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News Entry# 461028
Aug 04 (08:33) Will new Economy AC 3 Tier redefine rail travel for aam-aadmi? Solving a tricky issue holds key (timesofindia.indiatimes.com)
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News Entry# 461028  Blog Entry# 5032536   
  Past Edits
This is a new feature showing past edits to this News Post.
Posted by: RFIR~ 498 news posts
The new 'gamechanger' Economy AC 3-tier coaches in the Indian Railways fleet promise a comfortable, faster ride for the ordinary sleeper class passengers, much used to open windows, dust and noise. They also pose a significant challenge to officials who have to decide the tricky issue of fixing the fare. A little too high and the objective of introducing these new modern coaches meant for high speed comfortable travel may get defeated. A little too low and the railways may end up killing its only clearly profitable class - the normal AC 3-Tier. So what should be done? We take a deep dive into why this is not an easy decision to take, the classes of rail travel that are profitable, the impact of dynamic fares on them and what experts think should be the fix that will be a win-win.
The
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railway officials have already indicated that the fare will be higher than sleeper but lower than that of the conventional AC 3-Tier. So what's the tricky part? The objective is to ensure that sleeper passengers move to the new Economy AC 3-Tier without the conventional AC 3 Tier passengers thinking there is a better bargain available with the new coaches. What makes the challenge critical is that the losses from the passenger segment have been steadily rising and the conventional AC 3 Tier along with AC Chair Car is a class that brings in some money compared to other segments that bleed red.
What is Economy AC 3-tier?Indian Railways is rolling out over 800 Economy AC 3-tier coaches - a new class of rail travel to bring the luxuries of air-conditioned travel within the reach of common man. The new Economy AC 3-tier coaches are slated to offer the "cheapest and the best AC travel" in the world, say railway officials. A prototype was rolled out by RCF Kapurthala earlier this year and has undergone extensive testing by the Research Design and Standards Organisation (RDSO).
The new Economy AC 3 has "luxury comforts" such as personalised AC vents and reading lights, USB points with each berth among others. It has 11 more berths than the conventional AC 3 tier and the space has been created by moving the main electrical controls below the coach. Some of the major passenger-friendly features of the new Economy AC 3 tier are:

Fire-proof berths with enhanced comfort
Modified ladders for climbing middle and upper berths
Personalised AC vents for every berth
Personalised socket for charging mobiles and USB points
Personalised reading lights for every berth
Illuminated seat numbers
Snack table with side berth as well
Disabled-friendly entry/exit and one divyang-friendly toilet

The new coach can has been designed to run at speeds of up to 160 kmph and has successfully completed RDSO trials at 180 kmph. With railways upgrading major high congestion Golden Quadrilateral routes to 130 kmph speeds, there is a need to run more air-conditioned trains. According to the national transporter, sleeper class coaches are unfit for comfortable travel at speeds above 110 kmph. The long-term plan is to replace sleeper coaches in Mail/Express trains with Economy AC to offer better comforts at higher speeds to the common man.AC 3-tier the profitable class for Indian Railways

Indian Railways has stepped up the production of AC 3 tier coaches from 488 in 2014-15 to 885 in 2018-19, an 81% increase over 4 years.According to the Comptroller and Auditor General of India (CAG) report of 2018 which commented on the profitability of different classes, AC 3 tier is the only operationally profitable long-distance class of rail travel. The other profitable class is the AC chair car from 2016-17 onwards.As can be seen from the data above, all classes of train services have incurred losses during 2017-18 except AC 3 Tier and AC Chair Car which could recover its operational cost and make profit, notes CAG in its report. The report suggests that Indian Railways should revisit passenger fares to recover the cost of operations.

Incidentally, the White Paper of Indian Railways (February 2015) has also observed: "Running of AC3 tier class is most suitable for railways and passengers and it breaks even at approximately 75 per cent occupancy". "As it is the only coach which gives profits, trains should be augmented to run with as many AC3 tier coaches as possible," the paper says.

Fixing Economy AC 3 tier fare: A tricky job

Experts are of the view that any fare too close to conventional AC 3 tier may not see sleeper passengers opting for Economy AC 3.

Mukesh Rathore, Retired Director (Technical) of RITES says that railways is losing passengers to roadways with buses offering AC sleeper-style travel. "At the sleeper level there is a huge demand supply mismatch. Economy AC 3 will help railways meet excess demand and make it more competitive against buses," Rathore tells TOI. "Fares should not be too high for the cost conscious common man. While a certain premium over sleeper fares makes sense, flexi fares can be avoided. Dynamic pricing with a very ambitious price band may beat the entire purpose of introducing a new class of AC travel," he adds.

Jagannarayan Padmanabhan, Director, Transport and Logistics, CRISIL believes that the pricing has to directly compete with AC Volvo buses in the short routes and be significantly lower in comparison to low cost airlines for the longer end of the journey.

Interestingly, while AC 3 tier yields profits for railways, the passengers travelling by it appear to be sensitive to the fares charged. In 2016, Indian Railways introduced a system of flexi-fare or dynamic fare in premium trains. Under the flexi fare system, the fare for a particular class of travel would go up as the occupancy increases.

