Trains and the economy – case of New Delhi railway station

India has one of the largest rail networks in the world measuring more than 64,000 kilometres. According to the land and amenities directorate of Indian railways the total land holding under railways is 4,318 square kilometres, second only to the defence land holdings. Railway in India is a state monopoly and like most state run enterprises is highly inefficient and sluggish. A case in point is stations in Delhi. New Delhi railway station was commissioned in 1926 with a single track and a single platform. Then outside the old city and away from the newly built Lutyens’ Delhi it finds itself today amidst one of the most congested areas of the city. The station itself is a chaos. Depending on which source you look up there are anywhere between 360,000 to 500,000 passengers using the facility every single day (or 131.4 – 182.5 million a year). A total of 16 platforms handle around 300 trains a day.

Free boarding 

Access to the station is a nightmare and platforms are crowded throughout the day with scarce seating. Retail offer is substandard and vendors have arbitrary pricing. Festive seasons see a sudden spurt in passenger numbers. In the past years there have been incidents of stampede leading to death and injury during festive seasons. Poor visibility conditions in northern India during winters spell disaster for the limited infrastructure of the station. Many trains are cancelled or delayed leading to passenger build up on platforms.  Congested waiting rooms do not help to ease the situation either. A lot needs to be done to improve passenger convenience. Another aspect that makes the New Delhi railway station interesting is its location and 860,000 square metres it occupies in the central business district area. Redevelopment of the station will not only provide better passenger amenities but also give a boost to local real estate market which is struggling with shortage of space.

The huge volumes handled by the train station require specialist planning and operating procedures to manage the passenger flow. Being a terminus it is unlike other stations where trains arrive and depart after a short halt. The passengers arrive well in advance of their departure time and wait on the platforms with other passengers. At a given time there might be passengers waiting for four different trains scheduled to depart from the same platform within a few hours. This creates chaos and unwanted congestion. Arriving passengers on the same platform then add to the problem and passenger flow is seriously hampered and passenger safety undermined. Provisions should be made to segregate arriving and departing passengers like at airports. This will create more space for passenger flow and improve safety standards.

A multi level station complex with separate arriving and departing areas will double the passenger processing space. Separate waiting areas with retail offers will generate more revenue and improve passenger services. Standard operating procedures spelling out step wise details of passenger processing from the moment passengers enter the station building till they depart will harmonise passenger handling. Adequate holding areas will also act as buffer to handle delays. The flow might work in a way that passengers arrive at the departure level and are segregated depending on their departure time. Passengers arriving close to their departure time will be sent to gate areas linked to their platform and early arrivals will be directed to a common waiting lounge. Security checks can be done in the gates area prior to final departure. Similarly arriving passengers will be processed at arrivals level and will leave the station building according to the arrival procedures. A separate procedure for trains with short halts will have to be put in place. This can be in form of dedicated platforms with separate access points.

Bringing in operational efficiency is definitely a priority, but harnessing the business potential of the location should also be part of the plan. In a small scale it has already started happening with Delhi Metro. Many metro stations now have multi story business centres and shopping malls. High passenger volumes and proximity to the central business district will make the New Delhi station area very attractive. The huge land area available can be used for office complexes, mid range and budget hotels, shopping areas, restaurant, employee welfare, and so on. Redevelopment of the station complex will have a significant contribution in the local economy in the long run. The railways too will benefit from efficient operations and can ensure a safe journey to passengers.

Waiting for the connecting flight

Kingfisher Airlines’ license has been suspended and Mr. Mallya is nowhere to be found. Newspapers are pouring in a lot of ink to cover how the mighty falls. To be fair it was inevitable. There was too much capacity in the skies and irrational fares were the norm. Fares were not cost based but Air India based (Air India offered unrealistically low fares to grab market share unleashing a fare war). These are perks of a developing aviation market. What is strange however is the unwise use of the excess capacity.

Ever since the Delhi and Mumbai airports were privatized the media and the ministry of civil aviation (MoCA) rubbed two words deep in our minds. So deep that we used them without thinking what they really mean. The words were, “world class” and “hub”. Every one promised world class infrastructure, we all expected world class infrastructure, the ministry talked about turning India into a world class hub, a global hub and sometimes just a hub. India did get a lot of modern looking terminals in the past couple of years, I will leave it for the passengers to decide whether they are world class or not. But the other word, “hub” seems to elude India even after the modern terminals became operational.

Where is my hub?

A hub is an airport where people fly in from different corners of the world, change the aircraft and fly on to their destinations. A good example would be Dubai in the Middle East or Frankfurt in Europe. MoCA (irrespective of the minister in charge) always propagated the idea of turning Delhi and Mumbai into a hub. Before commissioning of the integrated terminal three at Delhi, hub operations were difficult due to two separate locations for international and domestic operations. This has been taken care of now by terminal three. Still Delhi is nothing close to a hub. Currently Delhi airport has close to 10% of its total traffic as transfer traffic. A large chunk of which is international to domestic transfer. The trend will not be much different for Mumbai either. Compared to 10% transfers at Delhi/Mumbai Dubai and Frankfurt have close to 50% transfer traffic.

