Will rail fare hike put wind under the wings of domestic airlines?

The jury is out on whether the decision of the Railways to raise passenger fares by 14.2 per cent will lead to a movement of passengers to the skies.

The pioneer of low-cost aviation in India, Captain GR Gopinath told Business Line that there will definitely be an impact.

“When we started Air Deccan, we were targeting rail passengers. People travelling long distances will prefer to travel by flight rather than pay the extra rail fare and also spend more time in reaching their destinations,” he said.

Concurring with his views, Sharat Dhall, President Yatra.com, feels that during the off-peak season, when airfares are low, and during flash sales that most airlines indulge in, there could be a larger movement of passengers from trains to flights.

Neelu Singh, Chief Operating Officer, Ezeego1.com, however, did not think so, and believing that the hike in rail fares is not likely to have any significant impact on low-cost airlines.

“This is primarily because of the wide gap between the fare brackets offered by the Railways and airlines, even if it is a low-cost one. For example, a first AC passenger currently pays about ₹2,370 for a journey from Mumbai to Hyderabad, which will be around ₹2,701 once the hike gets implemented. The corresponding cost of flying on a LCC will be ₹5,354, which is almost double the price.”

Amber Dubey, Partner and India head, aerospace, KPMG, felt that the increase may have a marginal impact on air travel.

“Passengers undergo a natural progression from train to plane due to increasing incomes, value of time and, at times, bragging rights. But this 14 per cent increase in train fares is too small to create a revolution. Unless airfares come down to, say, three times AC II fares, we may not see a major switch. For that, massive reforms in aviation taxes and other charges need to be undertaken,” Dubey added.

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