Air-conditioned first-class carriages are being phased out and rail fares are tumbling in India as trains struggle to compete with budget airlines.

Indian Railways this week announced that it would cut the price of first-class tickets by 18 per cent and second-class tickets by 10 per cent. It also announced 32 new trains, none of which will have air-conditioned first-class carriages. These have traditionally had compartments with four beds and lockable doors and proved popular with travellers who want extra security and comfort on lengthy journeys, some lasting up to 40 hours.

Carriers such as Kingfisher Airlines, GoAir, Jet Airways, Air Sahara and Air Deccan are proving a hit with wealthy Indians, who are turning away from travel in top cabins on lengthy train journeys. A train from Bombay to Goa takes about 12 hours, while a flight is one hour and costs little more. Amrit Singh, director of TransIndus, a company specialising in holidays to India, said: “First-class in air-conditioning is far too expensive. Prices are now about the same as flying. So people are flying.”

She said that some travellers will be upset that fewer first-class compartments will be available. She has been recommending that customers travel in second-class air-conditioned berths instead.

A 625-mile (1,000km) journey in India in the cheapest class, with wooden benches and (usually) standing room only, costs £2.20, while a first-class air-conditioned berth for the same distance is about £35.

About 15 million people take Indian Railway’s 10,000 trains each day — about the same number as take trains in the UK in a whole year. Roughly 10,000 people a day catch low-cost flights in India, and the number is rising rapidly.

A spokesman for Indian Railways said that he was not concerned about competition from planes. But Captain G. R. Gopinath, founder of Air Deccan, India’s first no-frills airline, said: “Railways can bring down fares, but will never bring down travelling times.”

Shankar Dandapani, operations manager at S. D. Enterprises, another India specialist, said that prices for rail journeys in India are already “incredibly good value”, having remained constant since 2000; a 15-day second-class rail pass is £112 and a 21-day pass £120.

But for many travellers, the romance of travelling by train, first-class or not, will always make trains the preferred way to get about in India, she said.

Details: TransIndus (020-8566 2729, www.transindus.co.uk), S. D. Enterprises (020-8903 3411, www.indiarail.co.uk), Kingfisher (www.flykingfisher.com), Air Deccan (www.airdeccan.net), GoAir (www.goair.in), Jet Airways (www.jetairways.com), Air Sahara (www.airsahara.net).

Times recommends

• Britain's top 10 New Year's Day brunches
• Mozambique's lost islands
• The best things to see and do in 2010