City pair	Air India	Jet Airways	Emirates	Qatar Airways
LHR – HKG	0	1/1.5/BOM	2/1.5/DXB	4/1-2/DOH
LHR – SIN	0	2/12-23/BOM	4/2-3/DXB	4/1-6/DOH
LHR – SIN	-	1/12/DEL	-	-
LHR – PEK	0	0	5/3-5/DXB	4/1.5/DOH
LHR – TYO	1/10/DEL	0	2/2.5/DXB	4/2-7/DOH
LHR = London; HKG; HKG = Hong Kong; SIN = Singapore; PEK; Beijing: TYO = Tokyo; BOM = Mumbai; DEL = Delhi; DXB = Dubai; DOH = Doha
Source: Availability display from Galileo for 12 November 2012

Waiting for my connecting flight

The above table is a snapshot of connections between popular business destinations in Asia and Europe. Air India, the national carrier offers only one connection between London and Tokyo with an extremely long layover of ten hours. Jet Airways, a private airline offers four but only one with a practical connecting time. On the contrary the Middle Eastern carriers offer multiple choices with extremely convenient connecting times at their respective hub. This is how poor the hub connectivity at Indian airports is.

So what is stopping Indian carriers from taking the plunge? Well the answer lies in the poor connectivity offered by Indian carriers (as shown in the table) and a lack of stakeholder coordination (airports, airlines and MoCA). For a very long time MoCA protected Air India by holding back flying rights for private airlines, not letting them fly on profitable routes, onerous process of approvals for fleet acquisition, high taxation, etc. There is no point in discussing what benefits Air India got from all this protectionism. After several strikes and routine operational delays the airline is surviving on taxpayer’s money.

Lets do the obvious

Protection of Air India is however just one of the reasons. Indian carriers can be a bit more enterprising when it comes to network planning. As shown in the table they lack connectivity between the most obvious destinations. London-Hong Kong market for example is big enough with seven direct flights and more than 20 indirect flights, all operated with wide body aircraft. Add to this a strong origin and destination market from India (both London – India and Hong Kong – India) and the Indian carriers can easily ensure high load factors. London – Hong Kong route might look over crowded but there are other less crowded markets to be connected and Indian carriers can use the geographical location of India to their advantage. A collaborative effort of airlines, airports and the government agencies is needed, where the airline is supported by the airport in its ambition of network expansion and the government provides a level playing field minus the bureaucracy.

There is no reason why Indian carriers cannot connect Jakarta to London or Manila to Riyadh via Delhi/Mumbai. A huge political change is unfolding in India’s backyard. Myanmar is opening up and businesses all over the world are eagerly waiting to set shops there. Consultants, bankers, politicians, project managers, and their teams will swarm in once the sanctions are lifted from Myanmar. This is a great opportunity, which needs to be assessed and seized at the right time. It will be too late once Qatar Airways or Flydubai start flying there twice a day. Some of the excess capacity can definitely shifted to routes outside India.

Urban Transport in India - Part 2, The case of Delhi

With a population of 16.7 million and around five more million in the suburbs, Delhi has only one reliable mode of public transport. The Delhi Metro which started operations in December 2002 has connected the most congested and far flung areas of Delhi to the suburbs. This has offered residents of Delhi access to convenient mode of travelling. However, the situation is much different in 2012 when the total length of the network reached 190 km. Rush hours see over packed trains where passengers struggle to get in and out. Initially stared with four coaches, the trains now have eight. With a wider network ridership has increased and so has the congestion in the trains. The average daily ridership of Delhi Metro during June 2012 was 1.9 million, (imagine entire population of Dubai and Brisbane travelling on a single day).

Though the metro is taking all steps to make the ride smooth the problem of plenty seems to persist. In its current phase the metro lines are being extended to create more interchange stations to take some burden of the three interchanges the network currently has. However, depending on metro to solve all the problems is not a good idea. What needs to be done is to integrate other modes of transport with metro. The metro did start with feeder bus services from select stations but the plan was flawed and did not meet the desired results. With no experience of running a bus fleet, Metro withdrew from the plan. The Delhi government should take it over and reintroduce the system with an improved plan.

Not everyone stays close to a metro station. Sometimes the last mile to and from the station takes as long as the metro ride (often costing as much), this is not an incentive to use the system. A well planned feeder bus service will help commuters reduce the last mile travelled and hence shorten the total commuting time. The government can look at a Public Private Partnership model since it already has tested it on one of the Bus Rapid Transit (BRT) routes. Feeder buses can also link the metro stations to major bus terminals in the city to ensure easy change of transport mode.

