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Surge Pricing in Indian Railways

Surge Pricing in Indian Railways – Understanding Railway Fare

Indian Railways is currently experiencing a major overhaul in its ticket pricing pattern. This new change introduced since September 9 this year. Prices have gone dynamic taking an incremental pricing model that is referred to as Surge Pricing. Surge Pricing will be applicable for all trains of Shatabdi, Duronto and Rajdhani expresses. In this article, we will learn in details about this new pricing pattern and try to explain the different components of the price breakup. We will drop in some additional information for your help.

Surge Pricing in Indian Railways

So, instead of wasting time any further, let us start. To begin with, let us check out the Surge Pricing structure first.

Surge Pricing – A Quick Overview

First thing first, Surge Pricing is still in its experimental phase. Indian Railways will be running this experiment for no more than 3 to 4 months. What’s interesting here is that this flexible pricing will take place on the base fare and not on consolidated fare. Consolidated fare means the fare inclusive of other charges like catering, super fast charges, service tax, reservation charge etc. Only and only the base fare, that is, the price charged for the distance traveled.

Now, here is the overview in a bullet point list:

  • First 10% of the seats sold will have no changes in any type of pricing – base price or any additional charges that are applied. It is normal as it used to be. So, assuming that a train has 100 seats, the first 10% will be 10 seats. These 10 seats will have exactly same pricing as before.
  • Once the first 10% are sold out, the price for the next 10% of seats will now be increased by 10%. This means, if we take our above example, the next 9 seats that will be sold at a price which will be 10% higher than the normal price (that is price at which the first 10 seats were sold). Then there will be another 10% hike in prices for next 10% of tickets sold and so on…
  • Charges like catering, super fast, service tax, reservation etc. will remain unaltered.
  • For Economy Class and 1AC class, existing fares will remain. No changes will be made.
  • In case some berths are left vacant during charting, those berths will be offered for booking taking place currently.
  • The price for the vacant berths will be the same as the last highest price at which the tickets were sold for that specific class.
  • If the price of a seat in a lower class becomes higher than the price of a higher class seat, that information will be displayed to all passengers.
  • The last price or the highest price which will be reached for a particular class, will be reflected in the reservation chart. That is, the last price will be printed on that chart.
  • Tatkal tickets will not be made available for Executive Class and AC class. However, tatkal will be made available for CC, 2S, 2A, SL and 3A. The price for tatkal ticket for the mentioned classes will be 1.5 times the base price or base fare of those tickets.
  • The previous tatkal quota (that is number of berths that will be made available for tatkal) will remain for now even with differential or incremental or surge pricing. Tatkal booking will not attract any additional charges apart from the tatkal pricing mentioned above.
  • These trains will not have anything called Premium Tatkal Quota.
  • Normal concessions are applicable on base fare of the trains. However, concession isn’t a flat rate. It changes with the class.

Important:

  1. For tickets that have already been issued prior to September 9, the difference between the prices as per old rule and new rule will NOT be collected from passengers. In other words, tickets sold prior to September 9, will all have normal pricing.
  2. Revised pricing system will be applicable for all tickets sold from September 9 onwards.

A bit more on Surge Pricing…

You must be wondering why this new system of Surge Pricing or flexible pricing has been introduced in Indian Railways.

The answer to this question is very simple. It has been implemented for increasing revenue turnover of Indian Railways.

In case you did not know, Indian Railways operates 54 Duronto Express trains, 46 Shatabdi Express trains and  and 42 Rajdhani Express trains. Indian Railways has set a revenue target of INR 51,000 crores for financial year 2016-17. The revenue target for the previous fiscal year was INR 45,000 crores.

In this experimental run, Indian Railways is expecting to extract INR 500 crores in passenger revenue.

About the pricing model: This pricing model is used by Aviation industry in India. The app-based taxi services in different states tried the same pricing model but the state governments banned them from doing so. However, unlike in case of app-based taxi services, Indian Railways is a face of Indian government. You all railway users need to comply.

A detailed look at the train fare…

As promised, we are now going to look at the details of the train fare breakup and understand its various components.

Train fare consists of several components. These components are given below:

  • Base fare for the train journey.
  • Charges levied for making a reservation. It is known as Reservation Charge.
  • Charges levied for operating a train at a speed of 55 km/hr for the entire journey. This charge is known as Superfast Charge, abbreviated as SF charge.
  • Charges for offering food. These charges are known as Catering Charges.
  • The final component is the Tatkal Charge. If a ticket is booked on a tatkal basis, this charge comes into play otherwise, it is not charged.

Finally, there is also a service tax component.

So, the final fare of the train is counted as:

Final fare = Base fare + Reservation charge + SF charge + Catering charge + Tatkal charge + Service tax.

