Privatisation Success – Tejas Train Makes a Profit

The Indian railways are one of the cheapest means of travel within India. The railways have always been seen from a social perspective as the means to allow the poor to travel economically across the country in search of work or a better life. It is run like a government department and not a commercial for profit organisation. I am not saying that this is not justified, the government needs to do whatever is possible to help the citizens improve their standard of living.

The railways always ran on the principle of making money in the freight business only to cross subsidise the passenger business, especially the second class and sleeper class passengers. However, this left a market void. There were people who could afford to pay for a better service but could not get the service because railways never had the money to provide those services. More importantly, they could not charge for those services. Hence, even the non-subsidised passengers traveling in air conditioned sleeper and first class had to make do with shoddy food and service.

Thankfully, some one work up to the void and decided to allow private players to run trains on purely commercial basis. The idea was, this will offer better service to the non-subsidised passengers, while reducing the load on the railways. To implement the project, the Indian Railways offered its subsidiary, the Indian Railways Catering and Tourism Corporation (IRCTC) to run a privately operated train on commercial considerations. Enter the Delhi-Lucknow Tejas Express, a fast short distance train connecting two important cities with commercial as well as political connections.

The Tejas offers air conditioned service in economy and executive classes with onboard entertainment and food included. It also offers travel insurance in the ticket as well as compensation for train getting delayed by more than 2 hours. Things unheard of in India where rail safety record is sketchy at best, delays up to 4 hours are common and up to 48 hours not unheard of.

The effect was that in 21 days of operation between 05 and 28 October 2019, the train has made a profit of 19% on an revenue of INR 3.7 Crores (US$ 514,000). The Delhi-Lucknow Tejas Express has been running with approximately 85% occupancy, that means seats are available at short notice also, another thing unheard of in India.

The Indian Railways intends to run 150 such trains across the country. The rolling stock and is owned by the private company while the locomotives and the right of way is provided by the railways.

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