China CRH, airlines start air-rail codeshare agreements
Updated: 2012-05-24 00:00:00
After two years of competing aggressively with the nation’s growing high-speed rail network, Chinese airlines are beginning to adopt a different approach: ‘if you can’t beat them, join them’. Mutually beneficial solutions are emerging in the form of air-rail codeshare agreements that could pave the way for foreign airlines to also tap into China’s vast interior even with a single gateway. China Eastern Airlines and Hainan Airlines are taking the lead, with the recent agreement between China Eastern and the Shanghai Railway Bureau and between Hainan Airlines and Yuehai Railway.
The moves are changing the relationship between airlines and rail, following a model successfully introduced in the European market. Using rail operations as an alternative to some short-haul feeder services will enable airlines to concentrate on longer routes (including international sectors), which is a key pillar of China’s aviation policy, while also enabling airlines to enhance their feeder traffic rather than losing this market to rail operators altogether. Direct rail links also increase airport (and airline) catchment areas for passengers that can allow them to be more competitive.
Hainan Airlines launched a programme with Yuehai Railway Co, which runs the high-speed rail between Haikou and Sanya in Hainan province. Passengers can buy high-speed rail tickets from Haikou to Sanya when booking tickets on any Hainan Airlines flight to Haikou. The airline will eventually sell tickets to other stops on the high-speed rail route. The rail fares will be the same as those offered directly by railways.
Hainan Airlines deputy GM and sales Yuan Huifang said joint ticketing can help both sides get more passengers. It is a way for airlines to profit from the HSR system, which has had a negative impact on airline bottom-lines. "High-speed rail services heavily affect the business of flights of less than 500km. But we want to find a way to cooperate with rail systems,” he said.
Hainan Airlines manager for product development Wang Yue however noted the process is not without its challenges, especially given the infancy of the system. Hainan Airlines took almost one year to prepare for the programme, with the two parties facing challenges in combining two different ticketing systems. Challenges have also been faced in linking up transfers. For that reason, Hainan Airlines will promote the programme more heavily in international destinations rather than adding more domestic cities, Ms Wang said. However, she noted that new airport development is increasing focused on inter-modal connectivity. "I believe more railway stations and airports will be built together for joint operations," he added.