India Transport Sector

MARKETING STRATEGIES OF INDIAN TRANSPORT SECTOR By, Ankit

Sharma Arunava

Saha Arvind

Singh

INDIAN TRANSPORT SECTORIndia’s transport sector is large and diverse; it caters to the

needs of 1.1 billion people. In 2011, the sector contributed about 5.5 percent to the nation’s GDP, with road transportation contributing the lion’s share.

Good physical connectivity in the urban and rural areas is essential for economic growth. Since the early 1990s, India's growing economy has witnessed a rise in demand for transport infrastructure and services.

However, the sector has not been able to keep pace with rising demand and is proving to be a drag on the economy. Major improvements in the sector are required to support the country's continued economic growth and to reduce poverty

India - Urban Transportation Scene• 2nd Largest urban system• 60% GDP generated from urban areas• 5161 towns and cities

▫ 7 megacities (4 million + population)▫ 28 cities with population 1-4 million▫ 13 cities in 0.8 to 1.0 million range, will cross 1 million by next

census ▫ 40 cities in 0.5 to 1 million population range and balance state

capitals• Motorization rates are high• In 6 Metro Cities, during 1981 to 2001

▫ Population increased by 2 times▫ Motor vehicles increased by 8 times

• In 2006, organised city bus service - in only 20 cities

3

Source: Ministry of Urban Development, GOI

Urban Transport Scenario 4

Forecast of Vehicle Populations in India(Figures in Million Vehicles)

Total on road Vehicle Fuel Consumption(Figures in Million Tons of Oil Equivalent)

From 1981 to 2001, population increased in six major metropolises by 1.9 times but motor

vehicles increased by 7.75 times.

Energy demand in transport sector projected to grow at 5-8% per annum

0

50

100

150

200

250

300

350

400

2005 2008 2015 2025 2035

49.1 63.9

121.3

246.1

372.7

CAGR7.0%

58.073.0

115.0

221.0

371.0

2005 2008 2015 2025 2035

CAGR6.4%

Source: Ministry of Urban Development, GOI

Two Wheelers

CarsHCVThree Wheelers LCV

Indian Transport

Sector

Service Sector Management

Indian Railways

• The largest railway in Asia

• The fourth most heavily used system in the world

• Carries 14 million passengers a day

• Track route length more than 65,000 kilometers

• 2,07,719 units of freight cars, 45,350 passenger cars, 6909 stations and 14,06,400 staff. It operates 8984 passenger trains everyday

Indian Roads

• Length of 2 million kilometers

• More than 20,000 kilometers of highways

• Carry almost 60 percent of the country’s passenger traffic and 40 percent of freight

Service Sector Management

Maritime Transport in India

• India has 12 major and 185 minor ports

• More than 16,000 kilometers of inland waterways

Airports

• India has more than 125 domestic airports, including 11 international airports

• Two airlines (Air India and Indian Airlines) and one helicopter service (Pawan Hans) owned by government

Marketing Mix for Rail Transport

ProductPassenger Traffic–

• Coaches (Seating, berths, leg room, elbow room, double decks)

• Reservation• Lighting• Catering• Water• Sanitation• Bed rolls• Medical aid• Services at the railway stations

Freight Traffic- (agricultural and industrial activities)

Types of wagons- BOX, BOY, BCA, TANK, BCXServices- Domestic Container ServiceFreight Forwarder schemeQuick Transit SchemeSpeed Link Express TrainsStreet Collection etc

Mail Traffic (Railway Mail Services)

On time services, quicker delivery, professionalism in management, wider coverage in remote areas

Pricing (Deciding the fare and freight rate)

Principles of pricing:

• Cost and Value of service• What the traffic will bear• Equal Mileage Rate Principle (fixed rate/km)• Differential charging• Zonal charging

Suggestions to improve pricing for Indian Railways to make it more profitable…

Place

Distribution of services to many remote areas

Online Facilities:• Passenger’s Current Status Enquiry• Fare Enquiry• Reservations• Train Between Important Stations• Upgraded Passenger Scheme/Chart • Weekly Availability at Stations

Tatkal Scheme

People

Training for employees: More than 2,00,000 staff is imparted training every year, enabling its officers and staffs in acquiring knowledge and new set of technical and managerial skills

Target customers: A wide coverage, all age groups, all incomes levels, occupations – office going, businessmen, short haul as well as long haul journey passengers

Marketing Mix for Road transportProduct

Road Transport Corporations, Inter State Road Transport Organisations or travel agencies/individuals engaged in road transport business to carry passengers or goods from one place to another

