Post pandemic indian railways 3rd ac gains speed brings over a third of passenger revenues

Post pandemic indian railways 3rd ac gains speed brings over a third of passenger revenues

IN THE FIVE years since Covid-19, where Indian Railways gets its passenger revenues from, has seen a fundamental transformation. The number of passengers travelling AC 3-tier is just 26 crore, or 3.5 per cent of the total 727 crore passengers (including suburban), but generates Rs 30,089 crore or 38 per cent of the Rs 80,000 crore total passenger revenues estimated in 2024-25.

The high revenues from AC 3-tier reflects in some sense ‘upward mobility’ — more people aspiring to travel well. Besides Railways’ better pricing power, the 19.5 per cent compounded annual growth rate (CAGR) in AC 3-tier revenues over five years can be attributed largely to an increase in the number of passengers willing to spend more money.

From 11 crore AC 3-tier passengers in 2019-20 (1.4 per cent of total passengers), the number of AC 3-tier passengers registered a CAGR of almost 19 per cent to 26 crore in 2024-25. The revenues from AC 3-tier jumped to Rs 30,089 crore this year from Rs 12,370 crore in 2019-20.

In the pre-pandemic year, i.e., 2019-20, passengers travelling Second Class Sleeper (Second Class ticket with a berth to sleep) were the highest contributor to the total passenger revenues. They contributed Rs 13,641 crore (more than one-fourth or 27 per cent of total revenues of Rs 50,669 crore), but were just 37 crore or 4.6 per cent of total 809 crore passengers who travelled by rail that year.

But this year, i.e., 2024-25, the number of passengers travelling Sleeper Class, generated Rs 15,603 crore or 19.5 per cent of total revenues. They were still 38 crore passengers or just 5.25 per cent of the total number of passengers who travelled by the Railways during the year.

Post-pandemic Indian Railways: 3rd AC gains speed, brings over a third of passenger revenues

A closer look at Railways’ passenger data from 2019-20 to 2024-25 reveals that while the AC 3-tier fares have gone up over the last five years, the average percentage increase is lower compared with AC First Class, AC 2-tier and AC Chair Car, and also the Sleeper Class.

For AC 3-tier, the fare per passenger increased 7.4 per cent to Rs 1,171 in 2024-25 from Rs 1,090 in 2019-20; for AC First Class 25.38 per cent, AC Chair Car (23.24 per cent) and then AC 2-tier (18.22 per cent) in the last five years. In the case of AC First Class and AC Chair Car premium coaches, the fare per passenger increased by Rs 458 and Rs 119, respectively, over the last five years. For AC 2-tier, it increased to Rs 1,498 in 2024-25 from Rs 1,267 in 2019-20. The Sleeper Class witnessed an increase of 10.64 per cent in fares in the last five years.

What has also changed is the mix of rail travellers viz., those travelling AC (AC I Class, AC 2-tier, AC 3-tier and AC Chair Car) and non-AC (Second Class Sleeper, Second Class Mail & Express, Second Class Ordinary and Suburban) classes. In 2019-20, the number of AC passengers were 18 crore, and this more than doubled to 38 crore in 2024-25. The number of non-AC class passengers, however, dropped from 790 crore in 2019-20 to 688 crore in 2024-25.