Low-cost carriers not ruffled by rail fare cuts

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New Delhi, Feb 26: The introduction of dynamic pricing for passenger fares for the first time by railway minister Lalu Prasad may have been aimed at competing with low-cost airlines, but the carriers are in no mood to accept the challenge and bring down the prices further. Low-cost airlines maintain that their fares for most of the sectors are still below the railways’ AC first-class and AC two-tier rates.

Rather than announcing an across-the-board cut in passenger fares, Prasad has brought in a dynamic pricing model, offering fare cuts according to peak and off-peak seasons. According to the proposal, there will be a 3% reduction in AC first-class fares for the peak season. For the non-peak season, it will be a 6% cut. For AC 2-tier, the peak and non-peak season reduction will be of 2% and 4%, respectively. AC 3-tier (new coaches) saw the maximum cut in fares with peak and non-peak season reductions of 4% and 8%, respectively.

The peak season for rail travel is between April 16 and July 14 and September 16 and January 1.The move to bring down upper-class fares has been designed to attract more traffic because during 2006-07, earnings from these fares at Rs 3079.61 crore were lower than the Budget estimate of Rs 3,174.80 crore.

Welcoming the new Railway Budget, SpiceJet CEO Siddhanta Sharma said, “The low-cost carriers feel that the revolution started by them is paying dividends not only to air travellers but to train passengers as well.”

Asked whether there would be any cut in air fares, Sharma said, “The reduction offered in the present rail Budget is miniscule and our promotional fares tend to be even lower than the railways’.”