Metro Rail Companies in India Can Boost Financial Sustainability with Non-Ticket Sale Revenues, Says ADB
The Asian Development Bank (ADB) has recommended that metro rail companies in India should diversify their revenue streams beyond ticket sales to enhance their financial sustainability. In a recent study, the ADB found that by aggressively exploring avenues such as advertising, leasing space, property development, and shopping at stations, metro rail companies can significantly increase their income.
The Cost of Financing Metro Rail Projects
Metro rail systems are essential for meeting the mobility needs of rapidly growing urban populations in a sustainable and low-carbon manner. However, the cost of financing these projects is substantial, and governments often struggle to secure the necessary capital for infrastructure development. Additionally, generating sufficient funds to cover operating and maintenance costs poses a significant challenge.
Challenges of Ticket Sale Revenue
Relying solely on fare income is insufficient for metro rail companies as ticket prices must be affordable to attract a high ridership. To ensure financial sustainability, alternative revenue streams need to be explored.
Exploring Additional Revenue Avenues
According to the ADB study, metro rail companies need to consider various avenues to generate non-ticket sale revenues. One prominent opportunity is advertising. The installation of digital screens, including jumbo-sized LCD or LED panels, at stations can provide a platform for impactful advertisements. Additionally, “train wrap” advertising, where the entire train is covered in advertisements, could be a viable option.
Apart from advertising, exploring “pouring rights” that allow beverage sales on all station premises and securing “station naming rights” where a corporation or entity pays to name a station for a certain period can also generate substantial income.
Transit stations can be utilized as venues for corporate events, conferences, festivals, and exhibitions, offering a unique and convenient space for these activities. Moreover, property development at stations, including the construction of commercial spaces and other amenities, can yield significant cash flows when proper planning and management are in place.
The acquisition and development of property above and adjacent to stations, as well as at maintenance depots, is another avenue that metro rail companies can explore. Acquiring sites at lower prices before commencing construction can also prove advantageous in the long run.
Driving Financial Sustainability
By diversifying their revenue sources, metro rail companies in India can strengthen their financial sustainability and address the operational costs associated with infrastructure development and maintenance. Exploring advertising opportunities, leasing space, developing properties, and encouraging commercial activities at stations can provide a steady stream of income beyond just ticket sales. Implementing effective strategies to generate non-ticket sale revenues is crucial for the long-term viability of metro rail systems and the mobility requirements of urban populations.
