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Bullet Trains Attract Customers From Chinese Airlines
By Jasmine Wang - Aug 15, 2013 2:05 AM GMT-0800
For two decades, Liu Yueping flew first class on China Southern Airlines Co. (1055) between Changsha and Shenzhen. This year, she took a bullet train and spent a fifth of the 2,000 yuan ($327) she would have paid to fly.
Money wasn’t the issue. The 3 1/2-hour ride on the high-speed rail between Changsha in central China and Shenzhen in the south is never late and allows phone calls unlike on a plane, she said. “Now that we have the bullet train, who will take flights?” said Liu, 50, who owns a property investment company and travels eight to 10 times a year between the cities.
Frequent fliers like Liu migrating to high-speed rail are a drag on earnings at Chinese carriers already faced with lower fares and overcapacity. Travelers in China, where one quarter of flights depart late, are also flocking to bullet trains after the opening of a new line between Beijing in the north and Guangzhou in the south that connects 28 cities along the way.
“What is really killing the airlines is flight delays,” said Andrew Orchard, an analyst at CIMB Group Holdings Bhd. (CIMB) in Hong Kong. High-speed rail has become a major competitor for airlines given the greater frequency of trains, he said.
Under a plan unveiled in 2008, China aims to have a high-speed train system comprising four north-to-south and four east-to-west lines covering 90 percent of the population by 2020. The east-west networks are under construction, while Beijing-Guangzhou is one of three north-south lines in operation.
More: bloomberg.com |
