The collapse of Asia's airline behemoth—Japan Airlines International Co. Ltd. (JAL)—rang alarm bells for its Chinese counterparts, who may also be secretly rejoicing to hear the news.
The Japanese state-owned JAL filed for bankruptcy protection on January 19, following the government's decision to end cash injection.
The Chinese market used to account for 15 percent of JAL's revenue.
Li Xiaojin, a professor at the Civil Aviation University of China, said domestic airlines, especially China Eastern Airlines Corp. Ltd., might devour a large portion of JAL's market share. Li said if JAL wants to cut costs, it must reduce flights.
However, JAL's downfall has also caused domestic airlines to wonder how they can avoid the same fate.
While high oil prices had a large impact on JAL's bankruptcy, the deep-rooted cause was fierce competition from Japan's high-speed railway network, said Li.
When Japan opened its high-speed railway network across the country in 1956, JAL turned its attention from the domestic market to more risky international markets.
The same is happening in China. In order to satisfy the increasing travel needs and driving economic growth, the government has poured money into the construction of high-speed railways.
On December 9, 2009, the world's longest and fastest passenger railway—the Wuhan-Guangzhou high-speed railway—was put into operation, reducing the journey time between the two cities from 10.5 hours to three hours. A flight between the two cities takes two hours.
Railways have forced airlines to cut prices. In many cases, the price of an air ticket is even lower than that of a train. "The enemy is at the gate," Li warned, fearing airlines may eventually leave the market. |