Another mode of public transport in Delhi is the city bus service run by Delhi Transport Corporation (DTC). The bus fleet was replaced with modern high capacity buses in time for the Common Wealth Games in 2010. With the games over the fleet has started ageing faster than it should have. The schedules are rarely published and almost never followed. This creates a situation where commuters are often stranded without any bus on a particular route or five of them at the same time. Though GPS is installed in all the modern buses no one seems to know how to use the device. There needs to be a complete overhaul of the system with a published schedule and strictly following it. Integrating it with the metro system and also acting as an alternate to the system.

When the heavens open up

Commuters in Mumbai depend on the suburban rail network that carries millions to and from work every single day. The same is almost nonexistent in Delhi. Only a handful of suburban trains ply during peak hours and are more popular with commuters coming from neighbouring cities. Delhi has a rail network which covers most of central, eastern and western Delhi. The rail network also connects the suburbs of Gurgaon, Faridabad and Ghaziabad. The network can easily be used for light railway which will have the advantage of higher speed. This will act as an additional mode of transport and will complement the existing metro network. It will also be easy to finance the trains since there will be no need to build new tracks. An increase in number of these trains will bring regions of Delhi even closer. However, the suburbs will get the maximum benefit out of such move. There is a plan by the ministry of railways to introduce high speed trains to neighbouring cities of Delhi. However the economic feasibility of this project is under serious doubt, given the high cost (expensive rolling stock and probably dedicated tracks) resulting in high fares. On the contrary an efficient suburban light railway will bring more benefits at a lower cost.

Once the integration is in place and the factors slowing down the traffic are mitigated the government should look at a sustainable transport system. Congestion charges, peak hour charges, premium parking rates all help in encouraging people to shift to public transport and reduce congestion on roads. Finally, what Delhi is not fit for is a BRT. Unless there are long starches of road without intersections BRT is a disaster as it has proved to be in Delhi.

Urban Transport in India – Part 1

This is a two part series on urban transport in India. In the first part I have discussed the problems urban transport in India is facing. In the second part I will take up the case of Delhi to discuss some issues and some solutions. Hope you will enjoy the series. 

Peak hour traffic in urban India is a nightmare. Large metropolitan areas and tier II cities both face sever congestion on their roads. The congestion is not limited to roads; other modes of transport like the suburban trains in Mumbai and the metro network in Delhi too face congestion in form of overcrowding. Commuters spend many hours travelling to and from work (sometimes as long as 2 hours each way). The rapid economic growth in India in the past decade has put a lot of stress on urban infrastructure which, failed to keep pace with the economic growth. Traffic congestion not only leads to long commuting hours but leaves a huge economic burden on the country. Estimates by the Highways Term Maintenance Association of the UK suggest that congestion costs the UK economy around GBP 20 billion a year in wasted time and resources and lost business. A similar study for Sao Paulo carried out by the Economist Intelligence Unit puts the cost of congestion at USD 20 billion (in 2008). These estimates do not include the environmental cost. If we give a value to the damage caused by resulting pollution the total cost will be many folds the current estimates.

According to the census report of 2011, urban population of India increased by 31.8%, from 286 million in 2001 to 377 million in 2011. Increasing population and more and more families entering the middle income group every year puts a lot of stress on the urban infrastructure. This double impact of population and prosperity is proving to be an urban planner’s biggest challenge. Traffic congestion is not unique to India. World over developing and developed countries have their own problems with urban traffic. In India a large share of responsibility of congestion can be assigned to lack of proper planning.

The case of Delhi and Mumbai stands out as example of lack of urban planning in India. Congestion on roads is mainly caused by three reasons, volumes of vehicle beyond the capacity of roads, slowing down of traffic and accidents. There is no single solution to solve the three problems. As mentioned earlier an increasing population and growing prosperity will lead to higher demand for vehicles. An increase in population also puts stress on availability of land for transport infrastructure. Urban planners should look at creating new business districts so that commuters do not converge on a single location. Delhi in recent years has seen its suburbs (Noida and Gurgaon) grow as alternate locations for business districts. However, the sole means of reliable public transport connecting Delhi to these cities is the metro network (started just over a year ago). Due to lack of reliable public transport commuters are forced to drive, leading to congestion and long travelling hours.

The bumps on the road

A road shaped like a bottle

Slowing down of traffic is the most intriguing of the reasons for congestion. Many a time commuters find themselves crawling in a traffic jam for long time and then all of a sudden they reach a point where there is no congestion. While there might not be a visible sign of the cause of the congestion, there are various reason which might slow the traffic down. Poor road condition is one of the top reasons. Potholes tend to slow the cars down since no one likes a bumpy ride, loose debris from damaged asphalt surface make vehicles prone to skid, water logging after rains leaves the commuters guessing as to what lies under the murky pool, a pothole or level road? Fixing these problems or even better preventing them from occurring will eliminate slowing down of traffic.

