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Non-fare revenue sources to rescue loss-making metros

Capital guzzling metros need massive manpower and money to build and operate smoothly. This has egged metro authorities and governments to explore various means to generate funds along with the existing fare-based earnings

Getting a metro rail, a crucial lifeline for commuters in most large cities, running seamlessly is a tough job. From laying tracks and purchasing coaches to ensuring smooth daily performance, it requires considerable manpower and money.

No wonder then the super-sophisticated mode of urban transport takes inordinate time to become profitable. So far, of the 200 or so metro rail networks across cities of the world, only a few have proved to be financially viable. This is because of their relentless efforts to complement fare-based revenue with other non-fare revenue sources. A solid government backing all along has helped too.

Those are in Hong Kong, Singapore, Tokyo and Taipei.

For metro networks in other cities, struggling to raise money through fare hikes, these are the alternate routes – not that they are not exploring those already.

Scroll down to find out how these additional sources are being being harnessed

Naming rights

It’s a win-win. It allows companies and public sector entities the right to prefix their names before that of stations’ for money. Thus, while they get a chance to promote themselves, metro operators and governments get a chance to fill their coffers by selling naming rights.

Dubai metro was the first one to take the route to create an income source. Soon enough, Boston, Chicago, London, Houston, Montreal, Philadelphia, Montreal, Gurgaon and Mumbai followed suit.

With greater footfalls, bidding prices for naming rights shoots up, thereby making it easier for authorities to keep fares affordable. The Mumbai metro, for example, sold annual rights for each station at around Rs2-6 crore, say sources. However, despite such massive advertising revenue, the Mumbai and Delhi metros in India have some of the highest fares in the world.

Considered an easy solution, naming rights nonetheless have been a subject of debate. Adding brand names, feel many, can confuse commuters by obfuscating place names. The bigger complaint, however, is that it equals to privatisation of public property. Notwithstanding such grievances, cash strapped metros have resorted to selling bidding rights liberally.

Advertising

Besides naming rights, there are other ways to generate advertising revenues from private and public entities. Authorities can offer spaces inside the station such as walls, civil structures and train compartments to companies for promoting their brands. The more the number of riders, the greater the money to be made as it means a product or brand’s posters having greater chances of getting noticed.

Retailing at metro stations

Another popular way to mop up money to support operating costs of metros is by allowing retailers to set up shop within the premises. Land or area can be leased for it. It’s another win-win for both parties. It helps small business establishments such as coffee shops, convenience stores, pharmacies, fast food stalls, ATM kiosks by banks and others to tap into the stream of commuters pouring in at both peak and non-peak hours. It also enables authorities to mint the much-needed money and busy commuters to grab a quick bite, withdraw money or quickly pick up stuff they need.

Commercial exploitation of adjacent land

Surrounding land can be a great asset. It can be acquired for property development, including building residential and commercial buildings. It could also be used for building public parks or car depots.

Shopping malls and residential units so far have emerged as the popular routes for authorities.  They are not just developing those in surrounding tracts of land but also elsewhere.

In Hong Kong, where property market is red hot owing to space crunch, the metro authorities have made a big money through land development. In India, Hyderabad Metro Rail corporation is keen on building multi-level vehicle parking complexes along the metro network and other locations. This could provide it with a steady stream of revenue.

Other miscellaneous sources

There are several other innovative lucrative revenue sources for metro authorities to tap on. One such is the option to lease out bandwidth on the metro’s optical fibre (OFC) cable, which are used by data providers for internet transmission. Commercial entities, such as private telecom companies, mostly buy them for selling to end users.

The Mumbai metro authorities are already planning on setting up an elevated network of OFC along the metro corridors being built. Relatively easy on the pursue, it would help them with quick bucks. Further, it would not require digging up of roads to lay them, since they would be on the metro route.

The Kochi metro, in Southern Indian state of Kerala, which is a little over an year now has already managed to reduce its monthly losses through selling bandwidth and other non-fare revenue sources.

Apart from that, metro organisations can also lease out space to third parties to erect mobile telephone towers. Selling of extra energy such as solar which is being used to run metros at many places these days and organizing events inside or just outside stations can enable to rake in the much needed money too.