ADB Urges Metro Rail to Explore Non-Fare Revenue Options

19 Aug 2024 CW Team

While the development of metro rail systems is crucial to meeting the mobility needs of rapidly growing urban populations in a sustainable and low-carbon manner, the cost of financing these projects is substantial. Governments often struggle to secure the necessary initial capital to create the infrastructure, and generating sufficient funds to cover operating and maintenance costs poses a significant challenge.

According to ADB, relying solely on fare income is insufficient, as ticket prices must be kept low to attract a high ridership. To achieve financial sustainability, metro rail companies must explore additional revenue streams beyond ticket sales, such as advertising, leasing space, property development, and shopping at stations.

In terms of advertising revenue, options like digital screens at stations, including jumbo-sized LCD or LED panels, should be considered. Another attractive option is 'train wrap' advertising, where the entire train is covered in advertisements. Additionally, 'pouring rights,' which allow beverage sales on all station premises, and 'station naming rights,' where a corporation or entity pays to name a station for a certain period, can generate substantial income.

Transit stations could also serve as ideal venues for hosting corporate events, conferences, festivals, and exhibitions. Furthermore, property development at stations could yield significant cash flows if properly planned. This would involve developing property above and adjacent to stations, as well as at maintenance depots. Acquiring sites at prices before the construction of the metro project could also be advantageous.

The Asian Development Bank (ADB) has found that metro rail companies in India can significantly enhance their financial sustainability by aggressively exploring non-ticket sale revenues through avenues such as advertising, leasing space, property development, and shopping at stations.While the development of metro rail systems is crucial to meeting the mobility needs of rapidly growing urban populations in a sustainable and low-carbon manner, the cost of financing these projects is substantial. Governments often struggle to secure the necessary initial capital to create the infrastructure, and generating sufficient funds to cover operating and maintenance costs poses a significant challenge.According to ADB, relying solely on fare income is insufficient, as ticket prices must be kept low to attract a high ridership. To achieve financial sustainability, metro rail companies must explore additional revenue streams beyond ticket sales, such as advertising, leasing space, property development, and shopping at stations.In terms of advertising revenue, options like digital screens at stations, including jumbo-sized LCD or LED panels, should be considered. Another attractive option is 'train wrap' advertising, where the entire train is covered in advertisements. Additionally, 'pouring rights,' which allow beverage sales on all station premises, and 'station naming rights,' where a corporation or entity pays to name a station for a certain period, can generate substantial income.Transit stations could also serve as ideal venues for hosting corporate events, conferences, festivals, and exhibitions. Furthermore, property development at stations could yield significant cash flows if properly planned. This would involve developing property above and adjacent to stations, as well as at maintenance depots. Acquiring sites at prices before the construction of the metro project could also be advantageous.

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