India’s IRCTC – the ticketing and catering company of the Indian Railways – will retain its near monopoly control over reserved ticket booking services and subsequent convenience fee earnings (on bookings). And there is “no immediate possibility” of loss of revenue to it, despite the Railway Ministry launching ‘SwaRail,’ its own super-app that includes ticketing facilities, among others.
Convenience fees, a part of ticket services, is among the most profitable segments. The EBITDA margin in the segment (ticketing sales) works out to be a whopping 85 per cent (with ₹300 crore of profit before tax). In comparison, margins from catering, bottled water sales and tourism were around 12 per cent, 12.5 per cent and 17 per cent.
Nearly, 72 per cent of its internet ticketing services comprise convenience fees.
For the company, convenience fee earnings were 20 per cent of its revenues, that is ₹2 is convenience fee from revenue of ₹10. Effectively convenience fees were ₹254 crore for the Oct-Dec period, where revenue stood at ₹1225 crore.
The IRCTC top brass during an investor call allayed fears of a revenue hit because of the launch of the super-app.
“There is no impact on our convenience fee (collections); because this (SwaRail) is one of the many modes of bookings that we are doing. All convenience fee collections will come to IRCTC,” Sanjay Kumar Jain, Chairman and Managing Director, IRCTC Ltd said.
Why the concern
The Beta version of this super-app was released by the national transporter on January 31 with CRIS (Centre for Railway Information Systems) claiming that it would allow reserved ticket bookings, unreserved ticket and platform ticket booking, parcel and freight enquiries, train and PNR status enquiries, food orders on trains and complaint management.
Incidentally, services like food orders and reserved ticket bookings can also be done through the company’s own app and official website.
Currently, any ticket booking done via OTAs (online travel aggregators) or third-party apps is routed through IRCTC search engines, allowing it to collect convenience fees. The same will be the case in the case of the railway super-app, officials said.
High Market Share
Nearly 87-88 per cent of all internet ticket booking for Railways is done either through the company’s official app or website at present – thereby making it the dominant market player.
For Q3FY25, IRCTC had 30 per cent of its revenues coming from internet ticketing – that is ₹354 crore out of ₹1,225 crore. Internet ticketing services saw a 6 per cent increase y-o-y from ₹335 crore; while convenience fee collections saw a similar 6.3 per cent rise over Q3FY24 (last year).
The issue of collecting convenience fees and retaining control over internet ticketing had been a point that was raised across multiple meetings between IRCTC, CRIS and Railway Ministry officials at the time of the development of the super-app.
According to Jain, there could be flattening of market share now in the segment.
“However, we are trying to shore up booking volumes as new trains get introduced and also increase the share of non – convenience fee earnings. Increased catering services is something we are looking at too,” he said.