Wednesday, January 31, 2018

Indian dreams take wing, railways loses out to airlines

Indian Railways has been losing out passengers to airlines in the past five years as travel by air becomes more beneficial in every possible sense, shows data from the 2017-18 Economic Survey.

Railway passenger growth dropped by an average 0.26 per cent every year in the five years ended 2016-17, according to the Survey. During the same period the number of domestic air passengers have been increasing 10 per cent per year, according aviation industry's regulatory body Directorate General of Civil Aviation (DGCA).

One of the key reasons for this is the narrowing fare gap between railways and airlines. For instance, a Mumbai-Delhi train ticket in AC 3-tier costs ?2,500 and it takes 17 hours to complete the journey. Now, if one books a flight on the same route one month prior to the date of travel, the costs remain the same, according to travel portal makemytrip.
To tap into latent demand from young travellers who form a large part of total travellers, domestic airlines have increased their available seat kilometres (ASK) — a measure that reflects an airline's passenger carrying capacity — by 8 per cent every year between FY12 and FY17 to 116.94 million. As a result of this, the average ticket price of India's largest airline by market share, Indigo has declined 1 per cent a year since FY12 to ?3,721 in FY17.
Railways, however, has been increasing fares to boost passenger revenue growth. Its passenger revenue growth grew 10 per cent a year between FY12 and FY17 on account of 8 per cent CAGR growth in average rate per kilometre and just 2 per cent increase in distance travelled. The average realisation for Railways stood at 40.30 paise per km for passenger in FY17, while on an average passenger travelled 141.67 km in the same period. More than 14 crore passengers of Indian Railways travelled in AC-coach which are facing direct competition from domestic airlines.

According to foreign brokerage Credit Suisse research, rail fares of AC segment increased more than 60 per cent between FY11 and FY17 when indexed to 100, while air fare remained flat in the same period.
31/01/18 Rajesh Naidu,, Ashutosh Shyam/ET Intelligence Group/Economic Times
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