• Surging railway fares could increase traffic at airlines

    The decision by Indian Railways to allow surge pricing in Rajdhani, Shatabdi and Duronto trains will further expedite the shift of rail passengers towards airlines — giving an impetus to the country’s growing aviation sector.

    Today onwards, railways has introduced the concept of surge pricing on base fares of Shatabdi, Rajdhani and Duronto trains. According to the Railway Board formula, the base fares will increase by 10 per cent with every 10 per cent of train berths sold.

    The maximum fare has been capped at 1.5 times of the base fare, which means half of the berths would be sold at that rate. Even as railways increased fares, state-run carrier Air India has announced that it will not increase its last minute fares, or tickets booked four hours before the take-off, that are being sold at par with AC II Rajdhani train fares.

    “Even as railways increased fares, our last minute fares will remain the same as earlier,” said a senior Air India official, who did not want to be identified.

    Hence, if you were to buy an Air India ticket from Delhi to Bangalore four hours before departure, it would cost you Rs 1,530 less than the second AC railway ticket. Above all, you get a confirmed plane ticket, instead of a waitlisted Rajdhani ticket. You can get an Air India ticket for Rs 4,095, whereas the second AC would cost you Rs 5,626.

    Other airlines are also providing tickets at almost same prices as Air India. (See chart) A comparison between Shatabdi train fares and air fares cannot be made because Shatabdi connects sectors that are short haul.

    Duranto fares are more or less similar to Rajdhani fares. Analysts say that the shift has already started with the difference between AC fares and air fares reducing to up to Rs 800 and this increase in difference will only expedite it.

    “This is good news for aviation industry in India that is seeing an over 20 per cent growth in passenger numbers that is highest in the world. Looking at the capacity expansion the airlines have and the level at which oil (price) is, air fares are going to get lower further in the future,” said Sharat Dhall, president at Yatra.com, an online travel portal.

    Other travel industry analysts feel that the railways plan to introduce surge pricing is a step in the right direction. “Globally, surge pricing in train fares is an acceptable thing and Indian Railways doing it is a step in the right direction. As far as the shift is concerned, it’s already happening and may happen more,” said Aloke Bajpai, cofounder and CEO of iXiGO, an online travel portal.

    Bajpai added the shift towards surge pricing may not impact Indian Railways in terms of passenger carriage. “Surge pricing is only in premier class, which is a small percentage of railways’ total capacity and passengers carried. So, the impact will not be much,” he said.

    Bajpai’s views were echoed by a Railway Board member. “Not more than 10 per cent of traffic would go to airlines. We already have waiting list of 300-400 for Rajdhani trains. I don’t think railways would lose passengers. Today, airlines are offering low prices because the fuel prices are low and demand is lean. They will also increase prices once demand goes up and then people will find railways cheaper. We are follo-wing the same model. We couldn’t have reduced base fares because we have no lean season and base fares are already so low,” he said.

    He said that railways has already tried surge pricing of up to 3.9 times the base fare of Rajdhani trains for its special Suvidha trains, run during the festive season.

    “For a second class Rajdhani type segment, people are already paying Rs 5,000 during Diwali and Holi. We have introduced surge pricing keeping all factors in mind. It’s an experiment for us,” he added.  Brandon Marshall Jersey

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