Delhi Metro Airport Express Line: Making it Viable

In 2014, the Delhi Metro Rail Corporation (DMRC) had just taken over operations of the Delhi Airport Metro (DAM), which connected the Indira Gandhi International Airport to the New Delhi railway station. However, high capital expenditures, excess operational expenditures, and low ridership meant that the concessionaire, which had been operating since 2011 on a public–private partnership model, was continuously reporting losses and therefore decided to quit the project in June 2013. When project operations were transferred to the DMRC, the metro’s overall capacity utilization was a very low 5 per cent and the line had few riders and operational losses. The DMRC’s director of operations had the challenging task of making the DAM operationally viable. There were several available options. Should he consider rationalizing the fares; increasing ridership by connecting the Delhi Metro Airport Express Line to passenger hubs; improving the amenities or attractions at the metro stations; or offering hassle-free travel for different groups of customers?

This case can be used in graduate-level courses on acquisitions and turnaround strategy; managerial economics (microeconomics and econometrics); public policy, public utilities, and infrastructure economics; and supply chain management (services operations management, metro networks and railways). Working through the case and assignment questions, students will have the opportunity to do the following:<ul><li>Understand potential causes of trouble for an urban mobility project.</li><li>Identify the options available to a firm after taking over such a loss-making yet potentially important urban mobility project.</li><li>Understand how to make the project operationally viable.</li></ul><br><br>The learning outcomes for the case are as follows:<ul><li>Understand what leads to the failure of an infrastructure project.</li><li>Identify the issues that need to be solved after taking over a loss-making firm that has the potential to be revived and affect mobility.</li><li>Gain experience with a business case involving a major modern-day public mobility project in an emerging-market context.</li><li>Understand the concepts of price elasticity of demand, operational break-even point, cost optimization, and price discrimination.</li><li>Describe the issues in the revenue optimization of a complex public transportation project.</li><li>Identify various types of promotion and develop consumer awareness campaigns.</li></ul>

• Pricing Demand Transportation Strategy