In case you are looking for the charges applicable for 1AC, 2AC and 3AC tickets, here is a quick table to help you understand:

 

Charges component

Charges for various coaches
1AC 2AC 3AC
Base fare 4090 2367 1624
Reservation charge 60 50 40
SF charge 75 45 45
Catering charge 340 295 295
Tatkal charge 0 0 0
Service tax 190 111 77
Final Fare 4755 2868 2081

Price example in the Surge Pricing model…

The table that you see above is showing the previous pricing model. It does not incorporate the Surge Pricing model. Now, what will happen when Surge Pricing is introduced?

Before we go ahead and start giving a numerical example, let us define surge pricing in a more concrete fashion.

What exactly does Surge Pricing model says?

It says:

  • First 10% of the seats or berths will be sold at normal prices.
  • For next 10% of the seats or berths, the base price will increase at a rate of 10%.
  • For the next set of 10% of the seats or berths, the base price will increase by another 10% and so on.
  • This increase in price of base fare can take place only up to the level of 50% of base price. In other words, if the increase price hits 50% of base price, price surge will end.

With these aforementioned 4 points, let us take a look at an example. We will take a real life example. Let us assume that you want to travel from New Delhi to Mumbai and you want to book a ticket in 3AC coach. We also assume that you want to take Rajdhani Express for your travel. What prices do you look at under the Surge Pricing model?

In the above example:

Train: Rajdhani

Coach: 3AC

Base Fare: INR 1624 (Remember, this is the actual base price).

The table below shows the Surge Pricing Model for every 10 berths sold:

Coach Type: 3AC Incremental Rate Actual Rate
First 10 % seats Original base price INR 1624
Next 10 % seats 1.1 x of base price INR 1786.4
Next 10 % of seats 1.2 x of base price INR 1948.8
Next 10 % of seats 1.3 x of base price INR 2111.2
Next 10 % of seats 1.4 x of base price INR 2273.6
Next 10% of seats 1.5 x of base price INR 2436.0

Take a close look at the last slab of 1.5 x increase over base price. The price is INR 2436.0

Thus, 1.5 x increase over base price – base price = INR (2436.0 – 1624.0) = INR 812.

INR 812 = (Base Price)/2 = (INR 1624)/2

To the final slab has reached 50% of the base price. This is where the increment will stop.

However, the question is, will this 1.5 x increase over base price be charged? In order to answer this question, let us take a look a the table below for the same train but for 2AC:

Coach Type: 2AC Incremental Rate Actual Rate
First 10 % seats Original base price INR 2367
Next 10 % seats 1.1 x of base price INR 2603.7
Next 10 % of seats 1.2 x of base price INR 2840.4
Next 10 % of seats 1.3 x of base price INR 3077.1
Next 10 % of seats 1.4 x of base price INR 3313.8
Next 10% of seats 1.5 x of base price INR 3550.5

Take a close look at the base price of 2AC coach. It is INR 2367.00

From the previous table (on 3AC), you will notice that 1.5 x of the original base price is INR 24360.00

Since,

1.5 x of the original base price of 3AC > original base price of 2AC, Indian Railways will NOT CHARGE, 1.5 x of the original base price for 3AC.

Under no circumstances the increased base price of a seat or berth of a lower class can exceed the base price of the seat or berth of a higher class coach.

So, the table for 3AC coach we gave above needs a bit of modification. The new table will look like this:

Coach Type: 3AC Incremental Rate Actual Rate Actual rate after adding additional charges of INR 457
First 10 % seats Original base price INR 1624 INR 2081
Next 10 % seats 1.1 x of base price INR 1786.4 INR 2243.4
Next 10 % of seats 1.2 x of base price INR 1948.8 INR 2405.8
Next 10 % of seats 1.3 x of base price INR 2111.2 INR 2568.2
Next 10 % of seats 1.4 x of base price INR 2273.6 INR 2730.6
Next 10% of seats 1.5 x of base price Not Applicable Not Applicable

Please note that the additional charge of INR 457 includes Reservation charge, SF charge, Catering charge, Tatkal charge and Service Tax

It is mandatory for the last price achieved to be printed on the reservation chart. This will allow the TT to collect the necessary charges from the passengers who are traveling without ticket. For unsold seats, only the last achieved price will be charged.

We are now officially done talking about Surge Pricing. However, we do not intend to end our article here. We intend to give you further information. In the sections that follow, you will be reading about the following:

  • Different types of trains operated by Indian Railways.
  • Different types of classes in trains operated by Indian Railways.
  • A quick explanation of PNR.
  • A quick explanation of train numbers.

Once we are done explaining these parts, our article will be done!

Let’s start…

Different types of trains operated by Indian Railways

Indian Railways operates various types of trains. There are basically four categories of trains:

  • Express Trains
  • Superfast Trains
  • Mail Trains
  • Passenger Trains

Express Trains: These trains have numbers that start with 1 and then followed by 4 digits. So, it is 1xxxx. However, it is mandatory that express trains do not have the number 12xxx. In other words, 1 and 2 cannot come together in ascending order and descending order is not possible because the number has to start with 1. Express trains have lower average speed and have greater number of stops.

