High-speed rail might hurt airline business

The new Beijing-Shanghai high-speed trains might lead to a 20 percent to 30 percent reduction in airline passengers on that route, China Business News (CBN) reported Monday, citing an aviation industry insider. 

“When the Beijing-Shanghai high-speed trains begin operations, the number of passengers might be reduced 20 or 30 percent within half a year, but in a long run it will not affect the airlines so much because of diversified demand,” Ma Xulun, general manager of China Eastern Airlines Co Ltd, told the newspaper. 

Wu Li, an analyst from Essence Securities, said in a report this month that the Beijing-Shanghai flight route attracted more business elites than average customers. Business trips account for around 70 percent to 80 percent of all airline ticket sales, Wu said. Thus, she expects price cuts by airline due to the impact of the new high-speed rail s will be less than 20 percent.

However, as far as airlines concerned, they cannot control delays or cancelations of flights, which places them in a weak position to compete with the bullet train. On June 11, many airports, including Beijing Capital International Airport and Shanghai Hongqiao International Airport, encountered flights delays due to thunderstorm, CBN reported. 

The three major airlines – Air China Ltd, China Eastern and China Southern Airlines Co Ltd – have increased domestic and international air routes to compete with their railway counterparts. 

Ticket prices for the Beijing-Shanghai high-speed trains were released Monday, Xinhua News Agency reported. 

Tickets will range from 555 yuan ($85.60) for second-class seats to 1,750 yuan for business class seats on those trains that travel at a maximum speed of 300 kilometers per hour. For high-speed trains that run at a maximum of 250 kilometers per hour, tickets will cost 410 yuan for second-class seats and 650 yuan for first-class seats. Tickets will “float according to the market,” Xinhua reported.

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