Railways losing ground to airlines: report
25 July 2017
The plummeting costs of air travel combined with rising costs of train journeys will make flights a better option to long distance travellers by 2020, says a perspective report prepared by Indian Railways.
The report projects that Railways will lose a huge portion of its upper-class clientele to domestic airlines that offer cheaper and faster travel between 2019 and 2020.
According to the 2019-2020 projection for the sector, railways may lose a huge portion of its upper-class clientele to airlines.
Airlines have a definite advantage of speed and time of travel over railways, but, according to the report, trains will still have a competitive pricing in their favour.
''It is essential that Indian Railways addresses the two key value propositions of airlines passenger business – price and speed – immediately to sustain its core business in the passenger segment in the future,'' says the report.
According to the report, 25 per cent of domestic air travel happens over inter-city distances within 500km. This contradicts the popular assumption that air travel is usually between longer distances, ie, 800 km and beyond.
''With the proliferation of airports into small towns and massive thrust of low-cost airlines to tier II and tier III cities, there is a clear pattern emerging of air being preferred for even shorter hauls by passengers,'' it said.
While speed has traditionally provided the edge for airlines, ''price'' has now given them a complementary advantage, says the report, which warns that these two factors need to be taken up on an urgent basis.
The report is part of an internal assessment commissioned by railway minister Suresh Prabhu and prepared by the Railway Board to map a comprehensive overhaul and possible course correction.
''With the proliferation of airports into small towns and massive thrust of low-cost airlines to Tier-II and III cities, there is a clear pattern emerging of air being preferred for even shorter hauls by passengers,'' it says.
Apart from airfares coming closer to rail fares, proactive government policies like UDAAN, which provides for air travel of less than an hour for Rs2,500 will also provide impetus to the civil aviation sector, the blueprint concludes.
The number of total passengers carried by domestic airlines has been moving towards the 100-million mark for the last few years. They carried around 97.8 million between December 2015 and November 2016, the report notes. The comparable classes on Indian Railways - First AC, AC-II, III and First Class - carry on an average 145 million passengers every year.
For Railways, this segment has been either shrinking or plateaued. From a growth rate of 9.5 per cent in 2014-15, it shrunk to 5.01 per cent in 2015-16, the report notes. ''The 20 per cent year-on-year growth of the civil aviation sector is likely to sustain in the short run-up to five years and then taper out to a 10 per cent average annual growth rate,'' it says.
The report says that till Dedicated Freight Corridors are commissioned in full, the average growth rate of the upper class segment will remain a tepid five per cent. ''…the number of passengers by air would exceed the upper class rail passenger numbers by FY 2019-20,'' it says.
''For years, we have refused to see the writing on the wall. This is the global trend in developed economies, wherein the Railways do not serve long-distance passenger travel. That load is rightly taken by air,'' says Ajay Shukla, former Railway Board Member (Traffic).
''Railways should ideally cede the market of long-distance services, like Delhi-Chennai and others to air and free up its own capacity for more freight trains, which will be a real contribution to the economy,'' adds Shukla.