Impact of controlling railway fares on the financial shortfall of Sri Lanka railways (SLR)

Abstract

Although envisaged as the means of delivering an attractive and efficient mode of public transport, Sri Lanka Railways (SLR) has incurred a financial shortfall since the mid-1900s. To overcome this financial shortfall SLR, a government department needs to adopt strategies that enhance its total revenue or reduce recurrent expenditure. Passenger revenue and freight revenue are major components of the total revenue of SLR. These are determined by fares and the volume of passenger and freight transport. This study examines the impact of government controls on railway fares on the financial shortfall of SLR. To do this, it analyses the effects of the railway passenger and freight revenue components of the financial statements from 1977 to 2018. An in-depth descriptive and graphical analysis is performed using secondary data to find the impact of these variables. The study ascertains that the long-term financial shortfall of SLR is attributable to two factors: SLR charges relatively low passenger fares charged by SLR compared with public bus transport, and it does not revise its fares in line with changes in the bus. This study recommends that decisionmakers and planners formulate a railway fare policy that is revised in line with bus fares and adopt measures to enhance the quality and level of service delivered by SLR.