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June 14, 2011

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Airlines plan improvements

Air carriers were taking note of the forthcoming Shanghai-Beijing high-speed line, their new competitor. Managers said yesterday that they were preparing plans to improve services between the two cities to curb any loss of customer traffic after the planned opening of the rail service at the end of this month.

These would include raising flight punctuality rates to avoid losing business to the express trains.

Better punctuality and less vulnerability to weather factors seem the most attractive advantages of the future express trains.

"I would definitely choose the express trains if I am on a business trip for the punctuality. My friend was recently delayed by six hours on a flight and he had been kept sitting on the plane for all that time," said one Shanghai businessman.

Full-price first-class air tickets from Shanghai to Beijing yesterday were priced at between 2,200 and 2800 yuan, about 1,000 yuan more than the top-price ticket on the future rail service.

"But I could book the air tickets long enough in advance to departure to get big discounts. That way, the flight tickets would be nearly as cheap as the express train tickets," said Li Xin, a Shanghai woman who frequently travels to Beijing.

The average discounted air fare on the route is around 900 yuan, about the same as a first-class seat on the future express trains. This, say some industry analysts, means the air service will remain attractive after the high-speed rail services begin.

"Airlines still have advantages in its competition with the high-speed rail in terms of the average discounted price and much shorter travel time," said Huachuang Securities Co analyst. "The punctuality on Shanghai-Beijing air routes reaches 72.9 percent and the high-speed rail is expected to divert no more than 15 percent of passengers from airlines."

But GF Securities said the operation of the new high-speed railway will win passengers from planes, resulting in uncertainty over the future profitability of airlines.

Air China shares fell 2.07 percent to 8.97 yuan at market close yesterday and China Eastern Airlines dropped 1.75 percent to 5.04 yuan. Train maker China CNR Corp rose 1.05 percent to 6.72 yuan.

A flight from Shanghai to Beijing takes about 90 minutes compared to almost five hours on the fastest future rail service.

"I would still prefer traveling by air, which is much more comfortable and swift. It's hard to imagine sitting for five hours straight through to Beijing," said Jasmine Zhao, a 22-year-old Shanghai woman.

Transport industry analysts said the new rail service would attract the low-to-moderate income bracket and students since travel time was not as significant a factor as price.


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