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A dynamic pricing strategy model for Indian Railways

Author

Listed:
  • Kartikeya Singh

    (Indian Institute of Management)

  • Pushkaraj Dhake

    (Indian Institute of Management)

  • Sundaravalli Narayanaswami

    (Indian Institute of Management)

Abstract

The Indian Railways has adopted a dynamic pricing mechanism for its premium trains like Shatabdi, Rajdhani, and Duronto. This led to an increase in its revenue but also a fall in passenger traffic. In this paper, we have analyzed the existing dynamic pricing model. A major flaw in the existing system is that the present system is only a fare hike system rather than a dynamic pricing system as there is no provision for a decrease in prices when the demand is low. Considering this, we have developed a new model that incorporates both inter-temporal pricing and demand-based pricing to come up with the dynamic fares along with the provision of having a downside in case of low demand. We developed a route selection criteria based on the key parameters identified by us where dynamic pricing would yield good results. The model was then tested on these routes using real-time data to determine the feasibility of the dynamic pricing system.

Suggested Citation

  • Kartikeya Singh & Pushkaraj Dhake & Sundaravalli Narayanaswami, 2024. "A dynamic pricing strategy model for Indian Railways," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 23(4), pages 295-304, August.
    • Handle: RePEc:pal:jorapm:v:23:y:2024:i:4:d:10.1057_s41272-023-00450-w
    DOI: 10.1057/s41272-023-00450-w
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    References listed on IDEAS

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    1. Guillermo Gallego & Garrett van Ryzin, 1994. "Optimal Dynamic Pricing of Inventories with Stochastic Demand over Finite Horizons," Management Science, INFORMS, vol. 40(8), pages 999-1020, August.
    2. Bharill, Rohit & Rangaraj, Narayan, 2008. "Revenue management in railway operations: A study of the Rajdhani Express, Indian Railways," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(9), pages 1195-1207, November.
    3. Ahmad Faruqui & Sanem Sergici, 2010. "Household response to dynamic pricing of electricity: a survey of 15 experiments," Journal of Regulatory Economics, Springer, vol. 38(2), pages 193-225, October.
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