Fare cuts may give low-cost carriers a run for their money

New Delhi: Railway minister Lalu Prasad has slashed upper class fares (AC-I and II) between 7 and 4% during the lean season. The move has once again reaffirmed the railways status as a tough competitor to low-cost air carriers.
Once the new fares come into effect from April 1, passengers traveling in AC first class from Delhi to Mumbai would spend around Rs 2,200, against Rs 2,570 currently. In contrast, air passengers traveling in a low-cost carrier (LCC) would pay between Rs 500 and Rs 4,000 per ticket over and above the Rs 1,700 surcharges, bringing the total cost of travel to between Rs 2,200 and Rs 5,700. While, the LCCs would take shorter duration to reach the destination, it would come without frills such as food and very little space as opposed to the spacious sleeper compartment of a train.
Many of the discounts on the proposed fares will be further enhanced under a variable fare scheme for newly designed high-capacity coaches.
“New routes launched by the air carriers were just getting popular but the budget has announced new trains on these routes making it harder for the air carriers,” Ankur Bhatia, MD, Bird Group said.
Air fares are most probably going to drop after this Railway Budget, especially for low-cost carriers, which were born essentially as competition to the railways,” Bhatia said.
26/02/08 Financial Express

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