Encroachments are yet another reason for slowing down of traffic. The encroachments on public roads range from a kiosk selling knick knacks to shops displaying their wares on the footpaths. The encroachments force the pedestrians to walk on the roads and over a period of time the encroachments become permanent, robbing the road of its original width. Major roads in Delhi and Mumbai have many such encroachments and the urban planning agencies have done little to reclaim the space. Kolkata is probably the worst example of lack of dealing with such encroachments. With exception of Salt Lake there is hardly any public road which is sans encroachment. Encroachment in Kolkata is so aggressive that people have built residential units on public roads. These encroachments create bottle necks and slow down the traffic to a snail’s pace.

Lack of coordination between multiple civic agencies adds to the problem. Utilities departments like water, sewage, electricity, etc have their independent schedules for various civil works. Instead of coordinating and digging the roads once, they do their work one after the other. Leaving the roads dug for months together. Another problem is lack of standard procedures for taking over public roads for civil works and handing them back after the work is done. Once dug the excavated earth lies on the shoulders of the roads further reducing the available space. On completion of the work the excavated earth is filled in the trenches without proper settling procedure and without paving the exposed surface. The result is an ever sinking stretch of road, which makes it impossible for the commuters to use the road to its full capacity. Lack of pragmatic thinking is yet another aspect which leads to slowing down of traffic in many cases. Electric poles in front of traffic signals, bus shelters at busy intersections, unpainted speed bumps, all lead to chaos.

As it is clear there is no one solution to the urban transport mess we live in. It probably will never be perfect, given that we the users will keep increasing faster than the pace of expansion of our cities. Having said that there are ways and means by which congestion on the road can be reduced, making it easier for commuters to reach offices and back home, for emergency services to reach in time and so on. 

35 non metro airports of India – back from the dead?

In 2007 the stage was set for modernization of 35 non metro airports of India. The planning commission conducted long sessions with stakeholders to draft a master concession agreement for the project. The ministry of civil aviation was preparing the stage for Airports Authority of India (AAI) to share the burden of development with private investors and foreign airport operators. After much effort two airports (Amritsar and Udaipur) were put on the block as a pilot project. Both Indian and foreign airport operators were shortlisted on their technical bids. The deliberations on master concession agreement with planning commission reached its end with a final draft meant to be followed as a guiding document for all the projects to come. However, politics played spoil sport with immense pressure from the then powerful Left parties and successful lobbying by the AAI to stall the project. The project was unceremoniously put to a sudden death. Almost four years later media is buzzing again with reports on revival of the project.

The question is will the project take off this time around? Ground realities have not changed much. AAI will still be unhappy about private partnership (mainly due to HR issues and secondly due to loss of control over the assets). Political equations has come a full circle with Mamta Banerjee replacing the Left parties in opposing privatization of any kind. A newspaper report quoted the civil aviation minister saying that his ministry will soon prepare a cabinet note to revive the Public Private Partnership (PPP) for the 35 non metro airports (Livemint, 25 April 2012). To add more confusion AAI recently announced that it will develop at least 225 airports across the country by 2020 (Economic Times, 21 May 2012). No further details are available on the way forward for the project. Ground realities might not have changed much but a lot of money has been poured into these airports in the last four years. Just before the 2009 general election there were a string of inauguration of new infrastructure at these airports, new terminal buildings, extended runways, improved taxiways, car parking etc were dedicated to the public. The pace of modernization slowed down later due to lack of funding and inability of AAI to raise money from the markets (due to lack of government support). AAI has already invested INR 4,340 (USD 790 million at current exchange rate) on expansion of Chennai and Kolkata airports. Multiple delays lead to a cost overrun of 11.45% at Chennai and 19.72% at Kolkata airport (Livemint, 25 Aprill 2012). With massive cost overrun and shortage of funds, AAI doesn’t look in a comfortable position to undertake any more development projects on its own.

This brings us to another question. What is left to be modernized at these 35 non metro airports? Almost 20 of these airports have been provided with new infrastructure and a few will be completed in the near future, albeit with some delays. Unlike in case of the previous big ticket PPP projects the private partner will not incur any capital expenditure for a long time to come. What can be improved is the management of these airports. Just bringing in private money is not going to solve the problems; neither will developing 225 airports do the country any good. At best these airports will become white elephants with huge capital investment and recurring maintenance expenses. 70% of our current air traffic is being shared between Delhi, Mumbai, Chennai, Kolkata, Bangalore and Hyderabad, rest being distributed among the remaining operational AAI airports. Further airport development is unlikely to generate passenger growth by itself.

