Breather for IRCTC as Indian Railways decides to withdraw 50% convenience fee sharing order

IRCTC convenience fee sharing, IRCTC convenience fee News: In a huge relief for the Indian Railway Catering and Tourism Corporation (IRCTC), the government has agreed to withdraw its order asking the online ticketing arm of the Railways to share 50 per cent of the convenience fee. The decision was taken at a meeting between the top management of IRCTC and the Railway Board on Friday morning.

“Ministry of Railways has decided to withdraw the decision on IRCTC convenience fee,” DIPAM Secretary Tuhin Kanta Pandey tweeted.

IRCTC shares crashed more than 27 per cent on the NSE to hit an intra-day low of Rs 639. However, a sign of recovery was 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 its revenue earned as convenience fee from bookings on its website with the national transporter, an arrangement that had been discontinued since the pandemic. In a regulatory filing on Thursday, IRCTC informed SEBI that the Railways has said the revenue-sharing arrangement would be enforced from November 1.

Convenience fees charged from customers generated a sizable revenue for both IRCTC and the Railways. The fee is not part of the rail fare. It is for the service of online ticket booking offered by the IRCTC.

In 2014-15 when the revenue sharing ratio was 20-80, the Railway’s online ticketing and catering arm received a majority of the Rs 253 crore revenue. The following year, the revenue generated from this 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 earning for the IRCTC-Railway combine. However, the convenience fee was discontinued thereafter and the duo did not earn any revenue from it till 2019.

The IRCTC began charging the fee again during the coronavirus crisis mainly to boost its revenues during the slowdown. The Railways, however, gave up its share. In 2019-20, IRCTC earned Rs 352 crore from convenience fees and in 2020-21, it earned Rs 299 crore. Till August this year, the IRCTC had earned Rs 224 crore.

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