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Vande Bharat’s growing popularity may lure passengers away from airlines

The biggest impact of the swanky new trains is likely to be on shorter routes. Vande Bharat trains will force airlines to rethink their network strategies, experts say

Domestic airlines are likely to face challenges from the Indian Railways when competing for customers, especially on short-haul routes, with the growing popularity of Vande Bharat trains and plans to launch 100 more such express trains in the next two to three years.

It’s been over four years since the first Vande Bharat train started operating, but the fast-growing network of these trains, coupled with their promise of high speed, affordable pricing, comfortable travel experience, and lack of baggage and security complications, is expected to not only keep airfares in check but also spur airlines to rethink their network strategies, experts and industry executives told Moneycontrol.

The Indian Railways operates 35 Vande Bharat trains that are fully air-conditioned and come with CCTV surveillance, Wi-Fi, and bio-vacuum toilets. The top speed of these trains is 180 kmph, though they operate at much lower speeds due to safety concerns.

With the launch of Vande Bharat trains on the Chennai-Bengaluru, Thiruvananthapuram-Kasaragod, Mumbai-Pune, and Delhi-Jaipur routes over the past few months, airfares on these sectors have fallen by 20-30 percent from levels in April, data accessed by Moneycontrol from online travel agents show.

“The present dip in airfares along the Chennai-Bengaluru route can be attributed to multiple factors including a cut in ATF (aviation turbine fuel) prices, increased capacity by low-cost carrier flights like Akasa Air, sluggish corporate demand and an overall slowdown in the IT sector,” said Gaurav Patwari, vice-president, air category, Cleartrip. “Additionally, owing to the proximity between the two cities, people tend to opt to travel via road or rail. This is deemed more convenient compared to air travel because Bengaluru airport is not centrally located.”

Average fares on the Chennai-Bengaluru route have fallen to around Rs 1,500-Rs 2,500 in June and July from around Rs 3,000-Rs 4,500 in April and May, data from the OTA shows.

Similarly, average fares on the Mumbai-Pune have fallen to around Rs 2,800-Rs 3,500 in June and July from around Rs 4,000-Rs 4,500 in April and May, and average fares on the Delhi-Jaipur route have fallen to around Rs 2,700-Rs 3,500 in June and July from around Rs 3,500-Rs 4,500 in April and May.

An executive from IndiGo, the country’s largest airline, told Moneycontrol that it has reduced its frequency on the Chennai-Bengaluru, Mumbai-Pune, and Delhi-Jaipur routes. While Vande Bharat trains have impacted passenger load factors slightly, their long-term effect is yet to be seen, given the seasonality of travel in the country, he said.

Expected impact

The IndiGo executive added that with the growing demographic of travellers, Vande Bharat trains are not likely to pose a threat to airlines but will likely bring to the forefront the importance of network planning and customer reliability.

“The biggest impact of Vande Bharat trains, we expect in the coming years, will be on shorter routes, where the service, reliability, and timings of travel will be key in attracting loyal customers,” the executive said.

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He said both airlines and Vande Bharat trains have ample consumer bases.

Gunjan Pradhan, an associate partner at aviation services firm AT-TV, told Moneycontrol that the launch of Vande Bharat trains may impact 10-20 percent of the customer base of airlines. She said airlines are likely to face greater competition from Vande Bharat trains in the southern states.

Aviation analyst Ameya Joshi told Moneycontrol that the consistency of the Indian Railways will be key when competing with airlines. He said once the Indian Railways starts offering multiple Vande Bharat options in a day for passengers, it would increase competition between airlines and trains.

An executive from Air India told Moneycontrol that airlines will now have to carefully plan their domestic networks.

“A large section of Indian customers are very price sensitive, so airlines looking to expand their domestic network will have to carefully plan out their frequencies on smaller routes,” the executive said.

He said leisure travellers, families, and large groups are likely to look at Vande Bharat trains on shorter routes, but corporate customers are unlikely to shift.

An executive from a regional carrier said if the Indian Railways lowers ticket prices of Vande Bharat trains, it could affect airlines in the long term.

“It’s still quite early to predict the impact Vande Bharat trains will have on air travel in India. If the Indian Railways is hell-bent on offering the lowest price to customers on Vande Bharat trains in the long term, the impact on airlines, whose hands are tied when it comes to pricing, can be severe,” the executive said.

Earlier this month, the Indian Railways reduced ticket prices on Vande Bharat, Anubhuti, and Vistadome coaches, by up to 25 percent on routes with low passenger occupancy.