IRCTC, a subsidiary of the Indian Railways that handles catering, tourism and online ticketing operations, will now charge Rs 12 plus taxes for every ticket booked through online travel agents as annual maintenance charges (AMC), according to a document released in June and reviewed by ET. Previously, there was a flat rate charged for the service.
Additionally, if the AMC collected during the year falls short of the minimum amount plus tax, the difference will be recovered from the online travel agent when the service is renewed.
Several online travel industry executives told ET that the amount to be borne by them would increase almost 10-fold as a result of the re-worked fee structure. The executives expect costs to rise to between Rs 40 crore and Rs 50 crore, depending on the volume of tickets booked.
“IRCTC charges used to be a flat Rs 25 lakh for almost every integration that we had to do, be it payment gateway, as agents, or as a wallet option on their platform. Now with the pricing being moved to a per-ticket basis, it might be easier for smaller startups for whom the down payment used to be a challenge, but for others it is a cost that will be eventually passed on to consumers,” said the chief executive officer of one of the largest online travel agents with IRCTC.
For most online travel companies, train bookings and services are a minuscule portion of their services, which is dominated by the more lucrative air ticketing and hotels and packages segments. An email questionnaire to MakeMyTrip did not elicit any response at the time of going to press.
“While rail bookings is not a revenue driver for us, with the proposed changes, we will revisit the financial construct and see if it has any adverse impact on the cost of providing this service to our consumers and take a call accordingly,” Aditya Agarwal, head of corporate strategy at Cleartrip, told ET.
A Yatra spokesperson acknowledged receipt of the notification and said the company was “discussing some of the proposed changes with IRCTC.” Emails sent to RailYatri and Ixigo did not elicit any responses.
Terming the new policy as arbitrary and put into effect without prior consultation with the private sector, other executives told ET on condition of anonymity that they had met with IRCTC officials after receiving the notification but the situation was yet to be resolved.
Some of them told ET that the travel service providers may consider approaching regulatory authorities if a solution is not reached within a “reasonable period of time.”
“IRCTC has exclusive direct access to the Indian Railways’ ticket inventory and booking systems,” a senior executive at a leading online travel agency said. “Every OTA has to enter into a sub-agency agreement with IRCTC, which is what they have revised to make it even more onerous on OTAs making online rail booking on these platforms commercially unviable.”
As part of the new policy, IRCTC has said it will allow one booking for every 70 searches and will collect 25 paise plus tax for every enquiry above that ratio on a daily basis.
The higher ratio is also due to the fact that OTAs primarily cater to non-rail customers, a senior executive said.
“Apart from serving as a booking channel, these platforms are used by customers to check schedules, availability of trains, flights and buses to plan their full itinerary, which leads to multiple hits,” the executive said. Industry executives urged the body to follow the example set by Air India, the government-owned national airline.
“The government has created a level playing field for booking of Air India’s flight tickets by allowing the access of its inventory and reservation system to other travel agents and also allowing them the flexibility to provide a wider range of services to customers,” an industry executive said.