(The opinions given below are entirely those of the
correspondent and are not the official Railway take on the subject)
THEN:
Three years ago Indian Aviation Industry saw the emergence of the low
cost airlines pioneered by the intrepid Captain Gopinath and his Air
Deccan. (I have had the honour of interacting with him when he as a
pilot would come to file his flight plans at IGI Airport where I was in
my initial years as an Aerodrome officer, in the early nineties.) The
airlines’ fares were carefully fixed to be just above the AC2 Tier fares
of the Railways. Soon AirDeccan was joined by several new airlines along
the same lines, and even the established players started the trend of
offering reduced fares .The industry boomed. Air travel was suddenly
within the grasp of the middle class and even those below.
DOOMSAYERS
rang what they believed was the
death-knell of the railway passenger
business. The Ist
AC class is dead,
they averred. The IInd AC class may last another 2 years. Soon railways
will be all sleeper class and general compartments, and will have to
survive on the freight business alone. The predictions were as numerous
as they were negative.
BUT TODAY:
Almost without exception, the airlines are making huge losses. Yes, most
are operating at very satisfactory occupancies. Yes, more people
than ever are flocking to the airlines. Yes, the airports are today so
congested that they will give a run for the money to any overcrowded
railway station in the country. True, there are no vacant seats in the
flights in most of the major sectors, .But-- the balance sheets speak
for themselves…..
And the Railways? The Railways have generated
a surplus of over Rs 25,000 crores last year, the best ever performance
in its 153 year history! The freight business grew by over 12 % to
nearly 700 million tonnes and the passenger traffic itself grew by over
8-10 percent. The upper classes, alleged to be under threat from the
airlines, themselves grew by the same margins! The Honourable Minister
for Railways has achieved international acclaim as the CEO to emulate,
being invited to deliver keynote address at IIM-A and prompting
Wharton/Yale to send students to study from the Indian railways.
HOW?
The doomsday soothsayers forgot to take into account several things:
One, the
Railways, passenger business has always been a loss making proposition,
overall. While there is profit from the IAC, IIAC, AC Chair Cars and the
Executive classes, these classes make up less than 0.5% of the total
accommodation on the Indian Railways. The huge bulk of the 15 million
people carried daily by the Railways are in the General and Mumbai
suburban segments, which are charging the passengers less than one tenth
of the haulage costs incurred by the Railways. Traditionally the freight
business has always subsidized the passenger business, as there were
always other (mostly non-business ) compulsions to keep the passenger
fares low. Indian Railways have the lowest fares in the world. And will
continue to be so for quite some time. Diversion of a few upper class
passengers to the newly emerging airline market was not going to make
much of a difference to the overall picture.
Two, The
entire economy was on an upswing. More and more new businesses were
being set up, existing ones enlarging, branching out, new avenues
opening up , the country side getting connected like never before, and
more people than ever were traveling! Meaning, there plenty to go
around. The travel market itself has almost doubled over the last 5
years.
Three,
The fact was, in reality only about 2-5% of the much vaunted airline
low-cost tickets were at the 1rupee-500 rupee levels. Another few were
at higher but significantly low fares. The majority of the seats were as
costly as the railway IAC or even higher. The passengers realized this
soon enough. Still the lure of getting cheap tickets continues to bring
them to the airports. Which is indeed a good thing.
Four,
soon enough, the flip side of keeping all costs low by keeping margins
wafer thin and spares too low began to tell , with long delays on
connections/links not being met and passengers getting increasingly
disillusioned. They were already talking about the sheer
convenience of Railways, the multiple options, the flexibility. Even if
one train is full or delayed, there is another on the same route, at the
same cost, in an hour! And you just can’t beat the way you can stretch
out in a railway coach, chat with your co-passengers, live a bit, relax
and enjoy the journey. For families, there was no other choice or need.
