Competition may lower airline prices

Updated: 2012-12-21 00:57

By Wang Wen (China Daily)

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Air travel between North and South China could soon become cheaper, analysts say, as airlines look to handle competition from the country's newest high-speed railway.

The Beijing-Guangzhou line, which starts service on Dec 26, passes through 28 cities, including Zhengzhou, Wuhan and Changsha, all provincial capitals.

According to one expert, about 20 percent of passengers are expected to switch from air to rail travel, largely those traveling short to medium distances.

"The high-speed railway will affect a lot of carriers," said Li Xiaojin at the Civil Aviation University of China in Tianjin, who provided the estimate.

Li Jiaxiang, director of the Civil Aviation Administration of China, agreed and said calculations showed an airline operating flights along a high-speed rail route will usually lose 16 percent of its passengers.

Air China and China Southern Airlines, the main carriers between Beijing and Guangzhou, will be hit hardest, Li Xiaojin said, although other airlines also have to consider the competition.

"As I see it, ticket prices between Beijing and Guangzhou will be cut by 20 percent after (Dec 26)," Li said.

Hainan Airlines confirmed it will slash prices as part of multiple measures to improve its competitiveness.

Price reductions are just one of the ways companies say they will attempt to lure customers. Some revealed they plan to focus on other less-serviced domestic and international routes.

"We will adjust flights on medium- and short-haul routes affected by the high-speed railway," China Southern Airlines said in a statement.

However, the relationship between airlines and high-speed rail is not just competition, but also cooperation.

Major airlines have jointly launched a series of packages with railway authorities this year.

For example, Air China passengers can now buy tickets for high-speed train between Shanghai and four cities — Suzhou, Hangzhou, Changzhou and Wuxi — at the same time as booking a flight in or out of Shanghai's two airports.

Hainan Airlines also connects flights with high-speed rail in the island province of Hainan.

"The partnership has a lot of potential, and the number of passengers choosing the packages keeps increasing," said Yuan Huifang, a spokeswoman for the airline. "We'll continue to promote them."

In fact, Li Jiaxiang at the CAAC said high-speed rail is actually helping to take some of the pressure off the aviation industry at a time of massive demand.

"On average, 80 percent of the seats are occupied, which means passengers cannot even get a ticket on some popular routes," he said. "We are striving to expand capacity to meet these demands, and the high-speed railways can help share the load."

The adverse effect of high-speed railways on airlines can also be overstated, said industry insiders, who said routes longer than 800 kilometers are unlikely to be affected.

"I'll definitely move to high-speed train when my destination is less than 500 km," said Zhang Han, a regional manager for an IT company who often commutes around cities in North China. Compared with flying, he said he feels the train is more punctual and better at coping with bad weather.

However, for 500 to 1,000 km journeys, he said he would fly because of the shorter travel time, price and service.

Going from Beijing to Guangzhou by train takes about seven hours and only about three by airplane.

"I'd still fly from Beijing to Guangzhou, as the route is too long to take high-speed train," Zhang added.

With this in mind, airlines are less concerned about the competition from high-speed railway when it comes to long-haul routes.

"Air transport's advantage on runtime means it cannot be replaced by high-speed railway," said Fang Yesong, product development and promotion manager for Tianjin Airlines.

The developed ticketing systems used by the airline industry also give companies a competitive edge.

"It's extremely convenient to buy a plane ticket and refund it through multiple methods," said Wang Gang, who works for the Beijing branch of a company headquartered in Guangzhou.

"I can buy a ticket a year in advance or on the day," he said, while high-speed rail has restrictions, meaning tickets can only be sold 10 days before a trip.

Xin Dingding contributed to this story.