Cost of the air conditioned class seats/berths in IRlys is already much higher than the cost of comparable facilities provided by the ac buses. Still IR could command great patronage for its ac classes because of the following reasons:
(1) Provision of toilets in the trains which are not so common in luxury buses.
(2) Large number of passengers are loyal customers of IR and have a mind set to prefer rail journey for medium & long distance travel and due to this mental barrier they had never experienced the long journey in...
more... ac luxury buses.
(3) in the absence of large volume of traffic for ac buses, operators could not offer more & better options on many routes, and people are forced to pay high fare for ac classes travel.
The surge fares shall make ACII fares prohibitive for middle & lower middle class people and also cause ACIII fares to exceed equivalent ac sleeper bus fares. This could be a factor strong enough to break the mental barrier of people against medium and long distance bus travel. The huge chunk of vulnerable ac passengers shall be a good opportunity for the bus operators to expand their business by offering more and better alternatives through introduction of better buses.
In a study on impact of “Social Service Obligations” on IR which was done by Niti Ayog, it was found that AC2 Rajdhani Fares were more than comparable bus service i.e. AC Volvo or equivalent by about 15% to 70% on some of the important routes. Practically these ac sleeper fares are little bit higher than acIII fares in Mail Express trains. Report indicates that IR incurred marginal losses in ac1,acc,ac2 classes and earned profit in AC3 class. The report concludes that the losses incurred are not because of lower ac fares, but due to higher input costs i.e. inefficient operation which resulted in excessive expentidure incurred by IR. On the other hand cost of non ac sleeper berths in buses on the same routes were more than non ac sleeper berths by 30% to 120%. For non reserved passengers the rail fares are even cheaper than the bus fares.
Going by above, IR may not lose much non ac class passengers due to “Flexi-Price” but shall definitely lose ac class passengers to road/air sectors.
