segment of 10 per cent seats will go on till the last bucket of seats, which will sell at the maximum price. (See chart)
The following are indicative, not exact, train fares to illustrate how the rail surge pricing works. In the illustration below, an imaginary bogey with 100 seats are shown. For easy comprehension, 10 per cent of the seats are divided into a segment of 10 seats each and the fare in each segment given below. The fares do not include service tax.
The fare can go up to 1.5 times in the case of all applicable classes, except 3AC where the maximum permissible rate will be 1.4 times the base fare.
Those who have already bought tickets for journeys later this year will be exempt from the surge prices. "In the case of tickets already issued at pre-revised rates, the difference of fare shall not be collected from the passengers," the railway ministry said in a statement.
The increase is on the base fare of the class and there is no change in other supplementary fees like reservation charges and superfast charge. These charges will be levied separately, officials clarified.
Normal concessions for those eligible will apply at each bucket stage. For instance, senior citizens will have to pay the higher fare if they buy in the higher buckets but their ticket price will be lower by the concession rate.
Tatkal quota will remain for trains that have such a facility but no Tatkal surcharge will be levied from Friday. There will be no Premium Tatkal quota on these trains. Tickets under current booking will be offered at the last price sold for that class.
The rail surge pricing (officials prefer the phrase "flexi fares", not the more eloquent "surge pricing") is still far lower than that of airlines.
Under surge pricing, a Rajdhani trip from Delhi to Howrah can cost at the most a little over Rs 4,000, including the additional charges, in 2AC. But an economy class seat on a plane from Delhi to Calcutta can surge up to Rs 17,156 some days. But a cheapest plane ticket can sometimes be lower than the Rajdhani 2AC base fare of Rs 2,417.
Airlines have been using surge pricing without always calling it so. The phrase gained currency with the advent of app-based cabs, though some companies have stopped using the word "surge".
Airline fares are divided into several brackets approved by the watchdog. However, the number of seats in a particular fare bracket is not made public. It is believed that if demand surges, the lower-bracket seats are nudged into the higher brackets and sold. If the demand goes down, the higher bracket seats are pushed to the lower segment and sold.
Opposition parties termed the rail pricing policy "anti-people" while reaction was mixed in the travel industry.
Robin Pathak, former Indian Airlines director said: "The railways are too late. Now airlines are selling tickets at rates lower than that of 2AC on certain flights on certain days. Executive class trains will get a run for their money, except in the case of last-minute travel."
However, Krishnalekha Ghosh, managing director of Globe Travels, said: "The fact is that railways will continue to draw passengers in peak season as there are just too many people travelling on the domestic circuit."
Unethical travel agents hoarding seats and passing them on to passengers willing to break the law and travel under fake names will also feel the pinch as they will have to pay more.