Domestic Air Traffic Booms but Railways Suffers

In a recent report brought out by the NITI Ayog, domestic air traffic is booming. It seems that more and more people are opting to fly these days as between April to December 2016, air traffic has grown by a huge 23% to touch almost 77 million. However, this has come at a cost to the Indian Railways. According to the report, fewer people are opting to travel in air-conditioned railway coaches. Between April-December 2016, the number of AC coach passengers has grown by less than 5% to touch 108 million. This is due to a number of factors according to NITI Ayog’s analysis. To begin with, the fall in global oil prices made airfares cheaper, which boosted traffic. Along with that, the dynamic pricing that the Railways has been experimenting with has curtailed train use. According to this pricing mechanism, AC train travel becomes more expensive if you book your tickets closer to the date of the journey. This has made flying a more attractive option to many. While the Railways dominates long distance non-AC travel and suburban travel, it has been steadily losing ground to short distance luxury buses and private vehicles. Although freight traffic subsidises the Railways’ income, the transporter’s experiment in pricing seems to be yielding negative results. This year the Union Budget and the Railway Budget will be announced together on February 1. Coming as it does soon before the Budget, this report is an important one.