Price-gouging claim against rail ministry

PUBLISHED : Friday, 21 May, 2010, 12:00am
UPDATED : Friday, 21 May, 2010, 12:00am

The National Development and Reform Commission has accepted a request by four Beijing lawyers that it look into regulating high-speed railway fares, but says now is not the time to adjust them.

The four lawyers recently submitted a report to the NDRC and the State Administration for Industry and Commerce protesting about the high fares on high-speed trains, accusing the Ministry of Railways of taking advantage of its monopoly and deceiving passengers by making excessive profits from overly high prices, the Guangzhou Daily reported yesterday.

Dong Zhengwei, Bai Pingliang, Chen Dong, and Liang Huiqing, of Beijing-based Zhongyin Lawyers, demanded the authorities investigate their complaints. Dong told the Guangzhou Daily it was the first time the NDRC had taken up a written complaint about a market monopoly since the mainland's anti-monopoly law was passed in 2007.

'And because this time it involves a state-owned enterprise, the gesture carries a significant meaning,' he said, adding the move meant there might be room to cut prices.

High-speed trains between Wuhan, in Hubei, and Guangzhou run at 350km/h. A standard one-way ticket for the three-hour journey costs 490 yuan, rising to 780 yuan for a deluxe seat.

Although a ticket to travel more than 1,000 kilometres costs far more in Europe and Japan, many mainland residents, especially migrant workers, would find 500 yuan expensive. Standard trains charge between 68 and 140 yuan for a hard-seat ticket from Guangzhou to Wuhan and up to 490 yuan for a soft-bed ticket.

The controversial high-speed rail network has been criticised for being expensive and offering a poor return on investment due to inadequate passenger numbers.

In March, Beijing Jiaotong University civil engineering professor Wang Mengshu, a key drafter of the mainland's ambitious programme to build 18,000 kilometres of high-speed railway lines with trillions of yuan in investment by 2020, said another set of high-speed trains running at a more economical speed of 200km/h and charging lower fares would be introduced but it was up to government officials more senior than those at the Ministry of Railways to determine the timing of the move.

The Guangzhou Daily reported yesterday that the Wuhan-Guangzhou high-speed service made about 700 million yuan in the first 56 days of test operations, with 500 million yuan of that earned in the 26 days of the Spring Festival travel crunch.

Dong, one of the four Beijing lawyers, said he believed the high-speed network would be profitable even if fares were halved. He said 29 yuan would be a profitable price for tickets on the high-speed line between Beijing and Tianjin, but they currently cost between 58 and 69 yuan.

Operating costs would be high if rail services carried just 10,000 passengers a day but would be much lower if passenger numbers increased to 100,000 or even to 1 million a day, Dong said.