Pricing tatkal tickets using WTP choice model

Abstract

Railways has always been central to the travel journeys of the million Indians who use it to travel across the country. However, with the rising urbanization and increase in disposable income the preference for travel mode has been shifting towards the airways, especially in the Tier 1/2 cities. This poses a serious problem for Railways in general as people now often choose airways over Railways even it means to pay a higher price for the relatively very short travel time in case of air travel. Given the lack of pricing structure prevalent in tatkal pricing, this presents a possible area for application of certain pricing mechanism as talked about in various pieces of literature. This project is an attempt at one such model which can be applied to the price the Tatkal ticket for a particular route, taking into account the per-unit cost and prevailing air prices over the same route, the prices obtained are such that they maximize the revenue per tatkal ticket for railways.