Household spending on railway services may decrease

13 january 2016 | Gudok

‘In 2016, the consumer spending in real terms in Russia will either be stagnating or will continue to shrink, albeit at a substantially slower pace than in 2015. This includes real spending by households on railway services, which is expected to fall by 4 %, though it increases slightly in nominal terms in rubles,’ Alexander Golyashev, Analytical Center expert, told a Gudok newspaper correspondent.

Alexander Golyashev
Alexander Golyashev
Department for Research Studies

The expert believes that in the current situation the greatest challenge will be to get people to travel long distance by rail, seeing how price competition has increased in recent years from air carriers (as an alternative to second class rail travel) and long distance buses (as an alternative to third class rail travel.)

Last December the Analytical Center published estimates showing that the consumer spending on public transport increased slightly in Russia in nominal prices in 2015, though it was falling in real terms. Experts noted that the Russians are now spending on public transport approximately as much as they were in 2006. They believe that passenger traffic on rail transport has not changed very much primarily because of large numbers of people using commuter trains in cities. At the same time, the number of passengers travelling on long distance trains has been decreasing steadily. The passenger traffic is decreasing, too. Experts say it is a result of lack of demand for rail travel between Russia and Ukraine.

To analyze the competition between different types of public transport the authors of the report compared the fares for travelling 100 km between cities in the first nine months of 2015. Despite growing popularity, air travel has remained the most expensive in Russia. Even if you fly economy you have to shell out RUR 540 for 100 km, which is 26 % more expensive than travelling second class on a luxury long distance train. The difference between second class tickets in ordinary passenger trains and air travel was even greater at 67 %. The cheapest travel option in Russia is going third class in an ordinary passenger train. It costs only RUR 172 per 100 km and is more than 3 times less expensive than flying and 15 % less expensive than going on a long distance bus.  Besides, from January to October 2015, the difference in prices between air and second class train travel remained the same. The second class luxury trains have seen the least price increases among all long distance travel options in Russia, rising by a mere 5 %, which is far lower than the current inflation rate.

Source: Gudok