Wednesday, June 04, 2008

Will US need a Lalu?

The rising price of gasoline is ushering many changes into the lives of millions across the world.  Nowhere is this effect grander than in the US where consumers have been pampered by both good old road trips and cheap flights for their travel needs. 

Anyone who has lived in the US would understand that the country just moves on its roads; millions of vehicles ply its roads 24/7/365 and thousands of flights depart from hundreds of airports all over the country.  However, good old oil and its price climb is affecting both road and air transportation in ways one can only begin to imagine.  The profound implications of how this will affect travel behavior over the long run can only be mulled upon at this point in time.  AAA recently reported that fewer Americans (0.9% lower than last year) had taken to the roads for their memorial day trips - not a great change, but clearly a pointer of things to come.  Airlines are going bankrupt at an increasing rate; they are looking for mergers, closing hubs, cutting down routes and laying off employees.

If maintaining large family vehicles becomes impossible and there are no flight options - what will consumers do?  How will they travel? Clearly, these things will affect travel behavior and in turn tourism, local economies and maybe the structure of relationships between people (relatives and friends).  A far stretched argument for sure, but nothing seems impossible given the pace of these changes.

Two things might happen - 1) consumers would group into segments based on whether travel is discretionary or not and/or 2) trains will make a comeback. If India can run a large train network across the length and breadth of the country, so can US. It might not seem like a efficient, optimal solution at this point in time.  However, it is a reasonable change given consumers are also willing to make sacrifices and adjust their travel behavior.  Maybe someone like Lalu will emerge to take charge and change the fortunes of railroads in the US!


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