China's high-speed rail hurting air travel?

China's high-speed train

It was always going to be a catch-22 situation. The benefits of high-speed rail are that it's a cheaper, faster and more eco-friendly way to travel around countries - but the knock on effect is a hit to any transnational air company.

That is what is happening in China and the moment, and if America is to go ahead with their high-speed plans they will have to take note.

According to BusinessWeek, "China Southern Airlines Co., the nation’s largest carrier, and Air China Ltd. are slashing prices to compete with the country’s new high-speed trains in a battle that Europe’s airlines have largely already ceded.

Competition from trains that can travel at 350 kilometers per hour (217 miles per hour) is forcing the carriers to cut prices as much as 80 percent at a time when they are already in a round of mergers to lower costs. Passengers choosing railways over airlines will also erode a market that Boeing Co. and Airbus SAS are banking on to provide about 13 percent of plane sales over the next 20 years."

Rail Vs. Air

It would appear that when it comes to trips that are under less than 800km, high-speed rail trump airlines every-time forcing Chinese them to slash prices.

The main route from Guangzhou and Changsha that once took nine hours by train now takes two and a half leaving commuters with a much more appealing form of travel. As a result, China Southern have cut economy-class tickets to 140 yuan (US$21) from 700 yuan on flights between Guangzhou and Changshain order to try and claw back some customers.

“The high-speed train is invincible on this route,” said Tom Lin, 30, a civil servant in Guangzhou, who opted to travel by rail. “There’s no doubt it’s more convenient for trips to the cities along the line. Airlines can’t compete with trains for the spacious seats.”


It would seem that the benefits are clear and other countries are rapidly getting on board - the US high-speed rail plans have been gaining traction in recent months with the Florida and California's schemes receiving $3 billion each to start the project.

But what will this mean for American Airline's 'red-eye' flights? In Europe, where high-speed lines have seen great success, the likes of Air France and Lufthansa have had to drastically cut prices or drop the route altogether.

In 2002, as the Paris-to-Brussels route became faster, Air France SA dropped its five daily services between the two cities as did Deutsche Lufthansa AG and Germanwings when the Paris to Stuttgart route after rail travel got faster.

It seems that the world over is seeing the benefits of high-speed rail and local airlines may have to rapidly start rethinking their strategies if they are to survive in such a competitive market.

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