Scope for public private partnerships in railway tourism in india

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Indian Railways is the world's second-largest railway, with 6,853 stations, 63,028 kilometers of track and 37,840 passenger coaches. Every year it carries around 4.83 billion passengers. Most part of the railway system is currently a public enterprise with some public private partnership avenues coming through with initiatives like IRCTC - Indian Railway Catering and Tourism Corporation. This is however at a very nascent stage and there is scope for a lot more participation from private players. This works both ways, in providing better services to the passengers and also creating avenues of growth for the private players / brands.

As part of my dissertation I would be exploring the following

1) Avenues for use of railway infrastructure as alternative medium for brands to reach out to their target audience.

2) Feasibility of creating branded railway experiences

The scope will be limited only to the national railway network and suburban railways, MRTS are out of the scope of this dissertation.

Through this dissertation I would be looking at exploring passenger pain points which may be turned into windows of opportunity for brands. For example during long train journeys lack of entertainment options for the passengers could be an opportunity for a pay per view movie screening offering for a company like Moser Baer . I intend to do a survey of railway passengers across various cohorts to find out the most pertinent issues faced during rail journeys so that we may look at addressing these through partnerships with private players.

IRCTC currently runs a number of tour packages for high density tourist destinations like Goa and Darjeeling and also for the religious tourism circuit. The quality though is debatable and there are a number of routes that have tourism potential just for the sheer natural beauty of the routes , for example the Konkan Railways route which are yet to be tapped

Another focus area would be exploring the feasibility of creating co branded properties as a tourism experience. To take an example creating a bi monthly package like The National Geographic Tiger Reserves of India Tour. My interest is in looking at the costs of creating such a property and expected returns from the same.

The two experiences above are targeted at different target segments. There is clearly still scope for understanding a lot more about the diverse needs and attitudes of train passenger markets. A cluster analysis study of the consumers for the services of the Indian Railways would yield the size of market and the primary needs and attitudes of the target groups. I plan to support my hypotheses through case studies of successful implementation of similar PPP initiatives in other geographies.

Through my dissertation I would be aiming at creating a strong case for the railways as an underutilized medium which has so far been only been looked at mainly as a basic transportation service. Through the analysis of the various areas outlined above I plan to create a strong business case for investment in the railways for corporate players and brands.

Literature Review

If properly formulated and managed, a PPP can provide a number of benefits to the public sector such as: alleviating the financial burden on the public sector due to rising infrastructure development costs; allowing risks to be transferred from the public to the private sector; and increasing the "value for money" spent for infrastructure services by providing more efficient, lower cost, and reliable services 1. However the investment climate and complexities in India are quite different from that anywhere else in the world and need to be understood in detail.

Key learnings from available literature may be a good place to start looking at various factors that may contribute to the success or failure of PPP initiatives 2. Through an exploration of instances from across the world where PPP have been successful in creating value we may garner best practices that would be useful in creating an actionable framework for development of railway tourism in India. Instances of a few such partnerships which have been viable range in scope and scale from extension of Underground Railways in Hong Kong 3 to partnering in National Parks in New South Wales 4 to partnership with communities in Southern Africa 5|.

The current utilization of railway infrastructure and an operational analysis of the system as it currently exists gives us an understanding of the size and scale of operations and hence the size of market and helps create a strong case for corporate entry 6 . The impact of safety as a primary concern for deciding in favor of railways as a viable tourism option has also been explored 7 .

The resources at the disposal of the Indian Railways for the PPP initiatives may be derived from data like annual reports of the Indian Railways 8and the Balance sheets 8 and P&L statements of the last 5 years. The annual reports are also a good indicator of the initiatives that the railways is undertaking.

The methodology to be followed for segmenting customer groups according to needs and attitudes may be done using cluster analysis of passenger feedback. I intend to use the framework used in a similar study in UK9 to define the customer segments in India. The viability of rolling out such a program in India may also be examined in the light of a similar venture in Queensland 10.

Through the literature review we see that although there are instances of PPP in tourism and even in railways elsewhere in the world and there are documented studies of the same. There are no such studies for Indian Railways currently available. There is no current literature on the market segmentation for the Indian Rail passenger market and hence no targeted campaigns for improving operational efficiency in passenger traffic. Also very low involvement of the corporate sector presents scope for higher involvement and hence enhanced customer experience through efficiencies of scale for both the railways and the corporate.


