In a bid to keep the Pakistan Railways’ first public-private venture afloat, Pak Business Express announced fare cuts on business and budget class coaches for the upcoming off-season.
The six-month old partnership enterprise has been successful in taking much load off the crisis-hit Pakistan Railways (PR). The Rs510 million paid by the business to the state-owned carrier in royalties for using its rail network and other facilities is more than the grand total PR made from all other train combined.
The amount was enough to cover PR’s losses for five of the past six months as the national carrier announced earlier that it incurs a loss of Rs100 million a month.
The joint-venture of Pak Business Express, portrayed by Pakistan Railways authorities as vital for the state owned carrier’s revival, has been battling crises since its inauguration. Although its departures and arrivals are on time, it is becoming tough for the management to continue the venture in its current format. The train achieved 100% occupancy, only a few times and that too was during the peak season of June and July. Presently, the occupancy rate declined to 50% according to the management, which compelled them to slash down fares on return tickets despite skyrocketing fuel costs. The budget class return ticket which previously cost Rs9,000 will now be available for Rs7,000. Similarly, the previous business class fare of Rs10,000 was revised to Rs9,000. However, the prices of one-way tickets will stay the same ie variable between Rs4,500 and Rs5,500.
The private company Four Brothers entered into a deal with the PR and invested Rs225 million to build the project. The privately-run enterprise is bound to pay between Rs1.5 million and Rs2.5 million per day to the Railways, according to the company’s management.
“Pak Business Express has so far spent Rs177.5 million to improve its services for passengers and paid Rs510 million to Pakistan Railways as royalty till date,” said Pak Business Express Project Director Mian Shafqat Ali. If the fixed cost to be paid to railways is calculated since the service’s inauguration, the total amount supposed to be paid to PR from February 3 till present amounted to Rs737.8 million. According to this, Pak Business Express has to still pay the outstanding dues of Rs227.8 million to the PR.
“We are unable to cover the daily fixed costs of Rs3.1 million as the company was facing losses, the amount which we paid daily to the Railways varied between Rs1.5 million and 2.5 million,” said Ijaz Ahmad, CEO of Pak Business Express while talking to The Express Tribune. We revised the fares for the winter season only to attain our maximum occupancy this season, we were also negotiating with the PR’s management to revise the royalty amount and total outstanding dues as we were not in a position to pay the hefty sum, Ahmad said. Nothing had been decided yet as our plea was under discussion with the higher officials of PR, he added.
Talking about the future of the business train, Ahmad said that we will not consider closing down this venture yet; however we were planning to reduce the number of services for the off-season. The current number of coaches in operation was nine including the luggage van in which six economy class seats and 24 berths were also attached. Pak Business Express was also planning to convert the majority of the coaches to economy class coaches, if it is successful the burden will decrease considerably, as only economy coaches achieved 100% occupancy rate, Ahmad said. However, this revised setup of coaches will be for an interim period which will end as soon as summer season begins, he added.
The success of the venture is providing much-needed funds to Pakistan Railways at a time when it is facing a huge financial deficit and many of its trains are waiting to be fixed in the workshops. Thus, the once invincible state-owned national carrier cannot afford to lose the Pak Business Express which pays its bills.
“We do not want this joint-venture to fail, and PR also does not want to lose its profitable enterprise, so we are hopeful that revised proposals will be finalised soon,” Ahmad said.
Published in The Express Tribune, September 28th, 2012.
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