June 13 (Bloomberg) -- The Beijing-Shanghai bullet train, opening later this month, will offer coach-class tickets for a less-than-expected 555 yuan ($86), boosting the threat to local airlines on their busiest route.
One-way trips in the two different premium classes will cost from 935 yuan and 1,750 yuan on 300 kilometers-per-hour (186 miles per hour) services, Vice Rail Minister Hu Yadong told reporters today in Beijing. The line will move about 180,000 passengers a day initially, he said.
Fares on three existing bullet-train lines will also be reduced by 5 percent as the ministry slows trains to 300 kph to pare operating costs and boost passenger numbers, Hu said. Beijing Capital International Airport Co. fell in Hong Kong trading and Air China Ltd. and China Eastern Airlines Corp. dropped in Shanghai on concern the 1,318-kilometer Beijing-Shanghai high-speed line will lure travelers from planes.
“The ticket price is competitive and it will attract some passengers from airlines,” said Li Lei, an analyst with China Securities Co. in Beijing. “Whether the train can retain travelers will depend on the service levels.”
The line will run 90 services a day each way, including cheaper ones traveling at 250 kph. Operations will begin by the end of the month, Hu said without specifying a date. Ticket sales will start a week before the services. The 221 billion-yuan high-speed rail link is designed to carry 80 million passengers a year.
“The lower-than-expected ticket price is a bit of a positive,” said Gary Wong, an analyst at Guotai Junan Securities Co. “But the operators are facing big pressure to cut prices further.”
Trains will be slowed on the Wuhan-Guangzhou, Zhengzhou-Xian and Shanghai-Nanjing lines from July 1 to pare costs, Hu said.
Zhao Jian, a professor at Beijing Jiaotong University, which specializes in railways, said this month that standard tickets on the Beijing-Shanghai line would likely cost more than 600 yuan.
The 300 kph trains will travel from Beijing to Shanghai in less than five hours. A flight takes about two hours, excluding travel time to airports and waits for check-in. About 25 percent of Chinese flights also suffer delays.
Air China, the biggest carrier in Beijing, is advertising June 19 flights to Shanghai from 410 yuan on its website. Carriers will offer an average of more than 20,000 seats a day on the route this month, the seventh-highest tally worldwide, based on data from OAG Aviation Solutions.
Beijing Airport Shares
Beijing Airport dropped 0.6 percent to HK$3.53 in Hong Kong, after earlier declining as much as 12 percent. In Shanghai, Air China declined 2.1 percent to 8.97 yuan and China Eastern, the biggest airline in the city, fell 1.8 percent to 5.04 yuan. Both carriers closed little changed in Hong Kong.
To ensure safety on the new Beijing-Shanghai line, the operator will undertake at least four hours of inspections every night, Hu said. A train with no passengers onboard will also be run along the line first thing every morning as well, he said.
The new line will contribute to a 9.6 percent increase in China’s railway passenger capacity from July 1, Hu said. Cargo capacity will rise by 6 percent, he said.
The ministry also reiterated plans to spend 2.8 trillion yuan on railways in the five years ending 2015. That will boost the total network to about 120,000 kilometers, said Hu.
“Investments won’t be reduced,” he said. “The pace of development won’t be slowed.”
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