High Speed Train Service Forces Chinese Airlines to Change
Oct. 28, 2009
Lately, various sources told CARNOC.com that China is now trying to accelerate its expansion of the high speed train network and the domestic airline sector has already experienced some serious blows caused by tougher competition from the railway sector.
In fact, a lot of local media outlets have recently reported that domestic carriers have since implemented a number of measures including aggressive price cuts and frequency increases in order to maintain their existing market share on the so-called "rail-air competitive routes".
For instance, since the high speed trains started operating between Shanghai and Wuhan, airlines have lowered the low season fares to around 60%-70% off the full fare compared to the past which 20%-30% discounts were the norm. Even with such heavy discounts, airlines still suffered so badly that both frequencies and average load factors have been almost halved.
Similar stories are appearing throughout mainland China, the old lucrative air routes such as Beijing-Taiyuan, Shanghai-Wenzhou and Shanghai-Fuzhou had been forced to transform from "cash cows" for airlines into stressful battle grounds between the country's monopolistic rail industry and the still-growing aviation sector.
A number of market analysts told CARNOC.com that they believe it's only the beginning at present, but much bigger challenges are ahead for Chinese carriers and the overall aviation market.