Leading budget airlines are not worried by selective fare cuts Railway Minister Lalu Prasad announced in the railway budget for 2008-09 on Tuesday, and maintain that people would prefer air travel to save time.
"There is going to be a Rs.30-80 drop in prices on the Delhi-Mumbai sector but we can take passengers from Delhi to Mumbai in 1 hour 35 minutes while the fastest trains like the Rajdhani Express or the August Kranti Rajdhani Express take 17 hours," said SpiceJet executive chairman Siddhanta Sharma.
Simplifly Deccan executive chairman G.R. Gopinath said the airlines have an added advantage of saving time.
"The railways will never be able to bring down the travelling time. They can only bring down fares," Gopinath told IANS.
He was confident that people would not mind paying extra for air travel. "Since people save time with air travel, I don't think they would mind paying 25-30 percent more and travel by air," he said.
Bruce Ashbey, president and CEO of IndiGo Airlines, said: "We do not consider railways, at any price, to be competitive." He asserted the airlines would not bring down fares following the rail fare cut.
"We do not foresee making any pricing changes as a result of the initiative announced by the railways. Our fares are very attractive for travel in all sectors," he said.
Koustav Dhar, executive director (marketing and planning) of Gurgaon-based MDLR airlines, agreed: "There has been no significant cut in the ticket fares for travel by the Shatabdi trains. I do not see any negative implications for the aviation industry as railways cannot provide the time efficiency that only air travel offers."
GoAir managing director Jeh Wadia said: "We foresee no impact on Indian LCCs of the various initiatives and concessions announced by the railway minister. If the purchasing power of an individual goes up, passengers travelling by railways will upgrade themselves to air travel."
He added the railway budget was a reflection of shifting market trends and consumers' preference for air travel.
"The phenomenal 33 per cent growth recorded by the Indian aviation sector in the last year has led the railway ministry to take a hard look at making rail fares more realistic and attractive for the common man," said Wadia.
However, Sharma pointed out that railways have an unfair advantage with low prices of diesel compared to those of the aviation turbine fuel (ATF), which go up every month.
"Many of the steps announced in the railway budget are actually straight out of the low-cost carrier (LCC) model, for example, e-ticketing, Internet bookings and kiosks for selling tickets," he said.