High speed rail has been undeniably successful for China. So successful, in fact, that it's putting a massive dent in the airline industry. BusinessWeekreports:
China Southern Airlines Co., the nation's largest carrier, and Air China Ltd. are slashing prices to compete with the country's new high-speed trains in a battle that Europe's airlines have largely already ceded.
Competition from trains that can travel at 350 kilometers per hour (217 miles per hour) is forcing the carriers to cut prices as much as 80 percent at a time when they are already in a round of mergers to lower costs. Passengers choosing railways over airlines will also erode a market that Boeing Co. and Airbus SAS are banking on to provide about 13 percent of plane sales over the next 20 years.
There's really just nothing the airlines have that HSR doesn't — the latter has larger and more comfortable seats, the stations often more centrally located, it's easy to get to smaller cities, and the travel times are edging closer to equal.
Plus, given China's notoriously inefficient and unreliable air travel system — one traveler was quoted in the story as saying, "This is China; you make plans based on the assumption that you won't get there on time" — rail's steady schedules and few delays are only upping its attractiveness for travelers. In fact, the only way airlines can really compete is through ticket prices — and they're lunging at this opportunity, with China Southern slashing economy-class tickets to 140 yuan ($21) on flights between Guangzhou and Changsha. You may recall that the Guangzhou line has cut travel times dramatically, with the trip to Changsha going from 9 hours to 2.5.
Of course, this isn't to say that air travel in China is in any danger of annihilation — the country's 8.7% economic growth means that 90 billion yuan are being invested in airport and aviation facilities this year — a 50% increase from last year. Plus 25 new airports, including a second one in Beijing, will begin construction this year.
Still, high speed rail has fully infiltrated the population, and it's only getting bigger — by 2020, there will be HSR lines connecting every Chinese city with more than 500,000 residents, meaning that 90% of the country's population of 1.3 billion will have HSR access. Food for thought.
