After stock market red flag, Railways changes track on IRCTC fee-sharing

The Railway Ministry on Friday decided to withdraw its earlier decision to take 50% of the convenience fee levied by Indian Railway Catering and Tourism Corporation (IRCTC) for online bookings. The IRCTC stock received an immediate buoy after the Department of Investment and Public Asset Management (DIPAM), under the Finance Ministry, tweeted the news.

Ministry of Railways has decided to withdraw the decision on IRCTC convenience fee pic.twitter.com/HXIRLxXTlL

— Secretary, DIPAM (@SecyDIPAM) October 29, 2021

Yesterday, IRCTC had disclosed in a filing with the Bombay Stock Exchange (BSE) that the Railway Ministry sought to take 50% of its convenience fee collection. “Ministry of Railways…has conveyed its decision to share the revenue earned from convenience fee collected by IRCTC in the ratio of 50:50 w.e.f 1st November 2021,” it said.

Such an arrangement — previously in place — had been discontinued since the onset of the COVID pandemic, to shore up IRCTC’s finances.

The feared inconvenience

The convenience fee (which is apart from the rail fare) constitutes a sizeable portion of IRCTC’s revenue, contributing about ₹620 crore in FY 2019-20. Therefore, news of Thursday’s mandate to share the amount with the Railway led to a 25% fall in IRCTC’s share in early trade on Friday morning.

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By Friday late morning, Tuhin Kanta Pandey, from the official DIPAM Secretary Twitter handle, tweeted: “Ministry of Railways has decided to withdraw the decision on IRCTC convenience fee.” With this, the share rebounded, though it was still trading in negative territory around noon.

IRCTC enjoys monopoly status in Railway ticket booking. It also handles catering across train routes and railway stations. Though it doesn’t operate as a monopoly in food services, it enjoys a clear lead in that space, too.