Roads as well as vehicles plying on these roads need up gradation and regular maintenance

Maintenance of roads includes drainage, provision of road side amenities, landscaping/horticulture etc need special attention

Marketing Mix for Road transportProduct

Road Transport Corporations, Inter State Road Transport Organisations or travel agencies/individuals engaged in road transport business to carry passengers or goods from one place to another

Roads as well as vehicles plying on these roads need up gradation and regular maintenance

Maintenance of roads includes drainage, provision of road side amenities, landscaping/horticulture etc need special attention

Price

• For state road transport corporations, pricing structure cannot be changed with a change/hike in the prices of the input

• This affects their financial health and it reflects on the qualify of services offered

• Profit making private organizations can change prices according to cost incurred, seasonal demand, emerging trends etc

Place

• Better distribution/network of services than rail, in terms of reach

Road Transportation – Indian Economy

• Roads – a great importance to Indian Economy• Better product mix is needed to divert all long distance

traffic to road traffic.• Government could invite the private sector for

construction of roads- Toll taxes being their income.• India is portrayed as a Tourist country, so to ease travel,

roads provide for maximum social advantage.• Road transportation – a critical element in the

transportation infrastructure• Road construction & maintenance generate employment

opportunities.• Old buses or trucks should be replaced with new modern

buses to attract passenger traffic & also check on their safety.

• Road transportation- needed for development of trade & commerce.

Marketing Mix for Air transport•Product

•Price

•Promotion

•People

•Place

Product On ground Services

- Duty free Shopping- Reservation Counters- Flight Information

Display- Baggage Screening- Check In

In Flight Services- Free Water- Food- Comfortable Seating

Arrangement

PriceLow Fare Pricing Value for Money Pricing Premium Pricing

Promotion Frequent Flier Points Inflight – On demand Movies Travel Reward Programmes

Place

Booking offices of AirwaysTravel Agents Office

PeopleAir-hostessOn-Ground StaffPilotsTour Operating Agents

ProcessComputerized reservation systemBaggage Handling

Process – (Service Map)1. Ticket booking2. Ticket Processing3. Ticket Delivery4. Customer reaching the airport5. Boarding Pass6. Security Check7. Inside the aircraft, refreshments

is served before he reaches his final destination.

8. A pre-paid cab is also arranged for the customer’s add-on journey from the airport.

Transport Marketing in Indian perspective• In India transport business is found profitable- large population• Managerial proficiency is needed to transform potential transport

uses to actual users.• Marketing Mix should be reviewed keeping in mind the socio-

economic requirements.• A suitable product mix helps in satisfying the users, strengthens

the capacity of the organization to face competition & generate profits.

• Technology needs to be brought into every sector of the transport industry.

• Innovative marketing practices should be implemented.• Indian railways: suggestion• Indian Roadways : suggestion• Waterways : needs to be highlighted since India is mostly

surrounded by water. No. of lakes & rivers in our country.

Challenges•India’s roads are congested and of

poor quality•Rural areas have poor access•The railways are facing severe

capacity constraints•Urban centres are severely congested•Ports are congested and inefficient•Airport infrastructure is strained

Opportunities in Indian Infrastructure

Key Focus Area• Significant PPP model for

roads• Golden quadrilateral• Rural Roads• Privatisation of Ports &

Airports• Selective opening up of

railways for container traffic• Urban Mass

Transportation

Planning Commission Estimated Spends for XIth Plan (2007-12)(Figures in Percent)

Private sector expected to contribute to a large proportion of this investment

Power32%

100% = US$ 444.7 Billion

Transport40%

Telecom10%

Telecom18% 81.1

19.19.0

65.9

11th Plan

US$ 175.0 B

Roads

PortsAirports

Railways

Source: Planning Commission, GOI24

Investments RequiredInvestments Required in Urban transport in XI Plan (2007-12) - Total Investment

around US$ 30 billion.

Source: Planning Commission, GOIExchange Rate: US $1 = INR 45.37132 (September 22, 2008)

US$ 7.2 billion

US$ 8.4 billionUS$ 1.6 billion

0.1 - 0.5 million cities

US$ 1.7 billion

US$ 5.7 billion

US$ 4.6 billion

1.0 – 4.0 million cities 0.5 – 1.0 million

cities

4.0 million plus cities

Modern Buses

MRTS

Transport Planning and

Capacity Building

US$ 77 million

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Urban transport – Key Issues

• Current Problems:▫ Rapid urbanization & growing transport demand▫ Inadequate public transport and rapid motorization▫ Mix of slow and fast vehicles without segregation▫ Increasing level of congestion and pollution▫ Transport energy demand and carbon emissions rising▫ Uncoordinated management of urban land use/ transport

• Causes of Problems▫Poor quality and insufficient capacity of roads▫Explosive numbers – India’s urban population has grown

4.6 times, vehicle numbers have increased 158 times ▫Insufficient road space available to public transport

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Transport in the Republic of India is an important part of the nation's economy.

