When it comes to comparisons between high-speed rail networks and commercial aviation, the ultimate battle undoubtedly exists in China, which boasts both the world’s largest amount of high-speed rail track alongside one of the world’s largest aviation industries, which is usually ranked only behind the United States and the European Union. Bolstered by government spending, China’s high-speed rail network connects segments of the country in just hours, sectors in which free-market rail companies would never justify an investment.
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As a result, there is no more developed and potentially profitable rail market than that in China, which has and continues to receive heavy government support in its bid to rapidly connect the country via ground transportation, albeit to much international scrutiny given the political motivation behind many expansions. However, the rapidly growing demand for air travel within the country is not to be underestimated, with more and more passengers taking to the skies every year.
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China has also been cited many times as the first major aviation market to recover completely from the COVID-19 pandemic, with passenger numbers reaching 80% of pre-COVID numbers by July 2020 alone, something that Western airlines could only envy. The robust nature of the Chinese aviation market, which sees more and more new airlines enter every year, cannot be questioned.
Therefore, several unique interactions between the Chinese commercial aviation and high-speed rail industries exist. Let’s take a deeper look at how China’s unique geopolitical circumstances have created fascinating market dynamics between airlines and high-speed rail operators.
What factors have made China conducive to the popularity of high-speed rail?
The obvious first factor to point to is that the Chinese government has been quick to sponsor initiatives in support of high-speed rail, but simply the construction of high-speed lines is not enough to convince passengers to take trains over airplanes, especially in a country as large as China. Therefore, there are many other factors that affect the popularity of high-speed trains.
Aerospace issues have led to inefficiencies in air travel
There are certain high-speed rail routes in China that should be infeasible on paper. High-speed trains race from Beijing, the nation’s political and cultural capital, to Shanghai, the financial capital, in just over 4 hours, an impressively fast trip for what is a roughly 2-hour flight. According to an analysis from The Beijinger, the cost of these two journeys is actually around the same.
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Nonetheless, this ignores many hidden details and the fact that extra time is needed to get to an airport before security. China’s airspace is heavily restricted by the country’s military, preventing efficient airline operations from taking place. Chinese airlines suffer from persistent delays, and on-time ratings are often extremely low.
High-speed railways do not suffer from similar issues, with on-time performance being impressively high. As a result, passengers continue to choose the train over the plane on longer routes in China than anywhere else on the planet, something which extremely high operating speeds also assist.
China’s geography is extremely helpful
There are many arguments to be made about how China’s geography has been conducive to the expansion of high-speed rail. While high-speed railways in Japan are forced to tunnel through mountains and bend around geographical formations, the flat plains of Central China provide ideal geography for the long, straight tracks needed for high-speed rail. As a result, high-speed trains in China can operate faster than almost any on the planet.
Furthermore, Chinese cities are spaced in quite an efficient manner for high-speed rail. A parallel analysis of China’s high-speed railways and airlines from Xiaowen Fu and James Peoples’ 2019 book Airline Economics in Asia, concluded that high-speed rail is typically most competitive with airlines between 500 and 800 kilometers. Many of China’s largest cities lie within this distance threshold.
Related 35 Years Old: The History Of China’s Hainan Airlines In 1989, Hainan Province Airlines was established, and would go on to become an award winning airline in China.
Additionally, industry observers have been quick to comment that the inefficiencies in China’s air transportation system have also extended the distance at which high-speed rail can effectively compete with airlines. Fu and Peoples also found that between 800 kilometers and 1,500 kilometers, Chinese high-speed rail can offer an appealing alternative to air transport.
So what is next for the Chinese high-speed rail and aviation industries?
Despite a seemingly strong position within the market, Chinese railways will still have a number of challenges to navigate in the upcoming years. These include the following:
An increasingly political view of high-speed rail expansions
Concerns about the safety of increasingly higher-speed trains
The market entry of low-cost carriers
For starters, every decision that Beijing makes regarding the expansion of new high-speed rail tracks will undoubtedly be under international scrutiny, especially when it involves autonomous regions like Hong Kong. Furthermore, there are challenges brought to the market by new low-cost airlines.
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Budget airlines attempt to undercut high-speed rail on the most important factor for travelers: price. This could potentially challenge China’s high-speed railways, with an increasingly large commercial class being well-aware of the price tag associated with traveling.
Nonetheless, there are some issues facing the Chinese commercial aviation industry that could significantly help bolster high-speed rail ridership. The first of these factors is the increasing number of manufacturer delays, which have failed to keep pace with the rapid growth of many foreign airlines.
Following the geopolitical situation in Russia which led to lessors losing billions in aircraft that were taken by Russian airlines, lessors have been somewhat cautious about their lending in the Chinese market, according to conversations Simple Flying has had with industry leaders. These factors, inhibiting the growth of Chinese airlines, could bring new life to high-speed railways, as carriers will need to reallocate capacity away from many medium-distance routes that struggle with high-speed rail competition.