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FUTURE ON TRACK - IRCTC
By M H AHSAN
With a slew of breakthrough reforms, the Indian Railways is on the fast track of tourism growth. But a sudden turn of events in its nodal body, the Indian Railways Catering and Tourism Corporation (IRCTC), has threatened to derail the modernisation process. HNN assesses the sweeping changes.
A journey begins with a single step. In this case, the journey of the railways rolled out in 1853. The railways gave birth to tourism, as we know it today. It offered people the means for organised and comfortable group travel. As rail travel for tourism purposes reached scalable proportions, the Indian Railways set up the Indian Railways Catering and Tourism Corporation (IRCTC), with an agenda to facilitate tourism and impart professionalism in catering services. It is a single window interface that provides complete travel and tourism solutions for various customer segments.
Apart from catering to transportation needs of the masses through the length and breadth of the country, its product also includes luxury trains, such as the Palace on Wheels. These are perhaps its most defined tourist offering, combining hospitality with transport, and an advantage that no other mode of transport can hope to enjoy. Today, its repertoire has expanded beyond its core product.
The onslaught of transportation options available to tourists today is a reason compelling enough for the railways to reinvent the very model that brought them success. The lifeline of the country is competing head on with airlines for passengers. Soon, with the completion of the golden quadrilateral, it will compete with road transportation options.
The approach followed by the IRCTC was to raise the quality and quantity bar across its products. Food audits of base kitchens. 100-budget hotels. Food quality inspectors from 5-star hotels. New weekend tourism packages. E-ticketing and I-ticketing services. A new rail tourism website. These are just some of the initiatives introduced.
But a shocking turn of events threatens to derail the modernisation process. A Public Interest Litigation (PIL) filed against it, accused the ministry and IRCTC of serving unhygienic food. In response to the PIL for food quality, IRCTC said that the committee has noted with satisfaction improvement in quality of food in air-conditioned trains. Also, it had appointed research agency IMRB to professionally assess customer satisfaction, and would look into various aspects such as the quality and quantity of food and beverage including its taste, hygiene, and presentation. Other key aspects included service, quality, punctuality and communication skills; bedding quality and its standards. Essentially, all the services that made it a wholesome tourism product. But the tide had turned, and the turn of events is now, history. The railway minister is taking strict action against IRCTC's key official, PK Goel, its MD, along with other key players, leaving the organisation in disarray.
What does this herald? The rail minister has pointed out that the peripheral activities, with specific reference to the budget hotels, have made the nodal body IRCTC lose focus from its core product - food. Now a question mark looms over the fate of these projects. And it was these very projects which would have expanded its breadth of operations and ramped up future profit. Suddenly, the light dims.
The Indian railways have always been the backbone of the economy and an integral part of our social fabric. The intrepid railway minister, Laloo Prasad Yadav, received much adulation for the changes he introduced, and there are statistics to back it up. For the first nine months of the year 2006-07, besides growth in passenger earnings, gross traffic revenues also have higher projections at Rs 63,120 crore, 16 per cent higher than the previous year, and 5.5 per cent higher than budget estimates. Net revenue is expected to be Rs 14,870 crore and net surplus, after payment of dividend, is expected to be Rs 10,627 crore.
The turnaround, as experts say, happened when the railways, decided to tackle its losing share, both in the freight and the passenger sector. It needed to cut flab and tauten its girth. The focus of the railways over the past two years under the helm of Goel has been clear-cut: Expand its repertoire of offerings and at the same time raise the quality bar. Goel's achievements are evident. The new ideas infused under his tenure include a rehaul of passenger amenities, including cyclic menus, water-vending machines at stations, a centralised call centre for railway enquiry and various alliances to boost ticket sales, apart from opening cyber cafes and food plazas at stations.
The corporation, going strong on the other products, was continuously trying to improve and innovate. Not only its product strength, including catering strength, but also its marketing reach and depth. According to Arun Srivastava, deputy general manager, tourism marketing, IRCTC, "Ever since its inception, IRCTC's focus has been on providing quality services to its customer by continuous upgrading and innovation. With this focus, IRCTC has been able to strengthen catering services. Technological innovations such as E-ticketing, I-ticketing have been great innovations in terms of increasing passenger comfort with the help of technology." And what the corporation is set out for is to be the leading provider of a complete spectrum of consistently high quality tourism products.
The aim of this was a holistic product offering to fit across all tourism segments (see box: the new rail website) and reach out to potential travellers. "Making available the above mentioned services under our own conglomerate puts IRCTC in the unique position of being able to offer readymade as well as customised packages to meet the requirements of all segments of the travel and tourism industry," a senior official said.
And taking a leaf out of the airline industry's low cost carrier (LCC) strategy of tapping the distribution strength of alliance partners for boosting ticket sales, the Indian railways is selling tickets through existing facilities of SBI and Bank of India, Department of Post and Telegraph, and recently signed an MoU with the Indian Oil Corporation for the same.
Perhaps its most important grass root initiative towards boosting tourism is a thrust on rail-bound tourism outside the ambit of luxury trains - its rail packages that include value-added services and a guaranteed rail reservation. Destinations from where it will be operated include Bangalore, Mumbai, Kolkata (Howrah) and New Delhi to Kerala and Tamil Nadu.
