The Telegraph
Since 1st March, 1999
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Scare in the air for railways

New Delhi, Feb. 26: The railways are beginning to feel the pressure from cheap airline fares.

Result: it has slashed the anticipated earnings from upper class passenger fares by Rs 417.31 crore in the revised estimates for the financial year ending March 31 this year.

Railway Board chairman R. K. Singh said the railways would introduce a frequent traveller scheme but this would be some time in August. He claimed that finishing touches were being given to the scheme and most of the 'modalities' had been worked out.

Singh admitted to The Telegraph that some upper class passengers, especially those travelling by the Rajdhani trains, had switched to air travel ever since the Apex fares had been introduced.

In contrast, the anticipated earnings from second class passenger fares and goods freight have been raised in the revised estimates by as much as Rs 502 crore and Rs 1, 705 crore, respectively.

Interestingly even Laloo Prasad Yadav's budget has projected a target of Rs 2,992 crore for earnings from upper class fares, which is lower than the estimate of Rs 3,226 crore in last year's budget. However, this represents a 6.5 per cent increased over the revised estimate for 2004-05.

With more airlines such as Kingfisher and Go Air expected to take to the skies later this year, airline fares are expected to drop further, putting greater pressure on railway earnings from upper class segments.

The competition from the airlines has forced the railways to desist from raising fares ' an almost customary option to ratchet up earnings in the past.

Senior railway officials feel that the times have changed. Just as the railways had to face increased competition from the road sector for carrying goods and on account of which the government could not continue its policy of endlessly raising freight rates, it would now have to take on the airlines in the upper class bracket.

While the bulk of passenger earnings comes from second class fares, the upper class fares constitute a significant chunk, which the railways cannot afford to ignore.

The revised estimates for 2004-05 show that while upper class fares are expected to contribute Rs 2,809.05 crore to railway earnings, second class fares will add as much as Rs 11,215.98 crore which is nearly four times as much.

Goods earnings have been always referred to as the bread and butter of the railways as they contribute the lion's share to the earnings which have been put at Rs 30,450 crore in the revised budget of 2004-05. The railways appear to have done well in reversing the decline in its market share which was being eroded by the truckers.

The railways have increased their target for goods movement by an additional 35 million tonnes of goods during 2005-06 and expect to rake in Rs 35,480 crore on this score.

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