Airlines lose passengers to railways as fares ratchet up

New Delhi: Airlines have raised ticket prices the most on routes that are least serviced or are short-haul over the last one year, prompting many passengers to choose trains over flights. This could be a source of concern to airlines if flight occupancy continues to be low in the festive season between now and January.
India’s airlines have been reporting negative month-on-month growth for the past three months with flight departures being reduced and passengers of two flights clubbed together to counter low occupancy levels.
Scheduled domestic airlines carried 9.44 million passengers in June-August, an 11.2% decline from 10.63 million in the same period last year, according to the aviation regulator Directorate General of Civil Aviation (DGCA). Figures for September are not out yet.
Partly the fare rise has been due to high fuel prices, which have been passed on to customers as fuel surcharge. And unlike last year, the consolidation in the airline industry has also seen a near-complete absence of ultra-cheap or tickets at throwaway prices.
According to data compiled by brokerage Citi Investment Research, an Ahemdabad-Delhi return ticket that used to cost on average Rs5,059 in July 2007 was Rs11,117 in August 2008—a jump of 120%—while on longer routes, such as Chennai-Delhi, ticket prices jumped the least by nearly 30%.
12/10/08 Tarun Shukla/K.P. Narayana Kumar/Livemint

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Categories: Indian Aviation- In General Oct 2008