A CAG report has analysed that for premier trains, the occupancy in AC 3 tier "significantly dropped" after introduction of flexi fare. As seen in the chart, the vacant AC 3 berths increased from 0.66 per cent in the pre-flexi period to 4.46 per cent in post-flexi period.Thus, the introduction of flexi fare in AC 3 tier class which was already a profit making class was not fair," the CAG report concluded. In line with the fall in occupancy, Indian Railways has rationalised the flexi fare scheme since 2018, doing away with it all together on routes with very high vacancies.

A retired Railway Board member told TOI that AC 3 tier was introduced with the aim that sleeper passengers will shift to air-conditioned travel. "However, what happened was that AC 2 tier passengers moved to AC 3 tier. If railways wants sleeper passengers to shift, not only should fares be just marginally higher, there should be an assurance of a confirmed berth," he said.

G Raghuram, Principal Academic Advisor, NRTI is of the view that fare is dependent on the 'willingness to pay' and hence related to the purpose of introduction. "Is it to increase occupancy in an AC 3 tier or to provide AC to the current second sleeper? The latter may become imperative as speeds go up beyond 130 kmph, when all AC trains have to be introduced," he says.

"If it is the first, with the kind of comforts being offered, I see no reason why the pricing should be less than conventional AC 3 tier. However, if it is the latter, then the pricing can at most be a 'reasonable' percentage more than second class sleeper," Raghuram told TOI. This of course raises the possibility that AC 3 tier passengers will shift to the new class, given similar comforts for a lower fare, he points out.

"As more Economy AC 3 tier coaches come into the system, and all AC trains are run, it would become important to provide at least a service differentiation in some Economy AC 3 tier coaches to retain the AC 3 tier pricing, while offering some of the Economy coaches to the second sleeper segment. The fleet utilisation will be better, so cost will come down. Revenue will go up if more trains are introduced with the same fleet," he adds.
Demand for AC rail travel in India:

Draft National Rail Plan analyses passenger data from 2010-11 to 2017-18 for all passenger categories of Indian Railways and notes that railway passengers have grown at a CAGR of 2% per annum. The maximum growth has been witnessed in the AC category out of which 3rd AC passengers have increased at CAGR of 10.33%.
Additionally, the long distance AC category passengers have grown at an average annual growth rate of 9% in the last 10 years. Whereas, long-distance non-AC category passengers showed a growth of 1.44%.
Focus on revenue generation:


CRISIL's Padmanabhan tells TOI that the revenue generating passenger segments are AC and First class. "Railways should probably look at making train travel pleasurable with end-to-end services. Railways is engaged in direct competition with airlines in this segment," he says.

The retired official quoted above recommends focusing on air-conditioned chair cars in the long-run. "In the long-term railways would do well to focus on AC chair cars for better revenue generation," he tells TOI. "With all major routes such as Delhi-Mumbai, Delhi-Chennai etc. attaining 160 kmph speed potential, you can commute in 8-10 hours. Passengers will be willing to travel in AC Chair Car with reclining seats for such a short duration of time," he adds.


But, the issue may go beyond just fares, what is also important is the cost. The CAG report that commented on flexi fare also noted that the losses in AC class could potentially be attributable to higher base cost structure of Indian Railways than to its fare structure. Inefficiency in Indian Railways' cost structure also significantly contributes to the losses in passenger service business and hence tariff increase cannot be the only mechanism to recover costs, the report said. Clearly, change and reform will be a continuous process for Indian Railways as it speeds on the transformation track.

3 Public Posts - Wed Aug 04, 2021

7838 views
Aug 04 (11:51)
shiv2350
S.Sharma   591 blog posts
Re# 5032536-4            Tags   Past Edits
I guess ANTYODAYA Train was introduced for those General class people for faster commutation from one place to another and its doing well. Railway is thinking of every class and not only focusing one general class.

6639 views
Aug 04 (12:59)
Rail Fanning
RFIR~   5665 blog posts
Re# 5032536-5            Tags   Past Edits
Antyodaya was introduced but still they are much less in numbers. If you look at all the important daily trains : Few examples TN Express, GT express, Trains from East to North, similarly trains from North East to South...many of these trains have SL class always full. There are very less GEN coaches and so SL gets crowded. If we keep reducing SL and have more AC's, not sure if that will solve the purpose.

6271 views
Aug 04 (13:28)
VIVEK SINGH
VivekSingh~   1646 blog posts
Re# 5032536-6            Tags   Past Edits
I guess in future, we will have only dedicated class trains running for long distances
1) AC trains (premium and economy) - Rajdhani's, Shatabdi's and other premier trains will fall under this
2) Sleeper trains + General trains - Antyodaya and jansadharan trains with certain reserved coaches.
3) Mix trains - Short distance intercities/passengers with mix combo of classes (ACC, CC, 2S, DD)
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more...

Other classes like Duronto, GR, Sampark Kranti, Humsafar, Uday etc will probably merge in one of above categories based on their proximity.

5844 views
Aug 04 (13:31)
⚡Adipurusha⚡
Spark   4932 blog posts
Re# 5032536-7            Tags   Past Edits
These new Economy AC 3 Tier will replace Sleeper Coaches soon.
Coming years in some trains.

2534 views
Aug 09 (12:30)
shiv2350
S.Sharma   591 blog posts
Re# 5032536-8            Tags   Past Edits
I agree your views and i think more Superfast ANTYODAYA should run on the basis of passengers frequency and demand. But ANTYODAYA should be converted into chair class so that extra passengers should not crowd the train and increase of frequency.
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