Rail & Infrastructure

Flight risk

New Beijing to Shanghai train could hurt airlines

Flight risk

Has airlines worried

Let the Train Take the Strain was an advertising slogan favoured by former railway operator British Rail for its intercity services in the 1980s. Thirty years later, with China building plenty of new high-speed track, it is airlines who are said to be feeling the commercial strain.

But according to a recent report authored by Mark Webb, regional head of conglomerate and transport research at HSBC, the threat to leading domestic carriers like Air China, China Southern and China Eastern has been overplayed.

When the first high-speed rail lines opened in China in 2008, they did hit demand for air travel in some cities, Webb says. The advent of a high-speed link between Nanjing and Wuhan in 2009 cut journey time from 10 hours to three, for instance. Data released by Wuhan Tianhe Airport suggests that as many as 70% of airline routes shorter than 600km into the city have been cancelled.

Experience from Japan and Europe also suggests that high-speed rail will win business. But Webb says it is most likely to pose a challenge to airlines on shorter routes, with travel times of up to three and a half hours. Once trips extend much beyond that, airlines have the edge.

That was the case when the shinkansen first opened for business on its flagship route between Osaka and Tokyo in 1964, with airlines losing as much as 75% of their traffic on journeys of up to two and a half hours. But demand then began to drop off as ticket prices were increased (at the time Japanese National Railways was under pressure to pay off some of the massive debt incurred in construction).

Back in China, HSBC estimates 15 main air routes face competition with new rail links, although the distance in most cases ought to give planes an edge. The shortest of the key routes is Beijing-Shanghai, to which China’s big three airlines devote about 17% of their domestic flight capacity.

Of course, backers of high-speed rail projects are assuming that Chinese trains will match those of express trains in Japan and Europe. Certainly, that will help in the commercial struggle with the airlines, whose own punctuality scores are increasingly marred by air traffic control delays (see page 16 and WiC83). HSBC estimates that just 65% of flights now get away on time.

Nor is it fully clear how fast all of the new trains will go. Previously, much was made of an expected speed well above trains elsewhere. A world record for a commercial train was set during a test run late last year, reports CCTV, with a top speed hit of 486 km/h.

But officials now seem to be backtracking to speed limits set closer to 300 km/h. In part that is down to cost-control, says HSBC’s Webb, as the faster the trains run, the more it costs to maintain the track. According to the People’s Daily, passengers can expect two different services, one at 250km/h and the other a more expensive one at 300 km/h.

The fastest service between Beijing and Shanghai is expected to go into full operation next month and will take a little under five hours, or about half the current journey time by ‘slow’ train. Flights are much shorter, at just over two hours. But passengers have to make allowances for check-in and airport handling, as well as run the greater risk of flight delays. Trains will also arrive and depart in Shanghai from Hongqiao station, more convenient for the city centre than Pudong airport some distance away. Adding all that up, many flights will consume five hours door-to-door.

The other unknown for this key route is what a ticket is going to cost. The China Daily is predicting in the Rmb500-900 range, coming in a little less than an airfare. Sensitive to recent disclosures surrounding former rail boss Liu Zhijun, who is now under investigation for “severe violation of discipline” (i.e. corruption), the railway ministry has also announced that trains will not have VIP carriages, allowing more space for standard ticket holders.

So train or plane? For China’s mobile phone and internet-obsessed, perhaps the biggest competitive advantage: you can use both while training it from Shanghai to Beijing – but neither while flying…

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