35 non metro airports
Amritsar	Agartala	Agati	Agra	Ahmedabad
Bhopal	Bhubaneshwar	Chandigarh	Coimbatore	Dehradun
Dimapur	Gawhati	Imphal	Indore	Jaipur
Jammu	Khajuraho	Lucknow	Madurai	Mangalore
Nagpur	Panaji	Patna	Port Blair	Pune
Raipur	Rajkot	Ranchi	Surat	Trivandrum
Trichy	Udaipur	Vadodra	Varanasi	Vishakhapatnam

The way forward for ministry of civil aviation and AAI is to reconsider the entire process of PPP. In the last attempt what started as a full scope of airport operations for the private investors ended up as a facility management contract for the terminals. Such a contract might keep the buildings clean but will not help in generating extra revenue for AAI. The 35 non metro airports should get priority over the 225 airports. These are the airports which are located in fast growing cities with ever larger demand for air travel. However, not all airports are attractive enough for private investment.

The ministry of civil aviation should create smaller packages of three or four airports to be handed over to the private investor. This will ensure that the unattractive airports get some investment and at the same time AAI is not unfairly stuck with unproductive assets. The ministry should carefully lay down the criteria for qualification of the potential investors. Stress should be laid down on technical expertise more than the financial pay offs. This will prevent non serious players from bidding and artificially push the bid prices up. The scope of the project should include full scale of operations including both airside and landside. This will give more freedom and flexibility to the investor to improve services and invest money in upgrading. Airport Economic Regulatory Authority (AERA) should encourage dual till model to encourage more private participation. The dual till model will also make it easy for the investors to raise money from the financial market.  

It is time for the civil aviation ministry to work on other aspects of the industry like improving air services within the country and to make it easier for Indian carriers to fly abroad. Improved airports can only benefit if there is improvement in air traffic. 

The great turn around – case of a maharaja

During the British rule India used to be a land of maharajas, one every few hundred kilometres. Operating their own small princely state, they were a happy lot. With the demise of the Raj in 1947 the princely states were gobbled up by the dominion of India. The maharajas were now living on state pensions. Three decades later the iron fisted Mrs Gandhi put a stop to the state pensions and left the maharajas to fend for themselves. Many of them were lost in the oblivion, while many managed to adapt. The many heritage hotels (modified castles and forts) dotting northern India today is testimony to the turnaround. The case of Air India is a similar one. Once a true maharaja under the TATAs, it was made a state owned enterprise in 1953. In the last six decades Air India saw many changes including many years of perpetual losses. The current loans and outstanding for Air India is Rs 67,520 crore (USD 13.1 billion). The ministry of civil aviation has cleared a proposal to bail out Air India by infusing a total of Rs 30,000 crore (USD 5.8 billion) over the next nine years. However the airline has to follow a turnaround plan and achieve milestones to get the money. The question is will the maharaja of skies turnaround like the ones who own heritage hotels?

Little is known of the turnaround plan of Air India; with the information available in public domain it seems that the plan is more about financial restructuring than operational restructuring. The airline will issue non convertible debentures worth Rs 7,400 crore (USD 1.4 billion) to its lenders to pay for its working capital loans. A short term working capital loan of Rs 11,000 crore (USD 2.1 billion) will be converted into a long term loan. Information on operational issues is available in bits and pieces. The ministry has now agreed to pay for the induction of 27 dreamliner Boeing 787 aircraft on sell and lease back option (Air India will sell the aircraft to a leasing company, which will lease them back to Air India). This will take the assets and related depreciation off the books while still utilising the benefits. Another bit of information is on “On Time Performance” (OTP) of 90% and a seat load factor of 73% to get the money. The ministry also decided to hive off the engineering and ground handling units of Air India into wholly owned subsidiaries. A total of 19,000 staff will be moved from Air India to these subsidiaries. This will leave Air India with around 9,000 staff, bringing down aircraft to employee ratio to 101 per aircraft from the current 315. The subsidiaries are also expected to run as independent profit centres, competing for business form not just Air India but other airlines as well. A leaner Air India might be more attractive for investors in a future divestment plan.

With this infusion of money, Air India seems to be able to pay for its costs for some time, but much more needs to be done on the apron to keep it flying. At present Air India has a total fleet of 121 aircraft, out of which only 27 (22%) are long haul. It operates a total of 34 international destinations, out of which 12 (35%) are highly price sensitive and fiercely competed destinations in the Middle East and South East Asia (Bangkok & Singapore). In the year 2009-10 Air India flew a total of 11.7 million passengers out of which 41% were international. Of the total passengers flown only a fraction was transfer traffic (passengers connecting at an airport for their onward journey). For the sake of comparison let’s look at Qatar Airways. The airline with a fleet of 96 aircraft carried 12 million passengers in 2011 across 115 destinations worldwide. Nearly 45% of traffic on Qatar Airways is transfer traffic. Air India has a lot to achieve even with its current fleet and network.

