Irony Of Indian Travel: Govt. Caps Domestic Airfares To Rs 2500 Per Hour; IRCTC’s Dynamic Pricing Cause Rs 200 Cr Loss!

Travel industry in India is right now undergoing a unique transformation, which was witnessed in US and Europe during 1950s and 1960s. On one hand rail travel is getting expensive, which has resulted in record loss for Indian Railways; air travel is getting cheaper day by day on the other hand.

This posts an interesting question for the travel industry as a whole – Will air travel become the de-facto travel mode for the aam aadmi and will replace rail travel as we know it? Or it is a passing phase, which will soon change?

UDAN Launched; Regional Air Travel Becomes Cheaper

Regional air-travel, which in layman terms means air-connectivity between a state capital with other small cities is in bad condition inside India, mainly due to high airfares and less demand.

So, in case you wish to search a flight from Delhi to Ambala or say Chandigarh to Bhatinda or Mumbai to Mehsana, there aren’t any flights available.

And in case there are airports in Tier 2 or 3 cities, then they aren’t used much. There are 16 airports in India which has less than 1 flight a day or less than 7 flights a week; there are 400 airports which haven’t witnessed a single flight in the last two air schedules.

In order to change the sinking scenario of regional air travel, and to boost aviation sector and enable citizens from Tier 2 and 3 cities to fly more, Govt. of India has launched UDAN Scheme, which means ‘Udega Desh Ka Aam Nagrik’ (The common man will now fly).

Under this scheme, Govt. will provide heavy subsidy to those airlines, which launches regional flights and populate those locations which are turning into ghost airports and witnessing very few flights.

In order to avail the subsidy, the concerned airlines need to cap airfares at Rs 2500 per hour of flying; and Rs 5000 per hour for helicopters.

UDAN is a first of its kind aviation scheme wherein the airlines will bid for seats in order to avail subsidy for flying into remote areas: For a fixed wing aircraft, a minimum of 9 seats and maximum of 40 seats would be open for bidding. Rs 2500 cap for one hour of flying has been reserved for 50% of the seats in any air-route.

Civil Aviation Minister A Gajapathi Raju has said that UDAN is a result of PM Modi’s vision of enabling every “hawai chappal wearing Indian to board a hawai jahaz” (every hawai slipper wearing Indian to board an aero plane)

Dynamic Pricing Fails Massively; Rs 232 Crore Loss Recorded

At a time when Indian Govt. is attempting to bring down air fares and empower every Indian to fly, Indian Railways has made a big blunder by increasing rail fares in the form of dynamic pricing.

As per Railway officials, their dynamic pricing has resulted in loss of Rs 232 crore during the first half of October. Interestingly, IRCTC had estimated that their masterplan would result in an increase of profits. But it seems that their calculations have failed.

An official said, “The flexi fare scheme has backfired. Occupancy in trains has gone down substantially as passengers are getting flight tickets at cheaper rates. The railway ministry will review the scheme only after three months,”

In fact, Indian Rail recorded 15-20% less occupancy in important trains like Shatabdi Express and Rajdhani Express, which has shocked the plan makers.

When the fares under surge pricing has increased to the range of Rs 3000-4000 for Delhi-Mumbai route, passengers have started opting for air-travel. With introduction of schemes like UDAN, aviation sector can witness more transformation and more traction.

Have you recently ditched rail travel and opted for air route instead due to less price difference? Do let us know by commenting right here!