Pricing of public utilities, especially public transport, is a contentious issue in India. The hike in Delhi Metro fares last year was met with strong resistance with protestors claiming that it was not affordable for a large section of the population. Studies also show that the ridership in Delhi Metro is too low for the project to be sustainable economically.
One way to address both these concerns could be combining fare cuts with other measures to attract ridership, according to a new research study published in the Economic and Political Weekly. In the study, Sunil Ashra from the Management Development Institute, Gurgaon, and others, examine the Delhi Airport Express Metroline (AMEL)’s operational turnaround. They show how reduced fares, along with a range of other measures to improve accessibility, helped overturn losses, increase ridership and resulted in the Delhi airport metro line breaking even in April 2016.
The Delhi airport metro line was launched in 2011, through a public private partnership with Reliance Infrastructure as the operating partner. However, it struggled to take off, incurring huge operational losses and running at less than 5% of capacity. In 2013, Reliance Infrastructure quit the partnership and the Delhi Metro Rail Corp. (DMRC) took over the operations. Under the new regime, several changes were introduced to attract more riders. These included the rationalization of train timings, improved frequency, faster trains, and interportability of smart cards with the rest of the Delhi Metro network. Finally, AMEL also introduced lower fares to boost ridership.
These changes seem to have worked. Between July 2013 and April 2016, daily ridership rose from around 10,000 to 35,800. The authors show that traffic demand grew at a faster pace than the fall in fares. Despite the lower fares, traffic earnings grew by 82%.
The Delhi airport metro line experience highlights how a rational fare structure combined with operational changes can keep public transport affordable, while maintaining operational efficiency, the authors argue.