Keep them flying

How can Air India make use of this turnaround plan? First of all Air India should see the current situation as an opportunity. With 19,000 employees off its shoulders there are huge savings to be made in the years to come. Another blessing is the induction of ultra long haul 787 aircraft. These are highly fuel efficient and can seat up to 290 passengers (depending on seat configuration). The 27 aircraft to be inducted over the next few years can be used to realign its network in a smart way. Hiving off of the engineering and ground services unit will also give Air India the much needed freedom to shop for the best offer in market, again helping it to save money.

The next step is to come up with a well planned hub strategy. At present Air India is more of an O & D carrier than a hub carrier. It needs to evolve as a mature network carrier to improve its efficiency and seat load factor. While O & D traffic has its own premium, transfer traffic gives the much needed support to fill up seats. The two logical options for a hub in India are Delhi and Mumbai. While Mumbai will take a while to get ready with the infrastructure required to have hub operations, Delhi is ready since 2010. Integrated terminal with seamless transfers will reduce turnaround time at the tarmac and provide convenient connections for the passengers. Large volume of traffic moves between South East Asia and the Middle East, East Asia and Europe. Air India can tap into these markets utilising its position as a hub carrier at Delhi/Mumbai. Majority of the traffic is being hubbed through the Middle East at the moment. Competing with the established carriers like Emirates, Etihad and Qatar Airways is not easy but on the other side there is the advantage of a mature market which can be tapped.

A hub is no good if the network is not diversified enough. As mentioned earlier, one third of the international destination of Air India are in the highly competitive market of Middle East. Between India and three large airports in the Middle East (Dubai, Doha and Abu Dhabi) there are 550 weekly flights (this figure will be higher if other airports like Muscat, Kuwait, Bahrain and Jeddah are included). The traffic consists of mostly guest workers from India and is extremely price sensitive. While seat load factors might be high, yields are low due to competition. To diversify its network Air India needs to use its 787s on starting new routes. Europe is under served with only three cities on its network. South East Asia is another underutilised market, Malaysia and Indonesia are completely absent from its network. These two countries offer a huge potential of carrying transfer traffic through India to the Middle East (mostly on pilgrimage to Saudi Arabia).

A hub strategy and a diversified network will give Air India the much needed opportunity to perform well. However, this will not happen without investing in human resources. Extensive training and consistency in service quality is the key to successful operations. Air India might have to renegotiate the current employment contracts to introduce performance based pay. This might prove a difficult task, but to turnaround Air India a lot of difficult decisions have to be taken. 

High speed trains in India – is it time?

It takes a little more than seventeen hours to cover a distance of 1,454 Km between Kolkata and Delhi, at an average speed of 85 Km/hr. This is the fastest you can travel on India’s trains. Compare this to the 310 m/hr (almost 500 Km/hr) speed of the recently unveiled bullet trains of China and we know how far behind Indian rail infrastructure is. A China style high speed train can reduce the journey time between Delhi and Kolkata to a mere three hours from the present seventeen. People will save time and can be more productive. Business and manufacturing will benefit from high speed connectivity. Goods and people will travel faster. Time advantage currently enjoyed by the civil aviation sector will be challenged and will lead to strong competition between the airlines and high speed trains, ultimately benefitting the end users, i.e. the passengers. India’s economy needs high speed surface connectivity which will boost its growth even further. Is it then time for India to jump on to the high speed train projects?

The answer to the question lies in lessons learnt from similar projects around the world, the most recent being that of our neighbour China. China embarked upon the high speed train project in the 90s with the first proposal to build a high speed train connection between Beijing and Shanghai. The line was finally opened in June 2011. The first high speed train however, was the Beijing – Tianjin section, opened on 1, August 2008. According to official Chinese media reports the country plans to build a total of 25,000 Km of high speed tracks till 2020, with a total investment of $ 300 billion. China spent $ 50 billion on its high speed network in the year 2009 alone (Indian railways earned a total of $ 20.7 billion in fiscal 2011-12). Once completed China will have the world’s largest high speed rail network. A report by CNN money in August 2009 goes a step further and says that the Chinese network will be bigger than rest of the world’s high speed networks all put together.

India in the railway budget for the year 2012-13 has announced high speed initiatives. In his budget speech the railway minister said that Indian railways have decided to construct high speed passenger train corridors, where trains will clock speed between 250 and 350 km/hr. The minister sighted feasibility studies being underway or completed for various sectors including Pune – Mumbai – Ahmedabad, Delhi – Agra – Lucknow – Varanasi – patna and Delhi – Jaipur – Ajmer – Jodhpur sections. No time frames have been promised but the government has decided to go ahead with the high speed corridors. But what does this means in realistic terms? Will there be takers for such a product? Let’s take a look at three different high speed train networks in China, Japan and Europe.

