Airlines fly into headwinds from high-speed trains
Rock-bottom fares and growing competition from high-speed railways have pushed carriers into red ink for three consecutive months
Mainland airlines experienced turbulence at the turn of the year, posting losses for three consecutive months due to low air fares and competition from high-speed railways, analysts said.
Air China, China Southern Airlines, China Eastern Airlines and other mainland carriers collectively reported 1 billion yuan (HK$1.24 billion) in losses last month, the official reported yesterday, citing the Civil Aviation Administration of China.
Passenger demand declined at all three major carriers. Air China's revenue passenger kilometres (RPK), which multiplies the number of paying passengers by the distance travelled, decreased 1.5 per cent year on year last month. The measure at China Eastern and China Southern fell 2 per cent and 1 per cent, respectively.
The drop in passenger demand was partly due to seasonal factors, given that the Lunar New Year holiday fell in January last year, leading to a higher base for comparison.
Meanwhile, the impact from high-speed railways on passengers' air travel demand has been growing.
"The diversion to high-speed trains has become more and more serious as the memory of the high-speed-train tragedy in Wenzhou in 2011 fades out," said Geoffrey Cheng, the head of transport sector research for greater China at MF Global Hong Kong.
The diversion to high-speed trains has become more and more serious as the memory of the high-speed-train tragedy in Wenzhou in 2011 fades out
