Caixin
Sep 21, 2017 06:32 PM
BUSINESS & TECH

Bullet Trains Take Aim at Short-Haul Flights

Yang Fei usually travels between his hometown of Beijing and Shanghai eight times a year to visit his family. After China’s high-speed railway system opened in 2011, he started to make the journey by train more often than by plane.

“High-speed trains are generally cheaper, and are rarely delayed,” Yang said.

He added that there are fewer restrictions on trains for luggage and the use of personal electronics. Chinese airlines, for example, require that passengers turn off their mobile phones for the entirety of their flights.

Moreover, China’s high-speed trains are getting faster. On Thursday, China’s rail operator increased the maximum speed to 350 kph (217 mph) for some trains running between Beijing and Shanghai. The speed bump cut the time it takes to travel between the two cities to as little as four and a half hours.

Although it still takes two hours less to fly between the two cities, long distances between airports and city centers, and frequent flight delays have dampened some passengers’ enthusiasm for air travel.

Meanwhile, high-speed rail allows people to get to a lot of places in China in less than four hours.

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Click on the map above to call up a full-screen interactive version with which you can see how far you can travel in one, two, three or four hours from a number of Chinese cities.

There is evidence that high-speed rail steals passengers from airlines, but experts said that in China bullet trains are likely to only challenge airlines for journeys that are shorter in distance.

Cutting into flight demand

The 1,318-kilometer Beijing-Shanghai high-speed rail line opened in June 2011 after three years of construction. It runs through three municipalities and four provinces in eastern China, the most developed region of the world’s second largest economy.

Before the authorities increased the maximum speed of the line, a trip between Beijing and Shanghai took five and a half hours on average and the cheapest seat cost 553 yuan ($84). Full-priced flights cost roughly twice as much.

In 2007, the launch of a similar high-speed rail service in Taiwan had a dramatic effect on local airlines, with air transportation volumes plunging about 70%, according to a study published by Penn State University Press in 2013.

There was a similar trend in Europe after its high-speed train network got up and running. On the Paris-Lyon route, for instance, air travel’s share of total traffic between the two cities fell from 31% to 7% between 1981 and 1984, according to a paper that appeared in the Journal of Transport Geography in 2014. In the case of the Madrid-Seville route, air travel’s share fell from 40% to 13% between 1991 and 1994.

For their part, China’s airlines don’t appear to be worried about the recent speed boost. “The speed increase to 350 kph will not have much of an effect on the airline industry,” said Sun Geng, deputy general manager of the planning and development department of Air China, one of the country’s largest airlines.

Although air traffic between the two metropolises did weaken after the high speed rail line opened, Sun pointed out that flight demand eventually bounced back.

Air traffic between Beijing and Shanghai fell 5% to 7.1 million in 2011, when the high-speed rail line made its debut, according to flight data services company VariFlight.

The new line is the busiest and most profitable in the country. Passengers have taken 130 million trips on the line, which turned a profit for the first time in 2015, when it earned 6.58 billion yuan. It should be noted that the railway operator, China Railway Corp., earned 681 million yuan that same year, indicating that most of the country’s railway lines lose money.

In the first half of 2017, Air China earned 3.3 billion yuan in profit, down 3.8% year-on-year, while China Southern Airlines, also one of the country’s largest airlines, earned 2.7 billion yuan, down 11.6% from the previous year.

Air China’s Sun said that high-speed rail has definitely hurt demand for short flights. For example, the air route between Beijing and Xuzhou, a city along the Beijing-Shanghai line, was abandoned after the line opened. It was the same story for routes between Wuhan to Nanjing, and Taipei and Kaohsiung.

There’s a threshold of sorts at around 1,000 kilometers (621 miles). High-speed tends to be more competitive with commercial flights for journeys less than 1,000 kilometers, said Zhao Jian, director of the China Urban Research Center at Beijing Jiaotong University.

But professor Qi Qi from the Guangzhou Civil Aviation College doesn’t believe the speed increase will affect airlines. “Even if high-speed rail shaves one or two hours off its travel times, it won’t have that much of an effect on the airlines,” Qi said.

He argued that one also needs to consider other factors besides the distance between cities, such as the distances between airports, train stations and passengers’ ultimate destinations.

Many passengers travel between Beijing and Shanghai on business, Qi said, so time concerns such as how long it takes to get from the airport to, say, their hotel in the city, plays an important role in whether people choose to travel by air or rail.

Qi said that five major airlines have created an express lane of sorts for passengers traveling between the two cities, effectively giving them their own line to check in and go through security.

From short to long

In the future, travel time on railway may be dramatically reduced. China Aerospace Science and Industry Corp. floated plans in August to develop a train capable of running as fast as 4,000 kph, more than three times the speed of sound.

Zhao said the idea is a very much “pie in the sky” because air resistance would become extremely high at such high speeds. In addition, a train traveling that fast would have a tough time making turns due to the much higher centrifugal force.

Airlines also have an advantage in traveling to less populated areas, such as western China, because making changes in air routes is much cheaper than building a new railway, which costs 100 million yuan per kilometer, Zhao said.

Sun from Air China said that although the development of high-speed rail has caused some shorter air routes to shut down, the industry can benefit from the change because it allows them to reallocate resources to medium- and long-distance routes.

Contact reporter Coco Feng (renkefeng@caixin.com)

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