Wednesday 10 March 2010

Airline chief warns of railways threat

The mainland’s ambitious high-speed railway programme will deal a “devastating blow” to its airlines and could even kill off short- to medium-haul routes, the chairman of China Eastern Airlines warned yesterday.

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Airline chief warns of railways threat

Minnie Chan in Beijing
09 March 2010

The mainland’s ambitious high-speed railway programme will deal a “devastating blow” to its airlines and could even kill off short- to medium-haul routes, the chairman of China Eastern Airlines warned yesterday.

“For trips under 500 kilometres, the impact is fatal,” Liu Shaoyang said. “For trips between 800 and 1,200 kilometres, the impact will range from significant to marginal.”

He said the government should better define the roles of express railway services and airlines because high-speed trains were siphoning off airlines’ customers, leaving them weakened in a competitive market.

“Just like the airline fever we saw a few years ago, now it’s high-speed railway fever,” Liu, 51, said. “The government should work out a reasonable division of labour between the two to prevent overlapping and a waste of land and other resources.”

Liu is well placed to comment. Before joining China Eastern, the mainland’s second-biggest airline, he was president of China Southern Airlines - its biggest - from 2004 to 2008. He was also among the country’s first airline pilots, in the 1980s.

Liu said the central government could also help airlines by opening up the skies for commercial flights.

“We should speed up air traffic control reform as soon as possible because we all know that it is the key reason for so many flight delays,” he said. “In our country, airlines just have 20 per cent of air traffic control rights; others are controlled for non-airline purposes. But in the United States, the aviation industry’s share is more than 80 per cent.”

Nearly 80 per cent of air traffic control rights on the mainland are in the hands of the People’s Liberation Army and state security departments.

Hong Kong’s Airport Authority says 6,568 flights from Hong Kong to mainland cities were delayed by mainland air traffic control problems over the past three years.

Fears have also been expressed that the high-speed railway programme may affect China’s ambitious plan to develop a new generation of regional jets - the ARJ21 Xiangfeng.

The 5 billion yuan (HK$5.68 billion) programme - which began in March 2002 - is a key project of the 10th five-year plan. The 70-seat, twin-engined jet, with a range of more than 2,200 kilometres and costing US$20 million each, is designed for domestic routes.

The Civil Aviation Administration of China still sees increasing demand for airlines. Xinhua said yesterday that Beijing planned to buy 218 aircraft this year, including jumbo jets and aircraft for regional routes. The report cited administration director Li Jiaxiang as saying that the government would spend 90 billion yuan expanding 25 airports this year. The administration expected 700 million passenger trips a year by 2020, with the number likely to double by 2030.

Xinhua has reported that 3.7 trillion yuan will be spent on the high-speed railway network in the next six years.

“It seems like the Ministry of Railways and the civil aviation authorities are competing with each other for their own interests,” Hu Xingdou, a Beijing-based economist, said. “But I think it will be a good chance for the aviation industry to implement reforms.”