Kochi Metro, a role model for tier-II towns across India?
Kochi Metro Rail (KMRCL), in early October, opened a 5-km stretch on its 25-km Metro Line 1, extending the 13-km that was already operational, deep into the centre of the city, and since then, has already seen its ridership double to 30,000 people daily. Read On ..
To be sure, the Kochi metro, which boasts a number of firsts, and was built at a cost of just over Rs 5,000 crore, is still finding its feet. It does not expect to achieve its target of 300,000 daily commuters for at least five-six years until the second phase of 12-km becomes operational and a host of other public transport initiatives to improve multimodal transport and seamless connectivity are also implemented.
Until such time, however, the nascent metro corporation of this affluent tier II city has thought up at least a couple of novel ideas to generate revenue. Recommended by consulting firm Ernst & Young, KMRCL saved its own money and instead invited bids from banks to set up the automatic fare collection system in exchange for the right to issue a co-branded card to commuters, including for the yet-to-be-constructed phase-II. The Kochi-1 smart card is a personalised card that gives people a discount on the existing ticket fare, otherwise purchased through paper tokens. The smart cards are RuPay cards, come with a PIN and can be used to pay for internet transactions, utility services and for shopping both within and outside India, besides doubling up as a metro, bus and ferry ticket. Axis Bank also paid KMRCL a premium of about Rs 209 crore for the rights to issue the card, which will be paid to KMRCL over the next ten years. The sweetener? KMRCL receives 20% of the card charges that Axis Bank charges either to its customers or merchant establishments, which is usually about 2% of the value of the transaction. Elias George, managing director, KMRCL, told Tradebriefs, "This is not just a transit card or services card. We also get a revenue stream from it."
Following Kochi's example, the Nagpur metro, too, has tied up with SBI for co-branded cards while Ahmedabad Metro is also believed to be planning something similar.
Second, KMRCL has 17 acres of prime land in the heart of the city that was given as a grant from the government, and which it plans to auction off to realty developers for mixed-use development. While KMRCL is eyeing about Rs 600-700 crore from the auctions, there will also be some amount of annual recurring revenue from recreation centres, etc.
The third thing that KMRCL has already successfully done is it has awarded station naming rights to winning bidders. Already, Chinese consumer electronics company Oppo has been given exclusive branding rights for the Edapally and MG Road stations, for which KMRL is earning Rs 6.60 crore and Rs 5.50 crore per year, respectively. South Indian Bank, too, has picked up a station for Rs 2 crore annually for three years. "The metro is a new toy so it attracts a lot of advertising revenue. Station naming rights is a great opportunity," says George. KMRCL is inviting bids for branding opportunities inside the trains as well but these have yet to be awarded. With 22 stations that are planned on the 25-km route across the first phase of the metro, the advertising revenue potential is not insignificant.
Only the second tier-II city in India, after Jaipur, to have a metro system already operational, George says the city is already physically aligning itself around the metro system. "In three-four years, we envisage a migration to public transport. We see this as a single system which it is possible to create in a small town like Kochi. Our goal is to make an integrated public transport system similar to what exists in London, with a common time-table, common ticketing and single command and control," says George.
- TradeBriefs Bureau -
Introducing TradeBriefs SME - Print edition - Subscribe Now! | Sample copy