Kochi Metro | KMRL looks to boost revenue from property and advertising business

Over 200 out of 311 kiosk spaces auctioned at Kochi Metro in just three days
Photo Copyrighted: KMRL

Kochi: In what can be seen as a thumbs up from the city’s residents, daily ridership on the Kochi Metro has doubled to 30,000 since the Kochi Metro Rail Ltd (KMRL) threw open in early October a 5-km stretch that extends the network to the heart of the city. Of the 25.6-km Phase 1 project, the first 13-km stretch was made operational in June this year. To be sure, the Kochi Metro, which boasts a number of firsts, and was built at a cost of just over Rs 5,000 crore, is still finding its feet. It does not expect to achieve its target of 300,000 daily commuters for at least five-six years, until its Phase II (11.2-km) becomes operational and a host of initiatives are implemented. Until such time, however, the KMRL is banking on innovative channels to boost revenue. First, on a recommendation from Ernst & Young, KMRL decided against spending on the automatic fare collection system, instead inviting bids from banks in exchange for the right to issue a co-branded card to commuters. The Kochi-1 smart card gives people a discount on tickets. The smart cards can also be used to pay for internet transactions, besides doubling up as a bus and ferry ticket. Axis Bank paid KMRL a premium of Rs 209 crore for the rights to issue the card. The sweetener? KMRL receives 20% of the card charges that Axis Bank bills its customers. Elias George, MD, KMRL, tells Media, “This is not just a transit card or services card. We also get a revenue stream from it.”

Following Kochi’s example, the Nagpur Metro has tied up with SBI for co-branded cards while the Ahmedabad Metro is also believed to be planning something similar. Second, KMRL plans to auction off to realty developers 17 acres of prime land that it was given as a grant from the government. While KMRL is eyeing about Rs 600-700 crore from the auctions, it would also earn some annual recurring revenue from recreation centres, etc.

The third thing that KMRL has done is to award station naming rights to winning bidders. Already, Chinese company Oppo has been given exclusive branding rights for the Edapally and MG Road stations, for which KMRL is earning Rs 6.60 crore and `5.50 crore per year, respectively. South Indian Bank, too, has picked up a station for Rs 2 crore annually. “The Metro is a new toy, so it attracts a lot of advertising revenue. Station naming rights is a great opportunity,” says George. KMRL is inviting bids for branding opportunities inside the trains as well. With 22 stations that are planned on the 25.6-km route in Phase I, the advertising revenue potential is not insignificant.

In fact, the innovative ways the Kochi Metro is employing to boost revenue could serve as the way forward for other metro systems. While its template could be a ready reckoner for tier-II towns, even metros in big cities stand to gain from it. For instance, the Delhi Metro that continues to make operating losses and has had to double fares since May this year is yet to tap properly the non-fare revenue streams.

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