Aviation slump: Here’s how Railways cashed in

In 2003, when Captain Gopinath started Air Deccan as the “common man’s” airline, he would hardly have anticipated what the latter part of the decade had in store for the industry he was pioneering...

What many suspected is now clearer than ever: some segments of air passengers have contributed to Rly’s improved performance this year

In 2003, when Captain Gopinath started Air Deccan as the “common man’s” airline, he would hardly have anticipated what the latter part of the decade had in store for the industry he was pioneering: Multiple factors leading a booming aviation industry to buckle. And simultaneously, the Indian Railways have been quick to grab the opportunity. Statistics now affirm what has long been suspected: A significant rise in railway revenues compared to last year, for the same period that saw airline load factors declining drastically.

A comparative analysis for April-August 2007 and 2008 show a dip in air passenger traffic and a concurrent rise in railway passenger traffic, most keenly observed in the number of Second AC and Third AC. Airline officials admit the tilt too — barring the corporate traveller who will prefer to not travel at all, a large number of fliers is now back in the trains.

Airline industry figures show a dip of four per cent in passengers travelling between April and August this year when compared to last year’s figures. The Indian Railways saw a whopping rise of 21 per cent in its sales of passenger tickets for two and three-tier air-conditioned compartments in the same period.

According to the figures obtained from the Railways, (see box), an additional 1.67 crore passengers have travelled between April and August 2008 as compared to the same period last year. On revenue, the railways have recorded a growth of 13 per cent in the period.

Three-tier AC has recorded 35 lakh passengers more compared to last year — the same segment of people targeted by low-cost airlines. This segment also recorded a revenue of Rs 1,283 crore in this period, nearly Rs 300 crore more than the corresponding period last year.

“It’s simple logic,” said a senior industry analyst. “A certain section will choose rail travel compared to air travel, like a family going on a holiday. It makes more sense due to many factors like the all round inflationary pressure. More trains have been launched. Therefore their numbers are bound to go up,” he said.

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Jeetendra Bhargava, Executive Director of NACIL, said that the drop in airlines’ figures and the subsequent rise in railways’ passenger figure have nothing in common. “The drop and the rise do not correspond and are therefore exclusive of each other. People travel by air because of the time factor. To see the trend you need to wait for October and November’s figures when people take their leave travel allowances and travel on fixed budgets,” said Bhargava. “Anyway, it’s a global scenario,” he added, pointing out IATA’s announcement of a 5 pc slump in global air travel.

Marzban Antia, MD of Mumbai-based Avesta Travel Ltd, agrees. “We’ll have to wait till February to see if the trend continues,” he said.

Still, a shift in passengers who used to earlier prefer low-cost airlines is only to be expected, say others. “Air fares have increased due to fuel price hike. It’s an immediate reason,” said Rakesh Tandon, executive director (passenger marketing) of the Railway Board.

Fares for long distance trains has seen a cut, that also contributed to improved performance for the Railways, along with simpler e-ticketing procedures.