Tuesday, February 27, 2007

Lalu’s fare cut: Budget airlines say we don’t care

Bangalore: By slashing rail fares across the board, railways minister Lalu Prasad has, in a flash, taken away the cost advantage of low-cost airlines, leaving them with just the time advantage. With a 3-8% cut, railway tickets would now be marginally lower than airline tickets.
But this has only slightly ruffled the feathers of airline operators who say that the rail fare reduction was too small for them to adjust their current prices.
What the budget carriers feel is that competitive train fares will stimulate train, without taking away traffic from air.
Aviation analysts feel that lower rail cost, even though marginal, will succeed in putting the airlines on guard against competitio..
“A 3-8% cut is not of much consequence but airlines have to watch out for concessions beyond 10%. And if the cost of air travel become 1.5 times of rail travel then the time advantage that airlines give will not hold much appeal,” said an analyst from an international broking house.
26/02/07 Praveena Sharma/Daily News & Analysis