1 Background information
Fairy queen, now a vintage steam locomotive, was commissioned in 1855, and retired from service in 1909. It had been kept in the National rail museum, before being overhauled and put into use again in hauling a two coach super luxury train to Alwar since 1997, making it the oldest locomotive still in commercial revenue earning service. In 1999, Fairy Queen won the National Tourism Award in 1999 for most innovative & unique Tourism Venture.
The main objective of reviving the Fairy Queen was to promote Indian tradition and culture and attract foreign tourists to India, to boost the tourism sector and earn foreign exchange. With steam engine being phased out of the world, the Fairy Queen express is the only one of its kind. This has the potential to rekindle the romance of the bygone era among the tourists. Traveling in such a vintage train is the unique selling point of the venture. Added to this, the luxurious overnight stay in a palace-turned-hotel, visit to a wild life sanctuary and ancient temples, and a traditional Indian folk dance program is sufficient to attract foreign tourists who are interested in Indian culture and tradition.
2 The Problem
The project however ran into problems from the very onset. The high cost impact of overhauling the vintage locomotive, and its consequent operation to provide a superlative luxury to the tourists and maintaining its unique infrastructural requirements demanded a premium pricing, which had a very limited demand in the market. On the other hand any price low enough to attract tourists would never be able to recover the fixed cost of the project. Moreover, it was also closely positioned with the Palace on Wheels which is recognized as one of the ten most luxurious train journeys of the world. Coupled with this is the shoddy image of the Indian railways as a luxury service provider, which led to a less than acceptable occupancy rate.
All this made the manage...