Railways overtake airlines in fare battle

New Delhi: In the race of price war, Lalu’s railways seems to have overtaken budget airlines like SpiceJet, GoAir, Air Deccan and IndiGo. Even as fuel price hike forced airlines to increase airfares by 6-10%, competitor reduced rail fares by 5% across the board. For something budget airlines win away A/C rail passengers on certain sectors.
With aviation turbine fuel (ATF) prices going up significantly and consolidation leading airlines to focus on their bottom line, budget carriers increased fares in the range of Rs 500-600 per passenger in the last six month. At the same time, railways reduced fares by about 5% across the board in 2007-08, removing reservation and superfast charges.
With low-cost leader Air Deccan taken over, and airlines realising that too much red-ink on balance sheets is not good for them, the race is over.
Wooing high-paying rail travellers, low-cost airlines had offered competitive and cheaper fares with an eye on market share. This resulted in huge loss to the airlines, forcing some to stop schemes of Rs 50 and Rs 100 tickets.
22/10/07 Nirbhay Kumar & Rajat Guha/Economic Times

To Read the News in full at Source, Click the Headline

Categories: General Aviation Oct 2007, Low Cost General Oct 2007