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.
During the past week-long holiday between October 1 to 8, ticket bookings for the HSR lines that terminate at the eastern city of Hangzhou, a traditional tourist destination, had risen 140%, compared to the same period last year, according to statistics from China Railway Corp.
The increase in bookings can be, to a large extent, attributed to China’s aerospace control and infrastructure bottlenecks at tier-one cities, driving more passengers to the HSR services.
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