There will be intense competition between the railways and low – cost airlines with new initiatives brought in by Railway Minister Lalu Prasad Yadav , reports Economic Times.
For the budget 2008-09 , there have been a reduction in passenger fares.One rupee discount per passenger for fares up to Rs.50 in non suburban Second Class (ordinary and mail/express) have been announced in this budget. Five per cent discount across the board for passenger fares beyond Rs.50 for all non suburban Second Class (ordinary and mail/express).
Reduction in fare - AC-I : 7%; and AC-II : 4% (the reduction will be half for popular trains and during peak period) will increase competition between the railways and low cost airlines. Coach capacity in sleeper will be increased from 72 to 81, while in AC 3 tier from 64 to 72 while in AC chair car it will 102 from the existing 67 seats.
Also, reduction in passenger fares and freight rates, introduction of 63 new trains including 10 Garib raths, concession to students, special recruitment drive for SC,ST, OBC`s and minorities, are the major highlights of the Rail budget presented in Parliament today.
In the fifth consecutive budget the railway minister, Lalu Prasad said there will a 5 percent reduction for tickets costing more than Rs 50 in mail, express and ordinary trains. Tickets upto Rs 50 for non-suburban, mail and express trains will be reduced by one rupee.
The airline industry is already going through a hard row with the price of aviation turbine fuel already rising. In the last nine months alone , airfares have already moved up by Rs 900 as fuel surcharge.
Consequently, the gap between airfare and railfare have widened significantly. While on long-haul routes, such as Bangalore-Delhi and Mumbai-Kochi, airlines have managed to remain more competitive, on short-haul routes, such as Delhi-Chandigarh and Delhi-Amritsar budget, carriers are finding the going tough.
With merger and acquisition taking place in the aviation industry, various offers have been disappeared. Instead, a minimum airfare available today is for Rs 2,550. A few years back the same Rs 2,550 airfare was available for Rs 900.
The airline industry is rethinking strategies on airfares with this budget in place. With upgradation in policy , passengers are given opportunity to upgrade themselves to higher class, which inturn have thrown a challenge to the airline industry.
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