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Trains And Planes

China Southern adds shuttle services on rail threat

Nov 18, 2009

China Southern Airlines Co., the nation’s largest carrier, will add more shuttle services as an expanding high-speed rail network threatens to lure passengers off planes.

The airline will start shuttle flights from its hub in Guangzhou to Wuhan in Hubei province and to Zhengzhou in Henan, Chairman Si Xianmin said yesterday after an event to mark a marketing tie-up with the 2010 Asian Games. The flights will operate at least once an hour and passengers will only need to check in 30 minutes before takeoff. A service to Changsha in Hunan province is already in operation.

“We are actively responding to the challenge from high- speed railways,” Si said yesterday in an interview in Guangzhou. The carrier will also operate shuttle services to Southeast Asia, he added, without elaboration.

China Southern plans to add the shuttles as it expects traffic to fall on about 25 percent of domestic routes because of high-speed railways, offering cheaper fares and greater convenience. China is scheduled to build more than 18,000 kilometers (11,185 miles) of high-speed rail lines by 2020, Si said last month, citing the Ministry of Railways plan.

“China Southern will be hit the most by the expanding high-speed rail network,” said Li Lei, an analyst at China Securities Co. in Beijing. “It has to get prepared.”

Shares Decline

The airline dropped 3.5 percent, the most in more than two weeks, to HK$2.78 in Hong Kong trading. The carrier has risen 116 percent this year, trailing Air China Ltd. and China Eastern Airlines Corp., the other two of China’s big three carriers.

China will own more than half of the world’s high-speed railways under its plan, which will expand the total rail network to 120,000 kilometers. Of China Southern’s about 160 domestic routes, 38 will compete directly with high-speed railway lines, Si said in October.

A high-speed rail link between Guangzhou and Wuhan will shorten the trip to 3 hours from more than 10 hours when it starts operations by the end of the year, according to the Ministry of Railways.

Separately, China Southern is also looking at resuming jet- fuel hedging, Si said yesterday. The carrier closed all of its positions last year as the price of oil plunged from a record.

It “isn’t a good time” to restart yet because of oil prices near $80 a barrel, Si said.

China Southern adds shuttle services on rail threat
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