Train journeys call to mind a packed railway station, the hustle of a local coolie, children standing transfixed in front of the newspaper and magazine stalls and, most importantly, people crowding around the seating chart to see if their ticket has been confirmed. While a lot of innovation has gone into flying, little has been done for the railways, on which a large majority in India is still dependent. Therefore Railofy, which aims to settle a big inconvenience in rail travel, is welcome. It is a waitlist and RAC protection app. That is, if you have a waitlisted or RAC ticket, and your ticket is not confirmed last minute, you can ask to be shifted to an alternative mode of travel (flight or bus) at a comparable price.  

ISB graduates Rohan Dedhia and Vaibhav Saraf, and IIM graduate Hrishabh Sanghvi founded the start-up in 2019 but launched the service only in September 2020, after running a pilot version early this year. Prior to starting Railofy, Dedhia worked as assistant vice president with VC firm Orion Ventures, Saraf was the associate director at a management consultancy called Palladium, and Sanghvi conducted sessions on machine learning and AI at institutions such as IIM and NISM.

Dedhia says, “Passengers have to wait till the last minute (that is four hours before the train departure) to know if their ticket has been confirmed, and if their ticket has not been, passengers cannot afford the last-minute flight prices.” To capture the scale of this opportunity, he says, there are 330 million Indians who end up with waitlisted or RAC tickets. In comparison, the number of Indians flying every year is 140 milion.

To use Railofy’s service, a person has to enter the PNR of their waitlisted or RAC ticket number. Then, he or she can choose their alternative mode of travel, which is flights for long distance and buses for short, and the price they are willing to pay. While desperate travellers might be willing to pay extra to get a confirmed booking, Dedhia says, Railofy offers the ticket at a lower amount than the last-minute market price. This is where the start-up's edge lies. The passengers do not have to pay for the flight or bus ticket then but they do have to pay a protection fee that can range between Rs.50 and Rs.500-600, depending on where the passenger is placed at the waitlist. The further down you are on that list, the higher the protection fee.

Once this is done, Railofy starts monitoring the PNR. On the date of journey, when the chart gets made and the ticket is not confirmed, Indian Railways refunds the ticket amount and Railofy reaches out to the passenger via email with a flight option. On approval, a flight ticket is booked and sent to the passenger’s mailbox. The company earns around 20-25% from the booking, apart from the RAC/WL protection fee. Since the launch in September this year, the app has had more than 10,000 downloads and done around 500 bookings.

Railofy’s team found that airlines are running at 85% capacity and buses at 65-75% capacity. The start-up taps the idle capacity, through agreements made with airlines and private bus operators. “Our pitch to airlines is that you have been selling your tickets through online travel-aggregators such as MMT and others. But if there are unsold tickets after that, let us be your third channel, to sell inventory in the railway market,” says Dedhia.

While the company was bootstrapped in the initial days with an investment of approximately Rs.5 million, they have already received two rounds of seed funding worth Rs.110 million. This includes Rs.40 million from Roots Ventures, Astarc Ventures, Better Capital, and other angel investors in October 2020, and Rs.70 million from Chiratae Ventures in September 2020. The company also recently announced an expansion of the team of 25 with Anand Srinivasan, former head of revenue at GoAir, and Sunil Kumar, ex-joint GM (Portals) at IRCTC joining in as mentors.

 

Now that Indian Railways has called for investment in private trains, Railofy sees further growth and demand in the segment. They are hoping to capture 15 million passengers per year in the next five years and make around Rs.15 billion in revenue. Ultimately, for the team at Railofy, the goal is to become the largest private player in India in this segment.