It’s one of the most luxurious ways to travel through India — chugging along on opulent trains such as Royal Rajasthan, Golden Chariot, Deccan Odyssey and Maharaja Express. Yet, for the operators of these trains – mostly State tourism corporations – these are white elephants, slowed down by dismal occupancy levels and prohibitive haulage fees charged by the Indian Railways.
Now, talks are on between the operators, the Railways and the Union Tourism Ministry to try and put these luxury trains back on track. Knocking off haulage charges, exploring a revenue-share model, operating on shorter routes, introducing dynamic pricing a la airfares, improving ticket distribution by putting them on platforms such as Expedia, getting international travel bloggers to experience and write about the trains, are some of the ideas being mooted.
Reducing haulage charges“As products they are magnificent, but we need to take an entrepreneurial position rather than a regulatory one,” says Suman Billa, Joint Secretary, Ministry of Tourism, pointing out that ticket costs can be moderated only if the Railways cuts haulage charges. This fee is fixed by the Railways taking into account cost of fuel, locomotive, transportation per kilometre, staff and other variables.
At the moment, fares on these trains range between $500 and $1800 per night. Tourism corporations say that 70 per cent of their operating expenditure are for haulage charges. With some trains running at less than 40 per cent occupancy, losses are mounting for operators and their dues to the Railways piling up.
For instance, Rajasthan Tourism Development Corporation (RTDC) runs two luxury trains, which together owed the Railways over ₹83 crore till mid-2016.
Maharashtra Tourism Development Corporation (MTDC), which runs Deccan Odyssey, owed the Railways about ₹ 8.08 crore till March 2015. MTDC, which has outsourced the operations of the train to Cox & Kings, is now demanding a 50 per cent drop in haulage charges. Says Arup Sen, Director, Special Projects at Cox and Kings, “The Railways has to rationalise the charges. It is unviable.”
Seeking better marketingBut Railway officials counter that lowering haulage charges will result in Indian Railways subsidising even the luxury segment. They say that better marketing by the operators is the solution, and wonder how some operators pull in higher occupancy levels than others.
Karnataka State Tourism Development, which runs Golden Chariot, owes about ₹6.71 crore to the Railways. According to reports, the decade-old train netted ₹52.4 crore as revenue from ticket sales in eight years, but paid ₹52.5 crore as haulage charge to the Railways.
The Palace on Wheels, the first luxury train in India, runs on a revenue-share model, which is what other operators with the exception of MTDC are asking for. But, of late, the Palace on Wheels has seen dwindling demand too – last year, it cancelled a ride for the first time in its 34-year history. This is why the Railways is reluctant to repeat the model.
According to sources, Maharaja Express — operated by the Indian Railway Catering and Tourism Corporation — has been making operational profits for the last two years, though it reports only about 40 per cent occupancy. And it also wants to expand to the South.
Billa agrees that stronger marketing effort is needed and talks of holding a competition for global bloggers and inviting the winners to experience the trains. “You need to create an upswell in marketing,” he says.
In Sen’s view, however, there is only one thing that needs to be done to get these trains on track – and that’s address haulage. But theRailways, which is already slowed down by ₹35,000 crore losses in the passenger segment, does not agree.