Aug 23, 2008

India - Wealthy Indians desert planes for trains

India’s affluent middle class is rekindling its affair with long-distance train travel, as sharp jumps in domestic airline ticket prices push many former frequent fliers back to the railways.
India has seen a boom in domestic air travel, as low-cost carriers – led by Air Deccan – brought the once-seeming luxury of air travel within the reach of a far greater number of Indians. They had previously relied on the country’s colonial-era rail system for most long journeys.

However, sharp rises in the cost of fuel have pushed India’s domestic airline ticket prices up in some cases by 20 per cent, prompting many cost-conscious Indians to keep their feet on the ground.
In July, India’s airlines carried 12.6 per cent fewer passengers on domestic flights than a year earlier, at 3.04m. Meanwhile, Indian Railways, the vast state network, saw traveller numbers in its more up-market, air-conditioned cars surge by nearly 50 per cent in the same period.
“We feel that some passengers are diverting to the trains from planes,” said Anil Kumar Saxena, a railways spokesman, although he said it was too early to know whether the trend would last.
Pankaj Gupta, a partner in New Delhi’s Outbound Travels, said, “a lot of people can’t believe that so recently it was x-y-z to fly somewhere and now it’s up by 20 per cent. It’s a shock to them. A lot of people are deferring their travel, saying: ‘We’ll think about it and let you know.’”
Since the 1990s Indian Railways has sought to upgrade its service to appeal to more demanding consumers, introducing measures such as online ticket sales.
Raajveev Batra, head of KPMG’s transport practice in India, said leisure travellers were those most likely to forgo flights and return to the trains while business travellers were still probably willing to pay a premium for a quick, efficient journey.
“The low-cost carriers helped people appreciate and realise the value of time,” he said. “People who still wish to pay more and save time will not go to other modes of transport ... The drop is largely for those passengers who were leisure travellers. I am sure that they must be shifting back to other modes of travel.”
Mr Batra said air carriers must now focus on boosting their efficiency, and predicted a period of industry consolidation. “It’s a good opportunity for airlines to introspect and look at their business but I don’t see doom for the carriers,” he said

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