Airline industry trends of the day

Peggy Hollinger points to an interesting likely trend in the airline industry, about shifting of passengers from planes to railways for shorthaul routes. 

That it's sound economics is well known,

While many short-haul routes are important to legacy airlines to feed passengers on to their more lucrative long-haul flights, they are not profitable for many flag carriers on their own. “They are just a means to an end,” says one airline executive... Seven of the top 10 revenue-generating routes in the world are long-haul international flights, according to OAG.

So, airline operators in Europe are exploring the option of getting passengers to their hubs through trains,

So if airlines have a stake in getting passengers to their hubs by another route, with seamless ticketing and check-in services to smooth the journey, they can then use the slots that have been freed up for more lucrative services... For KLM, it is particularly urgent to make better use of their slots, given that the Dutch government has ordered the number of flights from its Schiphol hub to be cut by more than 10 per cent to 440,000 a year to reduce emissions. But KLM is not the only airline to be exploring closer relationships with train operators. Lufthansa, Austrian Airlines and others have been doing the same. Deutsche Bahn has even become the first non-airline member of the Star Alliance of airline operators, which jointly market flights and connections across their networks. “Airlines could get people to book rail tickets through them and perhaps take a commission. It could be a nice way to make a bit of money,” says Robert Thomson of Roland Berger. But it could also be a useful tool against low-cost competition on crucial feeder routes — assuming the airlines and rail operators can get the service right.

But such mode shifts this may not be good for the environment

In fact, according to consultants Roland Berger, even if these obstacles were overcome and all air journeys of less than 1,000km were transferred to rail (adding some four hours to the trip), the carbon savings for aviation would be less than 5 per cent.

Airline operators in India should pay attention to this trend. India is similarly continental like Europe. There are several small towns within a few hours of the metropolitan cities which act as hubs for international travel. Currently, the international travellers from these towns are serviced by code-share arrangements with the low-cost airlines. Is there an opportunity for railways and even road operators here?

Indian Railways too should explore opportunities of partnership with long-haul flight operators. How about a partnership between IR and Emirates or the European carriers, or now between IR and Vistara/Air India to ferry travellers to their metropolitan local hubs from nearby smaller towns? The airline operators would presumably want some competition to their current air code-share arrangements with low-cost airlines. The problem is the last-mile connectivity - IR does not connect to the airports. This means the need for IR to arrange another road leg connecting the stations to the airports. But wouldn't price sensitive customers not mind the inconvenience if it comes at a lower ticket cost?