The Ministry of Railways on Friday announced to withdraw the decision on Indian Railway Catering and Tourism Corporation (IRCTC) convenience fee. This comes a day after IRCTC said that it has been asked to share 50% of its revenue earned as convenience fee from bookings on its website.
“Ministry of Railways has decided to withdraw the decision on IRCTC convenience fee,” DIPAM Secretary announced in a tweet.
On Thursday, the Railways asked IRCTC to share 50 per cent of its revenue earned as a convenience fee from bookings on its website with the national transporter, an arrangement that had been discontinued since the pandemic.
In a regulatory filing, 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.
IRCTC shares rebounded, though trading in the negative territory, as the stock was down 4% after the news. The stock had declined 25% in Friday’s early deals after the news of sharing half of its revenue from convenience fee with the government.
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.
But 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. However, the Railways 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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