Five,
Meanwhile, the Railways were not exactly idling in the face of the new
threat. They first did what they are best at. Improved operations. In
the freight sector, wastages were cut, terminal improvements were made
in order to increase the efficiencies, speeds were improved, and
accounting procedures were streamlined. The Railways have a huge
think-tank, a brains trust consisting of thousands of engineers and
experts who know very well what is wrong in the system, where it’s wrong
and what is to be done to correct it. They just need to be allowed to do
the needful. In this case, they were. And they did!
Railways introduced the automatic up gradation
scheme, where, passengers from lower classes move upwards in the
accommodation( at no extra cost) at the time of charting, so as to
ensure 100% occupancies. They introduced the loyalty program for Rail
passengers in the upper classes, where as much as 10% of the fare gets
credited in the members account, to be accumulated and encashed for free
tickets later. They introduced the Internet Ticketing (much before the
airlines did, by the way) which took away a lot of the initial
inconvenience of the purchase process. The railways e-ticketing website,
www.irctc.co.in, is today the biggest e-commerce(B2C) website in
Asia Pacific with over 4 crore rupees of daily business with more than
25000 transactions every day. They enabled tickets to be booked over
cyber cafes, mobile phones, travel agents, and even petrol bunks. They
ran more specials and tourist trains , and added more extra coaches
than ever .Dozens of modern Food Courts are being set up all over the
Railways to provide better ambiences and conveniences; a hundred budget
hotels are being set up through PPP( public – private participation) in
all the major railway stations, the catering, on board and on station
services are being streamlined and modernized to bring back the old
glory and warmth and romance of railway journeys. And the Railways
are sitting pretty with huge surpluses , which in turn are being
pumped into more passenger amenities and infrastructure building.
THE POINT THEREFORE, IS, YOU JUST CAN’T BEAT
THEM.
SO, WHAT NEXT?
Join them of course!
The need of the hour is synergy or, to coin a
new term , competitive synergy! In the main sectors- the Golden
Quadrilateral and the links between the important commercial centres,
for instance, there is enough business for every one, so compete!
And may the best teams win, may be, may all the good teams win!
In the other sectors, the Railways and the
Airlines must get into local arrangements to share the business in such
a way as to leverage the strengths of eachother. As far as the Railways
are concerned once the railway tracks are laid , the signaling and
stations and staff are in place, it is fait accompli , the
investments are already made and not utilizing them is huge wastage.
Airlines must work together with Railways in
the other sectors to identify fruitful partnerships. The North East for
instance, and the deep south…..There are specific opportunities if you
know where to look….
Then, in tourism the sunshine industry, there
are a hundred things Railways and Airlines can do together to generate
synergy. I do not want to name these opportunities in this forum for
obvious reasons…..But if you are an as avid follower of the Tourism
sector as this writer is, the opportunities are just out there…
Next , in reservations, the Railway website is
a huge opportunity to attatch to and make use of…Instead of the
reinvention of the wheel, get on to the readymade platform….
There could be an India all purpose
travel card…..
There could be a smart travel card…..
There could be an all purpose travel portal
jointly by the operators- without any middlemen…..
There could be…
There could be- there ARE.. enough openings
out there to work together. If you want….
Just think about it….
Shri
J.Vinayan is Additional General Manager with the Indian Railways- (IRCTC).
He has worked
in various capacities in the Railways in Operations, Safety and Commercial
Department in Chennai, Palghat and
Madurai Divisions of Southern Railway. He is credited with the first ever
efforts at Computerization of the 150 year old Train Control Charting
System of the railways in Palakkad and Madurai divisionds of the
Railways.
In 2002, when the Railway’s Internet Project was
being set up, he was asked to join the Two-officer team which he did in
June 2002. He was involved in every aspect of this website
www.irctc.co.in right from setting up and launch
in August 2002 to making it the biggest e-commerce site in India. He
looked after every aspect of the Operations from Security and Procurements
to Staff Administration, Customer Support, Logistics and Marketing.
Now he is Additional General Manager for the South Zone of IRCTC which
is in charge of Catering and Tourism activities over Southern Railway and
South Western Railway.