View of the Government
The dynamic fare pricing announced for the Rajdhani, Shatabdi and Duronto trains on an “experimental basis” has been justified by the Ministry of Railways as a means to shore up lagging passenger revenues.

The Ministry says the cost per passenger kilometre today is around 73 paise, while the Railways recovers only 37 paise. The flexible fare system means only the first 10 per cent of seats and berths will come at the base fare, with 10 per cent increases for every batch of 10 per cent sold. 

The increase will be capped at 1.5 times the base fare. The 77 pairs of the three classes of trains account for 13 to 14 per cent of the Railways’ passenger revenues. 

Need for increase in Fares 
Without a robust component of fare-based revenue from passenger trains it will be difficult for the Railways to spend on infrastructure and amenities and focus on features such as safety — all of which are imperatives. The question is whether the flexible fare system is the ideal way to do so.

Evaluation of Flexible Fare System
First, these fare increases in the premium trains for some classes could result in airfares being lower at certain times and routes. This could wean away some train travellers. 

Second, the increase in the prices under the scheme begins much too early, when a bare 10 per cent of the seats are sold. As a result, it puts far too much pressure on passengers to book early. It would have made more sense for the Railways to expand the scope of Tatkal booking, which is currently limited to one day before travel. A Tatkal scheme with flexible and cascading pricing coupled with an increase in the number of tickets and an extension of the time frame would penalise those who buy their tickets late rather than most passengers on a train. 

Third, unlike taxi, bus or air services, train services in this country are a monopoly. The Rajdhanis and the Shatabdis are premium trains, which are favoured by the relatively better off. The real worry is that the experiment may be extended to include other long-distance trains in the future. A relatively poorer person who makes a late decision to travel should not be priced out by such a system by a monopolistic provider that aims to provide a public service.