Across The Border | China’s fastest bullet trains pose threat to domestic airlines, prompting them to speed up global expansion
China’s high-speed rail operator has reported a 140 per cent rise on year in bookings for lines that terminate in Hangzhou over the past week-long holidays, underlying a potential trend of consumers increasingly shifting to domestic rail travel
With China having recently launched the world’s fastest bullet train between Beijing and Shanghai, analysts are now concerned that Chinese airlines could lose domestic market share gradually to high speed rails and see their price power weakened further in the next few years.
The intensified domestic competition might also prompt Chinese air carriers to shift more capacity towards international routes and seek new opportunities from overseas markets, as rising personal income fuels more international travel, they said.
China recently increased the speed of bullet trains between Beijing and Shanghai to 350km/h, cutting travel time to under four hours and 30 minutes. This made China’s high-speed rail the fastest in the world, Xinhua reported.
Plans were also under way to increase the maximum speed of a third of the country’s high-speed rail (HSR) lines to similar levels, China Railway Corp special technical adviser He Huawu told Xinhua.
“In our view, this will effectively boost HSR’s existing capacity and increase its threat to airlines, ” said Edward Xu, Penelope Butcher and Rajeev Lalwani, analysts for Morgan Stanley, in a recent research report.
