Advertising revenues from Vayu Vajra to boost the coffers of BMTC

Advertising revenues from Vayu Vajra to boost the coffers of BMTC

Anil Kumar Sastry

BMTC’s Vayu Vajra and Suvarna coaches are expected to breakeven in three years

The contract with the Mumbai media company

is for six years

— Photo: V. Sreenivasa Murthy

Remunerative: The BMTC received an average offer of Rs. 20 lakh a bus for 40 Vayu Vajra coaches for advertisemt rights.

BANGALORE: The Bangalore Metropolitan Transport Corporation (BMTC), which risked incurring losses by introducing Bangalore International Airport Special bus services (Vayu Vajra and Suvarna) this year, is now confident of breaking even in three years.

And this breakeven does not come from the operational revenue, but by selling the right of advertisement space on the BIAS coaches. While the cost per kilometre of Vayu Vajra services is Rs. 40, the earning per kilometre in July was as low as Rs. 32, causing losses.

However, through a recent auction-cum-tender of advertisement rights, the corporation received an average offer of Rs. 20 lakh per bus for 40 Vayu Vajra coaches, and Rs. 9 lakh per bus for 43 Suvarna coaches.

A Mumbai-based media company offered Rs. 12 crore for 40 Vayu Vajra coaches and 43 Suvarna coaches with a 10 per cent increase every year for the next six years. On the other hand, BMTC gets Rs. 5.3 lakh per bus for its regular Vajra coaches on city routes.
Cost recovery

BMTC Managing Director Syed Zameer Pasha told The Hindu that the corporation can recover the cost of the coach in three years at the rate of Rs. 20 lakh a year. When road transport corporations are unable to increase the fares apprehending public outcry, cross-subsidising the operations through advertisement rights was helpful to sustain the operations, he said.

Out of Rs. 140 crore profits earned during 2007-08, only Rs. 19 crore was from traffic revenue and the balance through non-traffic revenue, which includes revenue from commercial spaces and advertisements. Though the deal was finalised on July 17, the BMTC did not issue the letter of approval to the successful bidder as the matter was stuck with the Government. As a result, the corporation is losing Rs. 3.28 lakh on every successive day.

Transport Minister R. Ashok told The Hindu that “the contract is for six years and we want as much revenue as possible from the deal.

For the first lot of 10 Vayu Vajra, BMTC received an offer of Rs. 25 lakh per bus and for the rest, Rs. 20 lakh per bus”. The deal, however, was finalised on Saturday at Rs. 20 lakh per bus as the Mumbai-based media company had bid for all 40 Vayu Vajras whereas the other contender had bid for only one lot of 10 buses.