Online travel firms frown upon IRCTC revised fee structure, to approach regulator

The Indian Railway Catering and Tourism Corporation's (IRCTC) move to charge a fee of Rs 12 plus taxes on every ticket booked from service providers such as MakeMyTrip, Yatra, Paytm and Cleartrip is making portals uncomfortable.

And it has its obvious reasons.

With the new fee structure, the cost would increase 10- fold that needs to be borne by OTAs. The projected cost rise is said to be around Rs 40-50 crore. This is going to affect operations and ultimately lead to passing the cost to customers.

The travel service providers are reaching out to IRCTC to rethink on a new structure. They are also planning to approach regulatory authorities if the expected solution is not met.

"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, quoted by ET report.

Besides the annual maintenance charges, IRCTC will charge Rs 5 will for display of advertisements and Rs 15 will be charged for cashback offers or for clubbing ticket sales with products and services of third-party. Also, there will be an additional charge of Rs 25 per ticket in case of cross-selling of any third-party products.

IRCTC is a subsidiary of the Indian Railways and handles the catering, tourism and online ticketing operations of the parent. Earlier, IRCTC used to charge a flat annual maintenance charge. The new fee structure is aimed at opening a new revenue stream.

In its 2016-2017 annual report, IRCTC on an average sold 573,000 e-tickets daily. IRCTC saw a 26 per cent drop in Internet ticketing revenue to Rs 466.05 crore in the financial year 2016-17. Despite selling more than 10 million tickets in compare to 2015-16, the value of ticket booked online increased merely by 2 % to Rs 24,485.21 crore.

IRCTC saw a 26 per cent drop in Internet ticketing revenue after it withdrew service charges on ticket.

At present, IRCTC revenue verticals include catering and hospitality, bottled water Rail Neer, travel and tourism, and internet ticketing.

Travel and tourism grew 41 per cent in 2016-17 to Rs 527.35 crore, contributing the most to the company’s revenue at 34 per cent. IRCTC sells reportedly over 12 lakh tickets a month.