Beijing-Shanghai high-speed train makes debut
The USD 33 billion rail line could hurt airlines operating on the busy route plagued by delays.
Beijing: High-speed trains linking China`s two main cities Beijing and Shanghai make their commercial debut on Thursday -- a step seen as vital to ease pressures on the country`s overloaded transport system.
The USD 33 billion rail line, which has been operating on a trial basis since mid-May, will halve the journey time to under five hours and could hurt airlines operating on the busy route plagued by delays and cancellations.
The fast link, which has been hit by safety concerns and graft, is opening a year ahead of schedule and will be able to carry 80 million passengers a year -- double the current capacity on the 1,318-kilometre (820-mile) route.
"It could play a transformational role in shaping the future economic dynamics in coastal China... by creating more spill over effects to regions lying along the sprawling high-speed railway line," Ren Xianfang, an analyst at IHS Global Insight, said.
But for the airline industry, the impact could be "destructive", she warned.
One-way ticket prices will range between CNY 410 and 1,750 (USD 63- USD 270) subject to further adjustments, Vice Rail Minister Hu Yadong said earlier this month, compared with about CNY 1,300 for a flight between the two cities.
Anxious about losing passengers to the new line, airlines have slashed some ticket prices by as much as 65 percent to below the cost of the cheapest rail pass, state media said on Wednesday, citing figures from travel website ctrip.com.
But Frederic Campagnac, the general manager of transport and logistics consultancy Clevy China, believes the fast link will have a positive impact on airlines by forcing operators to be on time.
It will "put pressure on the airlines to keep more on their schedule”, Campagnac said.
Work on the high-speed railway started in April 2008 with a planned investment of CNY 220.9 billion.
China has invested heavily in its high-speed rail network, which spanned 8,358 kilometres at the end of 2010 and is expected to exceed 13,000 kilometres by 2012 and 16,000 kilometres by 2020.
But huge investment has also made the sector a hotbed for corruption, which has raised concerns over the costs and safety of the high-speed rail links.
China`s state auditor in March revealed that construction companies and individuals had last year siphoned off CNY 187 million in funds meant for the Beijing-Shanghai link.
This followed the sacking of former railways minister Liu Zhijun in February, who had allegedly taken more than CNY 800 million in kickbacks over several years on contracts linked to China`s high-speed rail network.
The Railway Ministry has said the trains would run between 250 and 300 kilometres per hour on the Beijing-Shanghai link, although the line is designed for a maximum speed of 380 kph.
The speed is in line with a nationwide directive made public in April that said all high-speed trains must run at a slower pace than previously announced -- no faster than 300 kph -- to make journeys safer.
Despite the slower speeds, urban areas located within 300-400 kilometres of Beijing and Shanghai "will become kind of suburbs to the big cities" because it will be possible to do a return trip in one day, Campagnac said.
"All the cities on the way will benefit from the line," he said.