Low-cost flights hit growth, Rlys likely to slash AC-II tier fares

With elections around the corner, this year’s Rail Budget promises to be the most populist by Railway Minister Lalu Prasad Yadav.

With elections around the corner, this year’s Rail Budget promises to be the most populist by Railway Minister Lalu Prasad Yadav. However, a look at railway performance in the first nine months of this fiscal indicates that sound business reasoning and not just sheer populism may make the ministry effect some reduction in fares.

Officials are particularly worried about the slow growth in the AC-II tier segment, which could see some fare cuts. The latest ministry data shows that between April 1 and December 31, 2007, the number of passengers travelling in this segment grew by just 7.46 per cent compared to 23.65 per cent in the previous year.

Similarly, the number of people taking AC-III tier grew by 21.04 per cent.

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“It is no secret that the Railways has lost passengers to low-cost airlines. The data available with us tells us that probably it is the AC-II tier segment where we have lost our customers. Cutting fares in this class could be explored to woo back the lost clientele,” a ministry official said.

In the last Rail Budget, a 2 per cent reduction in the busy season and a 4 per cent cut in lean season was announced in the AC-II tier segment.

Sources indicate that the segment could see a similar reduction this year.

The last budget also saw Lalu making a token Re 1 per passenger cut for second-class travel in non-suburban ordinary passenger and non-superfast Mail and Express trains. This time too, only a token cut could be made, if one is made at all, said sources.

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With this, Lalu’s dream of being remembered as the only Railway Minister to have never hiked fares appears to be on track.