Railways requires sophisticated dynamic pricing mechanisms

Abstract

A sophisticated 'dynamic pricing' model will help manage demand better while optimizing revenue. Indian Railways recently announced that they would scrap its “flexi-fare" system for trains with less than 50% occupancy and would reduce the maximum flexi-fare from 1.5 to 1.4 times of the base ticket fare. This is proposed to be discontinued in 15 premium trains and 32 others during their lean periods when the occupancy is in the range of 50-75%.

This scrapping is being claimed as a “win-win situation", which will help regain passengers from airlines. This is not surprising. The real issue is that this could have been anticipated. The flexi-fare system was introduced on 9 September 2016 for 142 premium trains on a simple format of 10% increase over the base fare for every additional 10% of reservation, until a maximum of 50%, when 50% of the seats/berths were reserved. This was applicable in all classes except First AC and executive class where the fares were already close to airfares. Read more at: https://www.livemint.com/Opinion/Zq51CAbX6zUTOLIfNQhKOJ/Opinion--Railways-requires-sophisticated-dynamic-pricing-me.html