NEW DELHI: The low-cost airlines had already been feeling the heat of rising fuel costs. And, now the Lalu Prasad-led Indian Railways had decided to turn on the heat more by announcing a cool 30% cut in AC fares.
It is understood that the fare war would be launched by the minister on October 4, when he would announce an all-time low AC train fare (Rs 500 per passenger).
“There could be a second round of fare revision. We had reduced AC fares up to 18% in Budget ’06. It was purely a commercial decision. The outcome was as per our expectations. Our earning growth from the upper classes went as high as 14%. We would like to take it further by slashing fares for the second time,” a senior Railways official said.
The Railways will slash fares up to 30% — on certain selected sectors first and gradually move to routes which are competing with low-cost airlines. “Such decisions would be based on the principle of price elasticity of demand,” the official added.
There are some low-cost carriers, which believe that they have a definite advantage over the Railways in terms of dynamic pricing and speed. “We can’t have any competition from Railways as we work on the principle of dynamic fare management.
source : Economic Times
It is understood that the fare war would be launched by the minister on October 4, when he would announce an all-time low AC train fare (Rs 500 per passenger).
“There could be a second round of fare revision. We had reduced AC fares up to 18% in Budget ’06. It was purely a commercial decision. The outcome was as per our expectations. Our earning growth from the upper classes went as high as 14%. We would like to take it further by slashing fares for the second time,” a senior Railways official said.
The Railways will slash fares up to 30% — on certain selected sectors first and gradually move to routes which are competing with low-cost airlines. “Such decisions would be based on the principle of price elasticity of demand,” the official added.
There are some low-cost carriers, which believe that they have a definite advantage over the Railways in terms of dynamic pricing and speed. “We can’t have any competition from Railways as we work on the principle of dynamic fare management.
source : Economic Times