Budget airlines may feel heat of fare cut

Mumbai/New Delhi: Railway minister Lalu Prasad’s move to reduce fares of air-conditioned (AC) as well as second-class railway passage will hit the short-haul routes of low-cost airlines, but their long-haul routes will remain unaffected, say airline representatives and analysts.
In the Railway Budget for 2008-09, Prasad announced a 6% reduction in the fares of sleeper-class coaches and 2% in AC 3-tier and AC chair car coaches. Last year, he cut AC fares by 8%.
An analyst with a domestic brokerage, who did not wish to be identified, said the short-haul routes of airlines that can be covered by rail in 5-6 hours will bear the brunt of the railway minister’s proposal of paring fares.
Capt G.R. Gopinath, who introduced the low-fare airline concept in India and founded Deccan Aviation Ltd that runs country’s largest low-fare carrier Simplifly Deccan, however, did not anticipate any immediate problem.
SpiceJet’s director Ajay Singh doesn’t expect passengers to stop flying. According to Jeh Wadia, managing director of GoAir the fare cuts announced in the rail budget may have been prompted by “the phenomenal 33% growth recorded by the Indian aviation sector in the last year.” InterGlobe Aviation Pvt. Ltd-run IndiGo’s chief executive officer Bruce Ashby ruled out any fare reduction to counter the railways.
27/02/08 P.R. Sanjai and Tarun Shukla/Livemint

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Categories: Indian Aviation- In General Feb 2008, Low Cost General Feb 2008