Rail Budget: Impact on airlines

New Delhi: Railway Minister, Lalu Prasad had some good news for the Indian population in this year's Railway Budget.

He announced an 18 per cent cut in First Class AC, and a 10 per cent cut in Second Class AC passenger fares.

He also said that 55 new trains will be launched in the next fiscal.

Further he said that there will be no increase in passenger and freight rates.

Since the past one year low-cost airlines have been in action, and have tried to offer travellers attractive prices, so as to give them a better and time saving alternative to railways.

While the Railway Minister may have made passengers happy with the decision to cut fares, low-cost airlines may take the hit, as they will now be compelled to re-align their prices with those of the railways.

However, managements of these low-cost airline carriers have a different story to tell.

Spice Jet Director, Ajay Singh claims that there will be no negative impact of passenger fare cuts on them.

He says, "We do not think that people will move to railways from airlines like ours. The Railway Minister's move today is very welcome. The cut in fares will stimulate the travel market on the whole. Many more people will start traveling."

He adds that Spice Jet will align its fares with that of railways.

"This is something we have always done and we will continue to do this. So if they drop Second AC or First AC fares, we will try and respond to that by keeping our fares competitive," says Singh.

In addition to this he says that airlines have an added advantage of saving time.

"We can take passengers from Delhi to Chennai in two hours versus the thirty-six hours taken by a train. And the Mumbai Delhi flight takes less than two hours."

New Delhi- Mum

While Spice Jet says they will re-align their fares, MD Deccan Air, Captain Gopinath, asserts that they will not bring down their fares following the rail fare cut.

He says, "Railways will never be able to bring down the travelling time. They can only bring down fares. We are not going to bring down the fares any further only because railways have brought it down. So we continue to focus on improving our efficiency and bring down costs."

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He is still confident that people would not mind paying extra for air travel.

"Since people save time with air travel, I don't think people would mind paying 25-30 per cent more and travel by air."

According to Jeh Wadia, Managing Director of GoAir, "At GoAir we remain committed to making flying affordable to all Indians. Pricing is dynamic in this industry and we will price our flights based on our competition - both of other airlines as well as other means of transport like the railways."

While the fare tussle between railways and low-cost airlines continues, the traveller seems to be the ultimate winner.

With AC-class fares being slashed, would you prefer train travel over air travel?