High speed train connections
Sector	Distance (Km)	Fare	Indian equivalent
Beijing – Shanghai	1,228	Yuan 555 (INR 4,476)	Delhi – Raipur 1,164 Km
Tokyo – Aomori	713	Yen 16,870 (INR 10,355)	Delhi – Bhopal 701 Km
Paris – Frankfurt	572 Km	Euro 70 (INR 4,753)	Bangalore – Hyderabad 573 Km

It’s not very difficult to compare the fares high speed trains charge elsewhere in the world to what passengers pay in India (both on trains and flights).

The idea of having high speed trains is good but its time has not arrived in India. A huge investment in a relatively shorter period of time, strong opposition to acquisition of land and high fares to get a decent return on investment are big deterrents to the idea. High speed trains have totally different technical requirements as compared to conventional trains. The tracks are put on special sleepers, which can handle carriages moving at high speed. The tracks themselves have to meet specified design standards like having long rails with virtually no curvature. Platforms might need redesigning to suit the coach design and so on. It is not possible to run high speed trains on the present tracks. New tracks will have to be built and for that more land has to be acquired. This will be an extremely expensive (if the new land acquisition bill becomes a reality) and time consuming process. Cost of capital is moving up with global economy in choppy waters. In the past year itself 70% of China’s high speed projects have either being temporarily suspended or delayed. This is not a healthy sign. A February report in the Telegraph published in the UK suggest that though freight operation made a profit of 70 billion Yuan the passenger service failed to make any money. In Europe high speed trains face stiff competition from both low cost airlines (Ryanair and EasyJet) as well as from legacy carriers. So what is that India can look for to improve its train connectivity?

Runs fast but burns a hole in the pocket faster

The ideal solution will be to upgrade the existing infrastructure to double the actual speed from 85 Km/hr to around 160 Km/hr (some sections like Delhi – Agra already have tracks suitable for this speed). Signalling is one of the major issues which stifle speed. Poor tracks condition is another problem. Ministry of railways has been dragging its feet on the issue of infrastructure upgrade for a long time. The railway ministry should take steps to completely overhaul the signalling system across the network, improve track conditions by replacing short rails with long rails and use of mono-block concrete sleepers instead of wooden sleepers. These changes would increase speed across the network.

Changes are also required in the rolling stock. Rajdhani trains have been provided with the new light weight carriages but majority of long haul and short haul trains still use heavy carriages making it difficult to achieve high speed. High power engines and shorter train length can increase the speed to a large extent (some trains like Kalka – Howrah have between 21 – 24 carriages). Given the vast size of India the train tracks criss-cross country side and big cities on most of their stretches. Protecting the tracks from trespassing is essential for safety of the people as well as for the train operations. Fatal accidents happen every year at level crossings across the country. Eliminating the level crossings and providing proper fencing around densely populated areas will ensure smooth operation and high speed at all times.

Another common dimension usually missed out while discussing high speed train is bypassing the smaller cities and communities en route. To maintain consistent high speeds the trains will have to make as few stops as possible. With most small cities ignored, the benefits from high speed infrastructure too will bypass the communities. On the other hand an overall upgrade of the network will bring benefits to entire country. 

Multi modality in India

Transportation in India is changing, albeit at a slow pace. The golden quadrilateral project started in late 90s took painfully long twelve years to complete (it was formally declared complete in January this year). The initial deadline for completion was 2003. The other ambitious project the North South East West corridor will take some more time to complete. Though the Golden Quadrilateral took almost eight extra years to complete, the project capacity might have already saturated. The corridor is four lanes with a few exceptions. The North South East West corridor too has just four lanes on most stretches. The dedicated freight corridor (DFC) is yet to see full scale construction work on both eastern and western stretches. However, with the financing of first phase of the project from Rewari to Vadodra in place (Japan International Cooperation Agency has signed an agreement to provide approximately 93 billion Japanese Yen (Rs 5,625 crore/ $ 1.1 billion) for consulting and construction); the project looks to be on the fast track.

The three projects mentioned above are the largest infrastructure projects of India in recent history. These projects once completed are expected to decongest India’s chocked highways and move freight quickly on trains. This will be a significant boost to the overall GDP and will create hundreds of thousands of jobs across the country. The DFC proposes to set up logistic centres along its eastern and western arms to help move cargo efficiently and to bring development in hitherto underdeveloped areas (mainly in Rajasthan and Uttar Pradesh). An efficient logistic system in India would mean reducing artificial inflation due to supply side constraints, better prices for both small and large scale industries and better inventory management. What is missing from the development ladder is an important yet underestimated concept, multimodality.