1. B. Li, A. Akintoye, P.J. Edwards, and C. Hardcastle, "Perceptions of Positive and Negative Factors Influencing the Attractiveness of PPP/PFI Procurement for Construction Projects in the UK," Engineering, Construction and Architectural Management, 12/2 (2005): 125-148.

2. TABLE 11 , Young Hoon Kwak , YingYi Chih , C. William Ibbs ,"Towards a Comprehensive Understanding of Public Private Partnerships for Infrastructure Development", CALIFORNIA MANAGEMENT REVIEW VOL. 51, NO. 2 WINTER 2009

3. "Achieving Partnering Success through an Incentive Agreement: Lessons Learned from an Underground Railway Extension Project in Hong Kong" , Albert P. C. Chan; Daniel W. M. Chan, M.ASCE ; Linda C. N. Fan ; Patrick T. I. Lam ; and John F. Y. Yeung , JOURNAL OF MANAGEMENT IN ENGINEERING © ASCE / JULY 2008

4. "From lessees to partners: exploring tourism public-private partnerships within the New SouthWales national parks and wildlife service" , Erica Wilsonâˆ-, Noah Nielsen and Jeremy Buultjens , Journal of Sustainable Tourism Vol. 17, No. 2, March 2009, 269-285

5. "Joint Ventures between communities and tourism investors: Experience in Southern Africa" , Caroline Ashley and Brian Jones , International Journal of Tourism Research , 3 , 407-423 (2001)

6. " Operational Planning in Passenger Trains in Indian Railways", K V Ramani , B K Mandal , IIM Ahmedabad , The Institute of Management Sciences 0n91.2102/92/22O5/OO39$Ol 25

7. ""Competition between Intercity Rail and Road Transport in India: External and Social Costs", Prosenjit Dey Chaudhury , TERI, New Delhi , Journal of the Asia Pacific Economy Vol. 11, No. 3, 308-330, August 2006

8. Balance Sheet and Annual Report for the last 5 years for Indian Railways ,

9. "Sustainable Transport, Market Segmentation and Tourism: The Looe Valley Branch Line Railway, Cornwall, UK", Jamie Dallen , University of Exeter, UK , Journal of Sustainable Tourism Vol. 15, No. 2, 2007

10. "Tracks to Tourism: Queensland Rail Joins the Tourist Industry", Bruce Prideaux, INTERNATIONAL JOURNAL OF TOURISM RESEARCH ,Int. J. Tourism Res. 1, 73±86 (1999)

Conceptual Framework/Problem Definition

As part of my dissertation I intend to build a case for participation of corporate entities and brands in railway tourism in India. As already discussed in the literature review there are studies that exist for market segmentation of railway passengers and also case studies for PPP in various tourism related areas from across the globe that exist. My hypotheses are the following

H1 - There is a sizeable market for services beyond only transportation in railways

H2 - Private participation will be profitable for both Indian Railways and participating corporate in the long run

Towards H1 my approach would be to assess the size of opportunity through market segmentation techniques.

Towards H2 I will be doing a analysis of current and past financials for Indian Railways and also break even analysis for a green field PPP project to see how long it would take to turn a venture profitable. The size of market calculations from H1 would be integral to the break even and profitability calculations.

Proposed Research Design

The research needs for the dissertation would be to aid in the following objectives

Assessing pain points for passengers

* Research approach - Survey

* Data collection- Primary - Survey Questionnaires , Secondary - Available research

* Sample Design - To be determined

* Proposed method of analysis - Content analysis

Cluster analysis of passengers needs and attitudes for market segmentation

* Research approach - Survey

* Data collection- Primary - Survey Questionnaires

* Sample Design - Cohort spread across different SEC's , Also sizeable number of foreign tourists to get their perspective

* Proposed method of analysis - Cluster Analysis

Expected Contribution

My dissertation is based on my belief that the Railways may be utilized a lot more than as a means of transportation. Through a detailed study of passenger viewpoints, opportunity windows past financials and current assets my dissertation would present a strong case for public private partnership.

It will outline in the form of a business plan for private partners, passenger need gaps, size of market for particular services, size of investment needs and expected break even time and ROI expectations thus presenting the business opportunity in black and white.

For Indian Railways it would mean moving up the value chain from transportation major to a corporate entity with multiple profit centers and better utilization of current and future assets.

Above all for the passengers it would mean better services like hygiene , food , entertainment , tourism opportunities all under the ambit of trust that Indian railways already commands and at affordable prices.