Chinese airlines see high-speed rail threat; India reacts to increased fare levels

Shares in major Chinese airline stocks plunged on Thursday on speculation a high-speed rail network would eat into the carriers’ market shares. Air China led the slump with its share prices plummeting 6.1% in Hong Kong trading. Shares in China Southern (-4.9%), China Eastern (-4.1%), Hainan Airlines (-4.0%) and Shandong Airlines (- 2.1%) were also weaker. In contrast, high-speed railway-related stock gained strongly.

China Eastern Airlines stated it expects to reach an agreement on combining air-cargo ventures this month as it consolidates operations following the acquisition of Shanghai Airlines Co.  

India reacts to increased air fare levels

Indian airline stocks, which soared along with rising airfares to 52-week highs during the Nov-2010 festival season, are also experiencing weakness.

Kingfisher Airlines’ shares slumped 10.1% with SpiceJet shares 8.6% weaker and Jet Airways’ shares declining 5.6%. The carriers’ stocks are down 31.4%, 17.1% and 15.9%, respectively, from the yearly highs seen around the Diwali festival last month.

Indian airline stocks have declined over recent days as the Government intervenes to curtail airlines from charging high fares for last-minute bookings. India’s Directorate-General of Civil Aviation (DGCA) reportedly issued new directives to Indian carriers yesterday requiring them to lower certain fees from their website that the DGCA deemed exorbitant. The DGCA also asked carriers to explain why certain fares were higher than others.

Thai Airways to introduce upgraded seating product in 2012

On the other end of the spectrum, shares in Thai Airways strengthened 5.2%. The carrier yesterday stated it plans to introduce its upgraded seating product in 2012 as part of the carrier’s policy of being a "premium service network airline" in the same league as other major network carriers. As part of the upgrade, the carrier will install semi-private suites in first class, flat-bed seats in business and television screens for each economy-class seat.

Asia Pacific selected airlines daily share price movements (% change):  09-Dec-2010