Off the beaten path

Multimodality has been in works for decades in Europe. The arrival of a single market and the Euro has further strengthened the concept. Europe today utilizes its sea ports, inland water ways, rail network, road network and the airports seamlessly. Inland water transport in Western Europe increased from 568,766 containers per year in 1987 to 3.2 million containers per year in 2001. Airports in Europe are increasingly getting connected to the European road and rail networks. All major airports in Europe are connected by a high speed rail link to the city. Amsterdam, Frankfurt, Milan (Malpensa), Munich, Oslo, Paris (Charles de Gaulle) and Vienna all have at least a high speed rail link from the airport to the city centre. Out of these airports, Amsterdam, Frankfurt, Paris and Milan have high speed train connections to cities in neighbouring countries. A high speed train might be a competition on short haul flights but it also increases the catchment area (surrounding area from where passengers originate) of the airport significantly.

Lufthansa has benefited immensely from the high speed rail (Inter City Express or ICE) connection at Frankfurt airport. It has stopped many short haul flights like that to Cologne and now offers train connections from Frankfurt. Convenient location of the train station (a few meters from arrivals area) makes it easy for the passenger to seamlessly shift from flight to train. A dedicated daily freight train service has been introduced between Frankfurt and Leipzig (a city in east of Germany). The connection links the East European distribution hub of DHL to Frankfurt. This is an ideal example of multimodality at its best.

There but invisible to many

Indian airports have started their very own small experiment with multimodality. Delhi airport’s new terminal has a high speed rail link to the city centre. Mumbai, Bangalore and Hyderabad too will have a rail connection in near future. However, there is a huge potential which is largely being ignored by all the major airports. Delhi, Bangalore, Hyderabad and the proposed Navi Mumbai airport all are situated next to an existing rail line. None of the airports use them. If these rail lines next to the airport are put to use they can open up a completely new avenue for the airports.

Connecting to the national railway system will throw open the airport to connectivity to a large hinterland. Out of all the airports mentioned above, Delhi and Navi Mumbai stand to benefit the most from such a link. Delhi is the national capital and has large manufacturing hubs in the vicinity. Delhi also has a large domestic consumer market for high end products like electronics, mobile devices (increasingly smart phones) and fashion. All these are extremely time critical since they become obsolete in a matter of weeks. The ideal location of Delhi also favours it be become a regional distribution hub for such time critical goods.

Ideally Delhi airport should push for a rail siding at the airport’s north western corner and develop it as an air-rail centre. It will directly connect the airport to cities like Jaipur in the south west and Chandigarh, Ambala, Jalandhar in the north. This will increase the catchment area for the airport and more passengers will take the rail link to the airport. It will similarly benefit arriving passenger who can take the train to their destinations. Tourists arriving at the airport can directly connect to Jaipur or Agra. The maximum benefit however will be to the cargo business of the airport. Seamless transfer of cargo from road and rail to air and vice-versa will increase the efficiency of the airport manifolds. The future DFC will also link the inland container depot (ICD) at Tuglakabad. This will present another opportunity for Delhi airport to add more business. With a little innovative thinking Delhi airport can become a mighty logistic node for the northern Indian region.

A four point approach

1.      Identify the potential customers (Samsung, Sony, HP, Dell, etc)

2.      Approach the customers directly to set up distribution base at Delhi

3.      Get professional integrators to the airport (DHL, TNT, FedEx, Blue Dart, etc)

4.      Provide infrastructure in cooperation with existing cargo operators

5.      Ensure internationally accepted service standards

Committing to internationally accepted service standards might be little too ambitious because state run agencies like customs still belong to the old school and lot of work is done on paper. A different approach where technology is deployed to minimise human interface together with an incentive based on turnaround time might motivate the department to get more customer friendly.

A similar case can be worked out for the proposed Navi Mumbai airport. The site is close to Jawaharlal Nehru Port Trust (JNPT), one of the largest ports in India. A rail track connecting the port to the city of Mumbai and rest of India runs close to the south eastern periphery of the proposed airport. While there is potential for the passengers to interchange from flights to train and to connect to the hinterland, the potential of the site becoming a major logistic centre for Western and Southern India is much higher. Once completed the DFC will have its terminal node at JNPT, a special economic zone next to the proposed airport will provide opportunities for the people and goods from the zone to be transported quickly around the region.

The government of India is planning to replace various state and central taxes with a uniform Goods and Service Tax (GST). The GST when introduced will change the way business is done in India, especially manufacturing and retail. The current tax advantage and disadvantage of having distribution centres in different parts of the country will disappear with GST. Companies will be able to identify strategic sites for their distribution centres and will manage large supply chain systems with greater efficiency. Multimodal transport nodes can leverage this opportunity by offering integrated facilities. The Indian market is growing fast and will continue to do so in the few decades to come. Indian airports have a unique opportunity to develop the nascent market by identifying an anchor tenant (large integrators like DHL, FedEx, TNT, Blue Dart, etc) and help create distribution networks.