Home' Asian Aviation : AAV June 2011 Contents 16 AsianAviation | JUNE 2011
Domestic airlines in China and
South Korea are facing tough
competition from the countries'
expanding high-speed train
In China, airlines have
dropped several routes which are no longer viable a er
the opening of the Guangzhou-Wuhan high-speed
rail link in January 2010. First to go were Changsha-
Wuhan ights, just ve days a er the trains began
operating. is was followed by Zhengzhou-Xi'an
and Wuhan-Nanjing , the latter having been operated
by Kunming-based Lucky Air and Guangzhou-based
China Southern Airlines.
Shanghai-Wuhan ser vices, operated by China
Southern, China Eastern Airlines and Shanghai
Airlines, have been cut back drastically from 40 daily
ights to just 11. Other routes that have seen severe
drop in passenger demand include : Guangzhou-
Wuhan, Guangzhou-Changsha, Changsha-Wuhan,
Shanghai-Zhengzhou and Beijing-Taiyuan.
e 1,069km Guangzhou-Wuhan route is now
ser ved by the world's fastest long-distance bullet train.
In response, airlines have been forced to slash ticket
prices by as much as 35 percent in order to compete.
Competition will intensify and more air routes are
likely to be a ected with the opening of the 1,318km
Shanghai-Beijing bullet-train service, planned for
Trains travelling at an average speed of 330km per
hour will slash journey times on the rail route from 9
hours 49 minutes now to 3 hours 45 minutes. Flight
time on the route is 2 hours 15 minutes.
An o cial at the Civil Aviation Administration
of China (CAAC) says the number of daily ights
o ered by the ve airlines serving the route will
probably be slashed to less than 20 within two to
three months, from 40 today.
According to Li Xiaoji, director of the CAAC's
Institute of Air Transportation Economics,
competition will intensify as high-speed rail services
China has an ambitious programme to develop
its high-speed train network, which is one of the
objectives of the government's economic stimulus
plan. By 2020, the country aims to have laid
25,600km of high-speed rail tracks, with 18,000km,
on 42 lines, for trains travelling at 350kmh, and
7,600km for trains travelling at 250kmh-plus. is
network will account for about 55 percent of the
world's high-speed rail tracks, and will ser ve about
70 percent of the country's big cities -- equivalent to
about 80 percent of the domestic airline network,
covering close to 600 routes.
" e high-speed trains will pose a major threat to
China's airline industry in the long-term if jet-fuel
prices continue to rise," Li says. He adds that carriers
struggling to lure passengers on routes that compete
with such train ser vices will be le with no choice but
to cut fares, pushing their yields down.
South Korea's low-cost carriers are facing a similar
challenge, as that country's bullet-train network is
upgraded and expanded to enable 83 percent of the
population to have access by 2020, compared with
some 59.9 percent now. e government is investing a
massive US$14.6 billion over the next 10 years under
its transport-development programme.
According to the Ministry of Land, Transport and
Maritime A airs, the aim is to cut travel times from
the capital Seoul to other major cities to less than 90
minutes and to reduce greenhouse gas emissions by
7.7 million tonnes a year.
e Ministry says it expects that "when the project
is completed, more people will opt for the ser vice,
which will cost less than ying from one domestic
point to another".
High-speed train ser vices travelling at 230-
250kmh, linking Seoul to cities in the south-east of
the country will be expanded by 2020.
South Korea's bullet trains started operating in
April 2004 with the opening of the Seoul-Busan
route, significantly eroding revenue for Asiana
Airlines and Korean Air, which o er ights on the
route. e new competition prompted both carriers
to announce plans to set up low-cost carrier (LCC)
Since 2005, ve LCCs have emerged in South
Korea , o ering domestic and regional services. ese
are : Jin Air, Air Busan, Jeju Air, T'way Airlines and
Eastar Jet. e ve have quickly claimed a combined
35 percent share of the domestic market.
While the airlines' market share is projected to
increase in 2011, industry obser vers say competition
from the high-speed rail network may stunt further
growth. One cites the example of Yeongnam Airlines,
which collapsed just five months after starting
operations in July 2008, because it found it extremely
di cult to cut fares to a competitive level.
As bullet-train ser vices expand, analysts say
Korean LCCs may have to focus on expanding their
short-haul international networks if they are to stay
"Trying to match the fares of the bullet trains will
only spell nancial disaster for the LCCs," one says.
"The high-speed trains will pose a major threat to China's
airline industry in the long-term if jet-fuel prices continue
to rise." -- Li Xiaoji, director of China's Institute of Air
High-speed rail hurts Chinese, Korean
William Dennis / Kuala Lumpur
Jin Air is one of five South Korean LCCs that have
emerged to claim 35 percent of the domestic market.
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