New portal for rail tickets to hit IRCTC

Come October and Indian Railways Catering and Tourism Corporation (IRCTC) will receive another setback, when the alternative portal being developed by the Centre for Railway Information Systems (CRIS) according to the ministry's directions goes on air.

The new portal will compete with IRCTC for offering sale of online tickets. The launch would endanger around 14 per cent of the revenues IRCTC makes from the service charge levied on the sale of online tickets.

IRCTC is already set to lose 80 per cent of its overall revenues, as the management of catering services on trains and at stations is being taken back by the railways.

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IRCTC was created in 1997, as part of the Railways' efforts to corporatise its non-core business.

It saw the revenue and profit from the catering business not being accounted for on railway books. Any government department's earning from its undertaking is only through dividend payment.

IRCTC made Rs 688 crore (Rs 6.88 billion) in revenues in 2009-10. Of this, Rs 96 crore (Rs 960 million) came from online ticketing services. This was to decline by at least Rs 30 crore (Rs 300 million) this year, with railway minister Mamata Banerjee announcing reduced service charges in her budget presented in February.

The maximum service charge was reduced to Rs 10 from the earlier Rs 15 for the sleeper class and to Rs 20 from Rs 40 for the air-conditioned class.

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The overall revenue IRCTC reported from the sale of online tickets was Rs 6,138 crore (Rs 61.38 million) in 2009-10, a rise of over 55 per cent from the Rs 3,967 crore (Rs 39.67 billion) in 2008-09. IRCTC is the biggest e-commerce portal in the country. At present, every third ticket reserved on the railways is sold on it.

Strategy needed

A former member of the Railway Board, who did not wish to be identified, said, "The online ticketing services provided by IRCTC have redefined the travelling experience of passengers on the railway network. If the portal continues to offer user-friendly services, it would continue to draw in numbers. But there are chances that the share of IRCTC in online ticketing sales would fall when the new portal is launched."

A senior official at the ministry informed, "We have asked CRIS to develop a portal for providing online ticketing services. We believe the online platforms operated by IRCTC and CRIS will offer competition to each other and help in generating business."

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Some experts feel IRCTC's revenue would be affected only in the short run. "The potential from tourism in the country is huge. IRCTC can operate tourist trains. Revenues may be affected over the short term but eventually the corporation would be able to re-establish itself by tapping new streams of businesses," said R Sivadasan, a former financial commissioner at the Railway Board.

Many industry experts, however, feel at a time when railways finances are not in good shape and safety-related lapses have come up, the ministry could have desisted from taking over the management of non-core activities.

A former chairman of the Railway Board said, "The Railways should concentrate on core businesses operations and safety. The ministry has decided to takeover the management of catering services, a sensitive issue because it is directly related to satisfaction of customers on board trains, but administration would pose a major challenge."