The services include travel services such as reservation, ticketing, and package tours, boarding and lodging to customers. These tour packages would run across the country on new and already running passenger trains. To promote these packages, IRCTC is planning to rope in tour operators to market the products. While this opportunity should have been realised and implemented a long time before, the railways contention is that if this is successful, packages covering other destinations will also be launched.
Also in the pipeline is a high-speed corridor to connect key business hubs, competing with airlines, for instance, Delhi-Amritsar and Mumbai-Ahmedabad, which will be an attractive proposition for business travellers.
Strategic alliances with tourism boards and tour operators, private-public partnerships, focused communication to the right target audience and coordination internally will leverage it from being an unknown yet excellent commodity to being a known and appreciated differentiated offering. But the fulcrum of success is decisive leadership that will enable it to prioritise and leverage the momentum generated. How soon the ministry appoints a new successor to this role, and what direction it takes is yet to be seen.
Speaking on broader aspects, Mukesh Jagga, president, Association of Domestic Tour Operators of India mentions, "Indian tourism is yet to feel the great impact of Indian Railways. There is a vast untapped potential but we are gearing up to tap the same. We must realise that even when air travel has become cheaper, train travel is still the most preferred mode of transportation of the masses. Why isn't it getting better everyday?"
The issue is lack of integrated packages. The travel industry is yet to encash on it as tour packages incorporating train travel with stay and ground facilities are still missing. Consider this, 180 trains pass daily through Bhopal in Madhya Pradesh, which translates, into thousands of passengers. "Even if two per cent of this volume can stay at Bhopal for two days, this will give a huge impetus to domestic tourism," Jagga mentioned.
Slowly, the travel fraternity is waking up to the fact that domestic tourism thrives on this mode of transportation, especially religious tourism. Industry experts also suggest that the Indian travel industry must take a cue from Europe where the Euro Rail Network has created a humongous difference and is a part of every tourist's itinerary. It is a model that needs to be replicated in India too. According to Jagga, the need of the hour is to have combination options from IRCTC. Which means if a passenger is booked from Delhi to Chennai and enroute he plans to spend two days in Madhya Pradesh, then the railways will take care of accommodation, local sight seeing, etc. The railways must ensure that this onward journey is confirmed as per schedule. The logistics involved in such an endeavour can be provided through alliance with suppliers.
The success of these ventures depends on the trade support the IRCTC garners. The IRCTC is planning to rope in tour operators to help promote its initiatives. This includes offering them a structured benefits and commission system, akin to that what airline reservation entails. Srivastava said, "We have worked out attractive incentive structure for our various tourism products for our GSAs and sales agents. This structure varies for different products. Over and above, based on the performance, additional incentives would be applicable."
While the commission structure has not been fixed by IRCTC, the general consensus of operators is that it should be a minimum 15 per cent agency commission to promote a product like a package of Mahaparinirvan Special that plies on the Buddhist circuit. But it isn't merely on the pecuniary side that the operators seek support from IRCTC, but also with promotional products and tools. A working partnership is key, much akin to the strategy followed by National Tourist Offices in India. Says an operator, "Moreover there has to be a dialogue between IRCTC and tour operators. IRCTC can extend support to tour operators in printing brochure for publicity. While IRCTC should organise road shows in conjunction with tour operators by sharing the expenses," said Jagga.
Dalip Khanna, marketing head, Japan and Far East, Indo Asia Travels, who took the eight day journey onboard the Mahaparinirvan train recently, said, "It still has to be discussed with IRCTC before we take promotional trips to Japan and other far eastern countries for the coming tourist season to promote the packages. As of now I do not have any idea if any support has been assured or extended by IRCTC to any tour operators to promote the business for this train. However, I feel that if IRCTC can support the tour operators by offering them special discounts or tariffs then they can sell the same more effectively in the competitive overseas tourist market."
Essentially, it is not the lack of depth in product offering that breeds concern, but the basic foible of not supporting itself with the correct marketing mix. This coupled with red tape and a laid-back attitude freights down good intentions. On the request of anonymity, a senior industry observer said, "IRCTC has some fabulous products to offer and these products have been around for a while. Frankly speaking, the IRCTC has to break free from its inertia and bureaucratic attitude. They have to make themselves and their work known to the industry. They lack a cohesive marketing and communication strategy. It doesn't make any sense if there are ten beautiful products but one doesn't know how, when, where and to whom should these products be promoted to, and this is what the corporation has to learn."
Clearing their stance, the IRCTC officials maintain that it is only now that IRCTC is taking its marketing seriously as far as tourism is concerned. Sadly, the change at the helm happened just when the corporation was formulating plans and strategies to build its new brand identity. The future course of action is yet to be seen.
Though airlines threaten to grab the railway's share of passengers, the latter is unmatchable in its reach. The fact remains that the railways have been lackadaisical when it came to tourism promotion. Aviation rose to the occasion much earlier than expected, despite the lack of infrastructure to support growth. But now as the times are changing, the railways are rectifying past mistakes. Competing through competitive pricing and technology and product offerings, it hopes to salvage some lost ground.
The travel industry has welcomed the introduction of 32 new trains in the current year's budget, which means creating more capacity and construction of 225 stations. These steps are very likely to offer a fillip to the tourism. But perhaps the only announcement the industry seeks is a leader to show the way ahead.
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