IRCTC – Reinventing the “wheel”?

“Railways, perhaps along with post offices, are the only two institutions in India with a deep network which if tapped judiciously can create substantial improvements in the hinterland. Railways was always considered only as a mode of transport in our country, we want to see Railways as the backbone of India’s economic development.”

Shri Narendra Modi Prime Minister of India December 25, 2014

Indian Railways – the backbone of the Indian logistics industry

The Indian railway network has a total track length of 115,000 km (71,000 miles) [1] and transports over 23 million passengers everyday[2] . The network runs 12,000 trains, connecting 8,000 stations across the country [2]. In addition to the passenger segment it also runs 7,000 freight trains carrying more than  1 million tonne of cargo everyday. This makes the Indian railway system the fourth largest in the world (based on route length) [3] and a lifeline for transportation in India, connecting rural India to the rest of the country.

Historically passengers have been only able to book and modify train tickets at railway platforms or stations. The large demand for the service routinely led passengers to wait in long, never-ending queues.

A number of customer promises broken!

The Indian railway system transported more than 8 billion passengers (including unreserved passengers) every year, however the demand for this service often outstripped supply creating insurmountable challenges for the physical reservation system. The inefficiencies in the system led to three key challenges in customer service:

1. Sheer inconvenience of booking – railway bookings would typical become an entire workday’s task with potential passengers starting to line up at 5am to ensure they receive service.
2. Lack of visibility – the only way to check the availability of seats in trains was at the physical ticketing counters, thus making it impossible for customers to seek information and plan before the actual purchase (unless you are willing to get in line again!). Customers visited the station with potential travel dates in mind and purchased whatever tickets were available. On top of that cancellations and ticket modifications required you to repeat the entire ordeal again.
3. Rise of the “middle men” or agents – the secondary market for railway bookings was a flourishing business. These middlemen often purchased tickets beforehand either by bribing station staff or through other means, to resell them to customers later at a much higher price (often as much as 2 times the base price). The quota system (reserved seats for certain categories such as defense staff, government staff, caste based etc.) made the system even more opaque for the general category customer, allowing middle men to gain a clear advantage.

Digitization to the rescue: E-ticketing solution by IRCTC

In 2002, The Indian Rail Catering and Tourism Corporation (IRCTC), designed an Internet-based ticketing system. IRCTC is a subsidiary of Indian railways and under the purview of the the central government. IRCTC relied only on word-of-mouth publicity and hence had a slow start. In 2002 the number of tickets getting booked was 27,000 per day which grew to 40,000 by 2008. However, after dealing with the initial database structure and traffic management issues the bookings grew at an exponential pace. The website can now create more than 1 million bookings per day, with a capacity to handle over 7,200 bookings per minute! [4] This has allowed a majority of booking traffic to move online from the offline channel. The system has addressed all three customer service issues mentioned above by making railway reservations more convenient, transparent and eliminating the middle men. Though there were many factors that led to IRCTC’s success, I feel there were three key drivers for their success:

1. Lean, light website with a simple interface – The website was used most by the lower-middle and middle class of India. Many of these households did not have ready access to internet services back in early 2000s, by keeping the interface light and ensuring ease of usage IRCTC allowed even first time internet users to also use their service.
2. Tie ups with large nationalized banks – The core proposition of the website was to allow the entire transaction to happen online. This required IRCTC to partner with large nationalized banks to allow payments through the online interface. Creating trust within the target customer base was easier for IRCTC given that it was controlled and operated by the central government.
3. Appropriate pricing – The booking fee charged by the website started as low as INR 10 (0.2$) per booking (for sometimes a family of 4) making it affordable for all segments of consumers

Moving forward, going mobile

IRCTC has launched its mobile application [5] successfully for all platforms by 2014 (i-Phone and windows apps launched in 2013) [6]. The mobile application has faced teething problems and is still far from perfect. Common problems faced by users are ones such as saving passwords, availability of the application (does not work throughout the day) and insufficient syncing capabilities [7].

IRCTC also takes care of needs of passengers once on-board the trains. This creates opportunities to implement value added services on the basic offering such as – meal ordering, special dietary requests and assistance for differently-abled passengers. IRCTC has already showcased interest (book-a-meal service tried earlier) in implementing some of these value added services which may not be possible through a physical booking process.

The booking website and the mobile applications both still have room for improvement and change, however, there is no doubt that the move to digitization has solved a large seemingly insurmountable customer challenge for one of the largest logistics networks in the world.

 

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