Superfast Trains: As the name suggests, they are superfast and they have an average speed of 55 kmph. Rajdhani, Duronto and Shatabdi trains fall in this category. They are mostly galloping trains and stop only at selected number of stations. Their numbers always start with either 12 or 22. So, their numbers are usually 12xxx or 22xxx. Remember that superfast trains usually travel at a speed over 100 kmph. For example, Rajdhani takes a speed of 130 kmph and Duronto runs between 120 and 130 kmph.

Mail Trains: As of today, mail trains aren’t really popular today. They are not separate. They are simply wagons attached to either an express train or a superfast train. These wagons are called Railway Mail Service wagons or RMS wagons.

Passenger Trains: Very likely you have traveled in one. These are slow trains. They stop at every station and do not travel long distances. They are local trains for daily commuting. There is no reservation system however, there are a few local trains that offer reservation. These trains are perfect for traveling to small towns or villages in between. These trains have a speed of no more than 40 kmph but usually stays between 25 and 40 kmph.

Different types of classes in trains operated by Indian Railways

Some people are rich, some are poor and some are middle class. Hence, everyone’s demands are different. Hence, Indian Railways offers various types of options. Let us take a look at them:

AC1 or 1A or 1AC: These are highly expensive with following features

  • Air conditioned.
  • Carpeted floor.
  • Personal coupes.
  • Bedding included in fair for sleeping.
  • Only 18 passengers in a coach

AC2 or 2A or 2AC: These are less expensive that 1A and has following features:

  • Air conditioned.
  • Holds 48 passengers in a coach.
  • Seating arrangements are: 4 berths across then the gangway and then 2 longways berth.
  • All berths have curtains for privacy.
  • Individual reading lamps.
  • Bedding provided for sleeping.

AC3 or 3A or 3AC: These are less expensive than 1A and 2A and have following features:

  • Air conditioned.
  • Holds 64 passengers in a coach.
  • Seating arrangements are: 6 berths across then the gangway and then 2 longways berth.
  • There is no privacy as no curtains are provided.
  • There are no reading lamps as well.

AC CC: AC CC stands for AC Chair Car. The features include:

  • 5 seats in each row.
  • Only seating option. No option for sleeping.
  • Meant for day travels.
  • Air conditioned.

FC: FC stands for first class but these coaches are not air conditioned.

EC: EC stands for Executive Chair Class. This option can be found only and only in Shatabdi Express. The coaches are air conditioned and meant for sitting only. Purpose: day travel.

CC: Again, it is Chair Car and air conditioned as well but not as good as AC CC.

SL: SL stands for Sleeper. Basically the arrangement is same as in 3AC but there is no AC, no curtains, no personal lights. Way cheaper than 3AC.

2S: These refer to second class seats that are bookable. Coaches are not air conditioned.

II: No air condition and unreserved. This is second class travel option.

UR: Referred to as General Coach and it is unreserved. Just anyone can get up and travel. People often fight for seats.

A quick explanation of PNR

We have heard of this a lot many times. PNR is the abbreviation for Passenger Name Record. PNR shows status for Reservation Against Cancellation or RAC and Waiting List or WL.

PNR number is allocated when someone buys a WL ticket or an RAC ticket. This number has 10 digits in it. The digits are divided in groups of 3 and 7. An example?

Here it is:

432-3487665

In the above example you will notice that the digits are grouped in sets of 3 and 7. The first 3 digits have a meaning. The last 7 are basically useless and meaningless. They are random numbers generated by a system and hold no significance.

The first 3 digits are however important because they work as identifiers. They tell the TT the exact PRS from which a ticket has been purchased. Basically they say the zone for a particular train with respect to the station of origin for that train.

The first digit of the PNR will tell the station from where the train originated (that is, started its journey). The next two digits will give PRS or Passenger Reservation System details.

Other information about PNR:

  • PNR is located on top left of a ticket.
  • A PNR once generated remains active in system for at least 9 months because TDR filing may require up to 9 months of time frame.
  • After 9 months, a PNR which was generated previously is totally flushed out of the system.
  • The exact same PNR which was generated previously can be regenerated only after 1 year. It cannot be regenerated prior to that.

A quick explanation of train numbers

Train numbers can be confusing at first. However, this explanation here will help you get a better understanding of the number system used by Indian Railways all across India. The numbering system that you see today was introduced back in 2010 on December 20. Prior to that, a different system was being used. As of today, train numbers have 5 digits.

Providing the details of these numbers is way beyond the scope of this article. Also, these numbers don’t really matter for passengers as they never bothered about the train number while booking a train ticket. Still, if you are will to understand the codes and how the number system works in Indian Railways, you can always head for this link http://www.irfca.org/faq/faq-number.html. where you can get a detailed explanation of all numbers.

In case you have any question, feel free to drop a message through the comments section. We will try to answer your questions as soon as possible.

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