Friday, January 30, 2015

Beijing-Shanghai high speed rail line set to make a profit this year

BEIJING, Jan. 27 (Xinhua) -- The financial situation of the high-speed rail link between Beijing and Shanghai is improving, with profits expected for the first time this year.
About 30 billion yuan (5 billion U.S. dollars) of tickets were sold last year, Cai Qinghua, former chairman of the Beijing-Shanghai High-speed Railway Company Ltd. told Xinhua this week.
The company is yet to release official financial results for 2014, but stakeholders in the 1,318 km line look set to rake in some 1.2 billion yuan in profits this year, following continual losses since its opening in June, 2011.
"We originally planned to achieve a financial balance in five years and recoup our investment in another 14," said Cai.
The financial situation of other major railways in China remains obscure, but it is widely acknowledged that making profits from pure passenger traffic is difficult for high-speed rail operators. The China Rail Corporation (CRC) manages the world's largest high-speed rail network and lost 5.4 billion yuan in the first half of 2014. The company has 3.4 trillion yuan of liabilities.
The Beijing-Shanghai profits should ease the predicament of the CRC, which runs the transport business along the route.
Passengers have ultimately been won over by the comfort, convenience and relatively low prices that high-speed trains offer. More than 100 million trips were made on the Beijing-Shanghai line last year, up 27 percent, about an eighth of all bullet train trips in China. Average daily trips on the route rose to some 290,000 last year from 132,000 in 2011.

A profit of 1.2 billion yuan roughly comes out to $192 million. It's not much of a profit margin, but the line is new and still growing of course. Increasing Chinese prosperity will also end up resulting in truly insane revenues and profits. Right now the average fare paid on this line is $50 or less; this despite having more passengers per day than many Amtrak lines manage in a year. Currently it's actually cheaper than the Acela, with the most expensive business class seats averaging just 34¢ per mile from Beijing to Shanghai while the cheapest low bucket fares on Acela are 39¢ per mile between Washington and Boston. And, truth be told, I'd rather spring for the Chinese version of business class any day:

These are the most luxurious and expensive seats set and are available on some, but not all, of the high-speed trains. They are just like first-class on an airplane. There are two business-class carriages at the front and rear or the train behind the operation cab. The carriages are spacious with two meters (6.6 feet) of space between two rows. There are three in a row - two on one side and one on the other side of the aisle.
The sofa-like leather seats are comfortable and can turn 360 degrees. They are equipped with complete facilities. A mini LED TV set with many movies is folded in the left arm of each seat, and there is a power outlet under each seat. On the inner side of the right arm, there are buttons to adjust the footrest and the backrest. The backs can fold down flat for sleeping. A tray table is hidden in the arm of each seat. Some trains also offer free snacks, drinks, disposable slippers, back cushions and blankets.