AC Classes Now Contribute Over Half Of Indian Railways' Revenue, Reversing Pre-Covid Trends

Over the five years following the Covid-19 pandemic, there has been a noticeable shift in revenues from AC class and all Second Class tickets, including Sleeper Class (that provides a berth) in Indian Railways. This change was reported by The Indian Express after analysing the Budget documents.

During the 2019-20 fiscal year, the revenue generated from passengers who traveled in air-conditioned (AC) compartments, including AC First Class, AC 2-Tier, AC 3-Tier, and AC Chair Car, constituted just over a third, or 36 per cent, of the total passenger revenues of Rs 50,669 crore.

On the other hand, non-air-conditioned passengers, excluding suburban travelers, contributed to the majority of the revenue, making up 58 per cent of the total. Now, this trend has nearly flipped.

It is projected that in the fiscal year 2024-25, passengers traveling in AC classes on the railways will account for 54 per cent of the total passenger revenues, which is expected to be Rs 80,000 crore. On the other hand, passengers in non-AC classes (excluding suburban) are anticipated to contribute merely 41 per cent to the total revenue.

The non-AC categories consist of the Second Class Mail/ Express, also known as General Class, that operates over long distances, the Second Class Ordinary that services inter-city or shorter routes, and the Sleeper Class that provides passengers with a berth.

Although the proportion of AC class passengers remains in the lower single digits, the actual numbers have more than doubled from 18 crore in the pre-Covid year of 2019-20 to 38 crore in 2024-25.

The Railway Traffic

In the 2019-20 period, AC passengers represented 2.2 per cent of the total 809 crore passengers, whereas in 2024-25, they constituted 5.2 per cent of the overall 727 crore passengers. It's clear that the total railway passenger traffic in 2024-25 has not yet matched pre-Covid levels, showing a decrease of 10 per cent compared to 2019-20.

However, when you remove the sub-urban passenger numbers from the equation, the traffic appears to have largely bounced back. The non-suburban passenger traffic in the Railways was 349 crore in 2019-20, and it's projected to be around 334 crore in 2024-25.

According to The Indian Express, the AC 3-tier class is projected to generate Rs 30,088 crore in 2024-25, making up 38 per cent of the anticipated total passenger revenues of Rs 80,0000 crore across all AC and non-AC classes.

This class is predicted to transport 26 crore passengers out of an estimated 38 crore passengers travelling in AC classes for that year. In terms of percentages, the AC 3-Tier passengers represent 3.5 per cent of the projected total of 727 crore passengers using the Indian Railways services.

In the non-air-conditioned category, travellers who do not have a berth, specifically those in Second Class (Ordinary) and Second Class (Mail/ Express), are projected to total 256 crore passengers in 2024-25, making up 35 per cent of all passengers.

When it comes to passenger revenues, these two classes are expected to collectively contribute Rs 17,558 crore, which will constitute 22 per cent of the total revenues for the year 2024-25.

In the year preceding the Covid-19 outbreak, the combined total of Second Class (Mail/ Express) and Second Class (Ordinary) made up 293 crore passengers, equivalent to 36 per cent of all passengers, and contributed Rs 15,620 crore, representing 31 per cent of all revenues.

The Fare Hike

Over the past five years, there has been an observed rise in ticket prices across all classes, ranging from 6 per cent to 25 per cent. The mean fare for each passenger in the Sleeper Class saw a rise from Rs 368.28 in 2019-20 to Rs 407.48 in 2024-25.

Concurrently, the fare per passenger for the Second Class (Mail/Express) experienced an average hike of 5.52 percent, which equates to an increase of Rs 6.42, within the same timeframe.

In addition to other factors, suburban commuters have experienced a minimal rise in fares, averaging only Rs 1.12 over the past five years. Despite an increase in suburban traffic during this period, it has yet to reach its pre-pandemic levels.

In the 2019-20 period, suburban trains serviced 460 crore passengers, while projections for 2025-26 suggest a decrease to approximately 409 crore passengers. This decline in suburban travel could be attributed to various factors, including alterations in work routines or a transition to alternative transportation methods like metro or road travel.

The only class to experience a fare decrease, averaging Rs 4.43 per passenger, is the Second Class (Ordinary). Despite this, the projected passenger count for this class in 2025-26 is 131.9 crore, a figure that still falls significantly short of the 185.12 crore recorded in 2019-20.