National Urban Transport Policy (NUTP) 2006 27

India launched its first transportation policy in 2006, which focuses on moving people and not vehicles.

Promote ITS, cleaner fuel & vehicle technologies for cities

Projects to demonstrate best practices in sustainable transport

Build capacity to plan for sustainable urban transport

Ensure coordinated planning for urban transport

Ensure integrated land use & transport planning

People focused & equitable allocation of road space

Investments in public transport & Non Motorized modes

Strategies for parking space and freight traffic movements

Establish Regulatory mechanisms for a level playing field

Innovative financing methods to raise resources

National Urban

Transport Policy (2006)

Source: “NUTP and JnNURM- Government of India Initiatives to Strengthen Public Transport”, S.K. Lohia, OSD (MRTS), MoUD, GOI

JnNURM

• A mission for integrated development of urban infrastructure services with the assistance of the Centre, state and local bodies

• Set up with US$ 20 billion outlay to cover 60 cities with a million-plus population in next seven years

Objective:

▫ Provide basic services to urban poor (housing, water supply, sanitation, slum improvement, community toilets); and

▫ Enhance overall urban infrastructure

Federal Government also launched a new scheme JnNURM (Jawaharlal Nehru National Urban Renewal Mission) to finance

urban transportation initiatives.

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Urban Transport - Metro Rail Projects

• Delhi is successfully operating its Metro Lines with daily ridership of 1 Million passengers / per day.– 86 km is under operations. – Another 100 km is under

construction.• Metro rail projects promoted

under joint ownership with the concerned state governments in Delhi, Bangalore, Kolkata & Chennai– 20% Viability Gap Funding for

Urban transport projects on PPP Mumbai

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Urban ministry is supporting metro rail projects also in bigger cities to serve high demand corridors.

Source: “NUTP and JnNURM- Government of India Initiatives to Strengthen Public Transport”, S.K. Lohia, OSD (MRTS), MoUD, GOI

City Kms App. Cost (US$ Million)

Delhi 121.26 4085Mumbai 62.89 3915Bangalore 42.30 1736Kolkata 14.67 1037Chennai 46.50 3106Hyderabad 71.00 2638Cochin 25.30 0617

City-wise Metro Systems – Kms & Investment

Major Trust on BRT System in India

• Current Status – 17 Cities are considering, planning or implementing busway/BRT projects.

• 10 of the 17 are being funded through JnNURM

– BRTS Projects for 422 Kms sanctioned for 9 mission cities at a total cost of US$ 1,016 million (@ US$ 2.4 million per km)

Note: * Delhi is implementing BRTS with its own funds.

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Buses contribute as the most important mode of Public transport across all cities.

City Kms planned

App. Cost (US$

Million)Pune 101.77 204.00Pimpri Chinchwad 42.22 --

Indore 11.45 20.00Bhopal 21.71 --Ahmedabad 88.50 196.00Jaipur 39.45 44.00Vijaywada 15.50 --Vizag 42.80 --Rajkot 29.00 --Surat 29.90 --Delhi* 121.00 --

City-wise BRT Systems – Kms

Economic stimulus package• 15,260 modern buses sanctioned under economic stimulus

package at a cost of US$ 1,020 Million• Waive state & local taxes on public transport (upto 16%)• 61 mission cities Covered; about 4000 buses are on road as on

31st December 2009• 34 new cities to get organised city bus service

Urban Bus Specifications• Low floor (400mm), semi low floor (650mm) and standard

buses (900mm) as against prevailing 1100mm floor height (truck chassis)

• ITS features • LED sign boards• Audio visual passenger information• Multiplexing, On board diagnostics• Cameras, integrated controller• GPS, GPRS, Smart card ticketing machines

31Buses for City Transport

Source: Ministry of Urban Development, GoI (January 2010)

World Bank Support•National Highway Development Project.•Rural Roads Program.•States Road Project.•Mumbai Urban Transport Project.•Sustainable U Project.

THANK YOU……………..