Registered with the Registrar of Newspapers for India under R.N.I 53640/91

Vol. XXVII No. 1, April 16-30, 2017

Fair fares? Not for filling trains

(By Our Business Correspondent)

The likely fare structure for the 45 km Phase I of the metro project has been indicated. The base fare is said to be Rs. 10-70 for the 45 km stretch compared to Rs. 10-30 for 213 km in Delhi. Size of investment is quoted as justification for the proposed high fares.

High fares could confront user resistance and consequent low utilisation of the rolling stock asset, defeating the very purpose of fixing rates high. In fact, the trick lies in going for high volume usage and full or near-full utilisation of the asset to generate large aggregate revenue that could cover variable expenses and as much of the fixed expenses as feasible – it is possible, and even probable, that low fares and large revenues would meet investment considerations.

The Metro in Mexico City was, at one time, priced so low that what was paid was useful more to count usage – it encouraged mass usage. Going beyond considerations of financial viability, public utility projects of this kind elsewhere in the world are assessed for economic, social and environmental benefits they yield in the form of relieving traffic congestions, reducing pollution and its salutary effect on health and absenteeism, savings in road upkeep costs, conservation of forex on reduced fuel usage, timeliness, punctuality at work, and so on. Many of these benefits are reflected in financial savings to the public authority in the medium- and long-term and cannot be ignored in any viability assessment. Limited financial analysis is for individuals and firms, but looking at indirect and longer term, but nevertheless tangible, benefits, is for public authorities.

In our society, the culture of travelling by public transport is yet to acquire respectability and acceptability. It should be promoted. Wasteful use of private transport – just one person travelling to work by personal car – needs to change. In Jakarta, for instance, during peak hours, usage of main arterial roads is allowed in select sections only if the car has a minimum of three passengers. The Metro is one component of the transportation system. Attractive pricing and integration of Metro stations with feeder services with common ticketing are necessary for the Metro to make a visible impact on Chennai’s traffic environment and citizens’ daily lives.

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