Economic Highlights

New Delhi, 14 August 2023

Fares Fly As Rail Collapse

INTEGRATED POLICY MUST

By Shivaji Sarkar 

Air fares are shooting up again as the holiday season arrives. Some weeks back these shot beyond the sky, rattling all.India saw the highest airfare rise, according to Airport Council International, of 41 percent between March and May. It was 34 percent in UAE, 30 in Singapore and 23 in Australia. It’s not liberalisation but bondage of the passenger.Is it a sad comment – on the airlines? No, it reflects on the Indian Railways and transportation policies. 

This is the comment of a national safety and security, aviation and avionics analyst, Arya Ghosh. No segment of transport can be seen in isolation. It is an integrated system from bullock cart to the airlines. One fails, all the other starts tottering.During the Tenth Plan, Deputy Chairman KC Pant drafted an integrated transport policy in 2001. It remains on paper. 

The next is as a nation since the MRTPC was scrapped some 20 years back, we have not built up an alternative system to keep check on business practices. Somehow, former minister Pramod Mahajan believed that a free, liberalised system does not need a check. The leaders should have just cast a look at the US systems or most other European ones. They all have strong regulatory practices. Regulators do no control but give a guided ride to the business.   

The strength of India is its most expansive and reliable railway system. Now it specialises in dozens of train cancellations of and on.Earlier railways had support from a public bus system. Most state transport systems are in shambles and the private fake Volvo system is supporting none except their own profits. 

Poorer States like Madhya Pradesh, West Bengal are victims of unwise vehicle junking policy. Once the best, the State services in MP are virtually non-existent and private agglomeration that were providing the parallel services are becoming extinct as they do not have funds to replace the buses that cost a heaven now. 

Apathy, neglect and pseudo competition are playing havoc. We have vehicle scrapping policy that hurts every stratum of the society. It hits buses, taxis, jugaad and all other transportation system and the poor the most. Control is the best rent seeking that jeopardises a society. 

How does the railways help airlines? In reality, the airlines industry has reached the present stage piggy back on the railways, which in turn is supported by operators of bus and truck fleet. No one functions in isolation.  Indian Railways had the best system. It never operated on losses though profits might have been low. Its magic is the base fare, that realises all operational costs even from a concessional ticket. It evolved and served everyone. 

The classless Janata Express trains, few would remember, were the most profitable. With a system of charging graduated fares for higher classes, railways remained affordable for most. But some years back it took to Tatkal, dynamic fares like the airlines and an arbitrary reservation system. It started the convolutions. Many a time fares leap over the average air fare in many sections. Train tickets started playing a see-saw. The railways reduced sleeper and general coaches further causing disservice to the people. Load factor for airlines changed because of that and railways the pride became the cynosure. 

If the railways has to serve, they have to remain as efficient as till some years back and have to get rid of the high-speed and high fare mania. Interestingly American rail system Amtrack has increased its rider numbers following the Indian system. Alternates have to be strong, and railways cannot be for either speed or profiteering, a key to efficient transport policy. 

The airlines have their own dynamics. Till two decades back the fares were high. Then came the low fares to match the competition between some airlines. Fares lower than railways were offered without assessing if it was remunerative. Despite full occupation, the airlines from Damania to Jet, Sahara, Modiluft and many other crashed. 

Surprisingly, public sector Indian Airlines and Air India were the real few of the world’s profitable airlines till 2005. But some former ministers made it financially crash by forcing these to abandon profitable routes for their private competitors like Jet Airways. The PSU giants were smothered and sold for the price of three or four aircraft. 

Another crisis began. There are fixed operational costs of the fleet. An airline has to realise that basic cost. In a free for all market, survival becomes difficult and so today we have a nice but small airline Go Air/Go First on sick bed despite having adequate number of passengers. Many may follow suite. As per credit rating agency ICRA, despite the high airfares, the airline industry is estimated to post a net loss of Rs 110-130 billion in the April 2022-March 2023 period and may continue in future. 

There is system of per seat and per km fare calculation. Dynamic algorithm virtually did away with that and busted the marketing basics. Every system has its limits. It bust. Transport fares like the Ola-Uber cannot be dynamic. Passenger has a fixed pocket. No one can go on harassing him. An affordable transport system is must. Every bit of it is collapsing – roads because of high fuel cost and higher tolls, railways because of giving up its Janata principles, taxis because of the intrusion of aggregators, who earn for doing nothing, and airlines struggling to survive. 

It’s unwise to have Udaan short flights, as also super high fast trains. The Udaan is the segment of inter-city trains beyond 200 km and buses or water transport, within that limit. India does not need swanky stations but functional easy to reach, board and deboarding stations. Swankier stations and security paraphernalia create a system of laggards. Review of station demolitions at Rs 24000 crore is needed. 

No wonder a fiat from DGCA in May began a faint correction. That is not the way. Have strong regulators, fix strong fare parameters for each of the transport system with a low operation cost base like the railways. All must have fixed fares as in the good old days, may be with provision to charge lower fares at the last minute. 

India needs competent transport, not fast, ensuring a traveller reaches within stipulated time. An integrated public transport system can restore the dynamics of easy travelling at the lowest cost. India is capable of doing it.----INFA

  (Copyright, India News & Feature Alliance)