Passenger Rail Transportation Declines

EghtesadOnline: As Iran is expanding railroads across the country, an executive of a major Iranian rail company said passenger rail transportation is gripped by a longstanding recession.

News ID: ۷۷۴۶۲۱

14 March 2017

“It has been a long time since passenger trains are not cost-effective,” Alireza Ajamian with RAJA has been quoted as saying by the Persian daily Shahrvand.

RAJA was established in November 1996 as an arm of the Islamic Republic of Iran Railways with the aim of improving the quality and quantity of railroad passenger services.

It was transferred to Tourism Holding Company’s Social Security Organization (known by its Persian acronym Hegta) in March 2010 as part of IRIR’s outstanding debt to the organization, Financial Tribune reported.

CEO of RAJA Mohammad Rajabi said the company’s share in national rail transportation is around 50%.

Ajamian said RAJA has posted a 2-million drop in the number of passengers during the current Iranian year (March 2016-17) compared to the year before.

“The decline has continued for some time now,” he said. “Train owners cover a major share of their costs through freight trains.”

He attributes the reduction of rail passengers to a decline in Iranians’ purchasing power. Passengers tend to opt for private cars since it is cheaper because of low fuel prices. Fuel is subsidized in hydrocarbon-rich Iran. Much as the government has tried to reduce energy subsidies in the past years, prices are still comparatively low. The administration of President Hassan Rouhani has put development of rail industry on top of its agenda to promote safe transportation and fuel conservation and fight against pollution.

“Suburban trains are the least financially viable [means of transportation in the rail sector],” Shahrvand quotes sales manager of a rail company without mentioning the person’s names.

“Their [suburban train operators] accumulated debt has reached 4 trillion rials during the past three to four years.”