Relief for IRCTC as Indian Railways to withdraw 50% convenience fee sharing order
IRCTC Suvidha Fee Sharing, IRCTC Convenience Fee News: In a major relief for the Indian Railway Catering and Tourism Corporation (IRCTC), the government has agreed to withdraw its order allowing the online ticketing branch of the Railways to share 50 per cent of the convenience fee. The decision was taken in a meeting between the top management of IRCTC and the Railway Board on Friday morning.
DIPAM Secretary Tuhin Kanta Pandey tweeted, “The Ministry of Railways has decided to withdraw the decision on IRCTC Convenience Fee.”
Shares of IRCTC fell over 27 per cent to an intra-day low of Rs 639 on the NSE. However, signs of recovery were seen after the decision to withdraw the order was announced.
Earlier on Thursday evening, the Railways had asked IRCTC to share 50 per cent of the revenue earned from bookings on its website with the national transporter, an arrangement that has been put on hold since the pandemic. In a regulatory filing on Thursday, IRCTC informed SEBI that the Railways has said that the revenue-sharing arrangement will be implemented from November 1.
The convenience fee charged from the customers generated a huge revenue for both IRCTC and Railways. The fee is not part of the rail fare. This is for the online ticket booking service offered by IRCTC.
In 2014-15, when the revenue sharing ratio was 20-80, the online ticketing and catering arm of the Railways received the majority of the revenue of Rs 253 crore. The following year, the revenue generated was Rs 552 crore with a 50-50 share arrangement. In 2016-17, with a similar revenue-sharing model, the fee generated Rs 362 crore as earnings for the IRCTC-Railway alliance. However, after this the convenience fee was discontinued and both did not earn any revenue from it till 2019.
IRCTC started charging fees again during the coronavirus crisis mainly to boost its revenue during the recession. The Railways, however, gave up its share. IRCTC earned Rs 352 crore from convenience fee in 2019-20 and Rs 299 crore in 2020-21. Till August this year, IRCTC had earned Rs 224 crore.
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