The train, which was a first-of-its-kind public-private venture, has defaulted on Rs25 million which the private company, M/S Four Brothers, owes to Pakistan Railways under the agreement.
Railways Chairman Arif Azim said that the Pakistan Railways will be heavily criticised if the train project is shelved while Railways Minister Ghulam Ahmed Bilour said that the agreement was tilted in the railways favour.
The Pak Business Express, which was launched on February 3 by Prime Minister Yousaf Raza Gilani, travels between Lahore and Karachi, for 5,000 rupees one way or 9,000 rupees return ticket.
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This is like a firecracker. Blows up a few seconds after its launch
@hustlerbaby: Fahim is right, being Western educated doesn't mean you don't live in denial like most Pakistanis do. Learn to acknowledge the facts then being mindlessly patriotic. And Fahim's comments make sense.
i can bet you that someone made millions of rupees to put this deal together........clearly even a novice can see that this deal will not work.......in pakistan even beggers are very good at math :p
so here is see what happened.......the due diligence team came back with a resounding NO and someone at the top said "whoever wants to keep their jobs, please say yes" and even people with high morals know that in pakistan standing up for whats right just makes you part of the problem. so of course everyone said a YES and here we are..........
This is no way to learn that the public-private partnership doesnt work!
This may be the only good thing happens in our country in the corrupt Govt of decade. Our family has actually traveled just few days back. We were presently surprised that if we can get a clean & on time train in Pakistan. We & our three kids had traveled for 3,500 Rs, ticket in separate coupe with door closed from inside. The toilets were clean & it was exactly starts 15.30 from Lahore & reach Karachi at 10' morning , looked like a dream. I think we should support this is kind of private business activity instead of discouraging others.
@fahim, i doubt you are even a Pakistani for what you have just said. If people like you do exist that think they arent capable of anything then Pakistan will never prosper. I swear the Urdu media is far more patriotic and loving. And i am western educated.
@Cautious: "They couldn’t meet their financial obligations after one day of operation which is an obvious sign that they were under capitalized"
In addition to being undercapitalized, this is set up for failure from get go. The 5 million revenue committed to railways would not be met even if ALL 600 seats on the train were Business Class earning Rs. 5000 ANd the train ran at 100% capacity. But the fact is that 2 compartments are business, 4 compartments are budget (at 3500) rupees) and 1 compartment is economy (1t 1800). So assuming a weighted average revenue per passenger of 3500, the can only generate 2 million per day if the train goes at 100% capacity. How could this service ever be profitable?
No reasonable business person would sign up for such an obviously loss making proposition which leads one to believe that there must be something else to the transaction which is undisclosed.
They couldn't meet their financial obligations after one day of operation which is an obvious sign that they were under capitalized. Had the the govt/railroad performed a due diligence review they would have never entered into an agreement with this outfit -- bad management all around.
@Faraz: "Rs 5000 for an 18 hour journey! those who can pay 5K would rather fly then take the train and spend 18 hours commuting between Lahore and Karachi! "
Faraz, you are not a transport planner but clearly your guess apparently was right on the money. The venture did discover that business passengers were not travelling and introduced budget class and economy class fares (3500 and 1500 respectively). Apparently the folks with 1500 only get a cup of tea - which is fine. But as you said, this is common sense. Yet all profitability projections appear to have been made with business passengers paying 5000 in mind.
Read here: http://tribune.com.pk/story/337050/pak-business-express-economy-budget-class-save-the-day/
@gp65: "This assumes that around 1800 people would need to travel daily just to cover money owed to railways. That would not even take into account operating costs such as locomotive depreciation and maintenance, fuel, staff costs, food costs etc."
To add to what I mentioned, the train needs around 1800 passengers just to break even on the amount to be given to the railways and yet the total number of passengers that CAN travel (assuming 100% capacity utilization) is 600. How can this venture ever be profitable?
I am no transport planner/logistics expert but seriously, who thought this train would do good business? Rs 5000 for an 18 hour journey! those who can pay 5K would rather fly then take the train and spend 18 hours commuting between Lahore and Karachi! They should have only targeted middle/lower middle class and helped made their life better, they wouldn't care for having wi-fi, fancy restaurants and waitresses serving them on board, they just need efficient and cheap service which this train could have provided but for some inexplicable reason they decided to target the business community or the more affluent who I don't think would want to travel on a train and spend 18 hours commuting, target the people who can actually use the service, ridiculous idea, bound to fail, seriously, I can't believe a company can invest billions without acknowledging these very simple facts! what a joke!
Please review the sequence of events as reported in Tribune itself.
The train was launched with great fanfare on Feb 3: http://tribune.com.pk/story/331364/to-put-economy-on-back-on-track-pm-inaugurates-business-train/
Less than one week of completing operations, the venture had already run into financial difficulties. See this article dated Feb 9 http://tribune.com.pk/story/333740/stuttering-start-pakistans-first-private-train-service-skips-payments/
So to stem the losses an economy class had to be introduced because there were simply not enough business class passengers. Read here an article dated Feb 16: http://tribune.com.pk/story/337050/pak-business-express-economy-budget-class-save-the-day/
Despite knowing these issues of financial difficulty and market demand not being what was expected, there was talk of introducing 5 more trains on the lines of business express just yesterday on Feb 21 http://tribune.com.pk/story/339303/public-private-partnerships-five-more-private-train-services-in-the-offing/
They owe PR 5 million rupees daily. Average revenue per passenger is around 2800 rupees for a one way trip that takes around 18 hours. (weighted average of business class, budget class and economy class people). This assumes that around 1800 people would need to travel daily just to cover money owed to railways. That would not even take into account operating costs such as locomotive depreciation and maintenance, fuel, staff costs, food costs etc.
The train simply isn't getting that much traffic. Particularly in the more lucrative business area. So it seems strange that the management a) committed to such high daily revenues. b) Did not have a buffer at least for the first few months during which the train got popular and started getting passengers.
we must stop these gimmicks at once... we are already the joke of the table at international forums, and we should not make more fool of ourselves by taking these kind of misadventures. The only projects that succeed here is when we beg the chinese to come and do for us, and then go chest thumping on "our" achievements. We all know what we are capable of in reality. This train a glaring example.
Will PM show up again on de-railing cermony...
:(
Defaulted ? What a shame . what govt was thinking when it approved this ?