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China Southern to react to high-speed rail threat; increasing international focus

1-Feb-2010 11:46 AM

China Southern Airlines Chairman, Si Xianmin, stated the carrier plans to enact the following measures in reaction to the expanding high-speed domestic rail network (Bloomberg/Shanghai Daily/South China Morning Post, 29/30-Jan-2010).

  • International focus: The carrier is planning to add more long-haul and international services, with the carrier to increase frequencies on services of more than 1,200km and launch new services to smaller cities. New routes to Southeast Asia, Europe, North America and Australia are also under consideration. The carrier expects to increase international capacity from 17% to 30% of its total as a result;
  • Alliance cooperation: China Southern has expressed interest in increased codeshare operations with SkyTeam Alliance members, including Air France-KLM and Korean Air;
  • Air/train tickets: The carrier stated it may commence bundling air and train tickets on domestic routes;
  • Effect of domestic rail competition: China Southern expects a reduction in load factor of as much as 15 ppts on short-haul routes once the new rail network is completed. Approximately 38 routes of the airline's 160 domestic routes face direct competition with the bullet trains. [more - Perspective]

China Southern: "[The rail network] will affect short-haul business for all of China’s airlines. We’ve already seen a decline since the start of the Wuhan-Guangzhou high-speed line,” Si Xianmin, Chairman. Source: Bloomberg, 29-Jan-2010.