Airline and Railway in China - Case Study Example

Compare Airline and Railway Industry in China IntroductionFor a period of five years to 2014, China transport industry income has been increasing by 7.9% every year. There are roughly 260 ventures operating in the transport industry, employing approximately 737,250 workers and offering a total wages of about $4.5 billion in 2014. China Aircraft and High-Speed Rail (HSR) stand out as the most convenient means of transportation. (Cheng and Yung-Hsiang, 56). High-Speed Rail (HSR) includes both devoted passenger lines which are designed at speeds of 200 km/hour and above, and varied passenger-freight lines with utmost speeds of 200km/hour. The following economic analysis of China Railway transport and Aircraft Industry provides a detailed comparison of the two sectors (Zhang and Anming, 130). Cost Benefit Analysis: These coverage of analyses logically vary from HSR to China Aircraft Industry, these tends to wrap the construction costs of transport projects, maintenance and operation costs of related transport services, direct user benefits mostly time and cost savings, and a limited externalities such as congestions, overcrowding, transport safety impacts and emissions (Chou, Jui-Sheng, and Changwan, 6954). Regarding High-Speed Train locally the benefits related to the use of HSR outlays the cost thus it’s more convenient in China (Cheng and Yung-Hsiang, 56). Compared with China Airline Industry the High-Speed Train is more beneficial to the domestic market as compared to the international market (Cheng and Yung-Hsiang, 56). However, internationally China Airline Industry is benefits outlay the costs of using High-Speed Train, which is not implemented in many countries. Economic Mass: It measures the intensity of market access that the various industries have at a particular location. It is because firms currently interact not only with domestic firms who happen to be immediate competitors, but also to an increasing degree with firms in more and more isolated locations, the economic mass of a city is given by the sum of the extent of market size (Cheng and Yung-Hsiang, 56). Therefore, economic mass is the extent of overall market access, or the efficient economic size of town or city. High-Speed Rail in China has a huge domestic market as compared to the China Airline Industry (Campos, Javier, and Gines, 22). It is contributed, by the large, middle-class citizens in who use rail compared to the wealthy who uses airline transport. The HSR transport costs are equitable favorable compared to the Airline Industry. 1 china airline data Empirical information from the chart shows a slow growth of China Airline industry in different routes. It cannot be compared with the ever rising number of High-Speed Rail users. Employment Effects: These are by principle measured in terms of jobs created for every location. In addition, these jobs are related to the overall economic output at every location though alterations in jobs do not automatically move by the same size or same direction as economic output. It is because they are affected by employment policies, industrial composition, technical change, legislation and regulations (Cheng and Yung-Hsiang, 56). China High-Speed Train has created more additional employment opportunities as compared to the China Airline Industry (Chou, Jui-Sheng, and Changwan, 6950). Though China Airline Industry has created more employment opportunities, it is not comparable to the number that High-Speed Train has employed in various sectors (Zhang and Anming, 126). 2 China southern Airline passenger 2011-2013 The numbers of jobs are significant social dimensions of the regional effects, which enter the evaluation structure through multi-criteria examination (Cheng and Yung-Hsiang, 56). HSR, in other words, has promoted the domestic creation of employment as compared with the airline industry (Campos, Javier, and Gines, 24). Inter City Connections: These are High-Speed Railway lines connect many particular cities, often within a relatively shorter distance, for instance, 100-200 kilometers, as compared to China airline industry that connect few cities compared the later (Chou, Jui-Sheng, and Changwan, 6952). It, therefore, makes the High-Speed train more desirable as compared to the Airline travel. HSR is more accessible as compared to Airline Industry making it easy to access different cities across China (Zhang and Anming, 125). Generally, High-speed rail holds more benefits over air travel for distances under 800km, although between 800-1200km there is a tradeoff depending on how direct the train tracks (Cheng and Yung-Hsiang, 53). Distances more than 1200km air travel is more advantageous. 3 China Rail network 1990-2009  Government of China has expanded the High-Speed Rail tremendously completely transformed capacity and quality. China has increased railway accessibility in the country and competitively recognized as the best means of transport. Tourism Effects: Many towns and cities on new High-Speed Rail lines have experienced a swift increase in tourist’s number in a couple of years after opening. Such effects provide an excellent case for studying the short term effects of the High-Speed Rail industry (Campos, Javier, and Gines, 21). The primary indicators of tourism account for the fact that High-Speed Rail travel has enabled the tourist to leave faster and conveniently (Cheng and Yung-Hsiang, 61). For this reason, it has promoted the movements of tourist around the nation enhancing the growth of tourist sector rapidly. Economically, High-Speed Rail is more affordable to many Chinese citizens as compared to the China Airline Industry. It is attributed to the massive domestic middle-class citizens (Campos, Javier, and Gines, 23). Many Chinese prefer to use the High-Speed Rail as compared to the Airline transport because it’s more economical as compared to the airline industry. On the other hand, China Airline transportation is more expensive for the ordinary citizen (Fu et.al, 20). As compared to China Airline usage is minimal to High-Speed Rail. Prices on High-Speed Rail lie close to USD139 for a ticket. It is about 28% less than air fares (Cheng and Yung-Hsiang, 58). 4 Chinese Passenger Rail Turnover: 1980-2012 Social and Environmental Impacts; China Airline Industry and High-Speed Rail pose enormous social and environmental effects to the nations. These ranges from noise and air pollutions, environmental degradation to more positive impacts like social amenities and development of facilities (Zhang and Anming, 128). High-Speed Rail has influenced creation and development of social facilities such as hospitals and health centers, schools and institutions (Campos, Javier, and Gines, 26). 5 Modern High Speed Rail Gross Economic Output; Although there is emergence of new transport demands and existing growth need for transport, the High-Speed Rail network is already the most efficiently used in China causing a robust growth from 2009 and 2013. In general the number of passenger grew by 5.5% per year during this time reaching up to 2.1 billion passengers in 2013 (Cheng and Yung-Hsiang, 60). Rail freight also grew by almost 6% every year to 3.6 billion tonnes, in 2013. Although both are critical in improvement and enhancement of general gross economic output High-Speed Rail has been of greater significance and substance as compared to the Aircraft industry (Zhang and Anming, 124). 6 High Speed Rail on Transit Agglomeration Benefits: Mostly applied in urban economics to illustrate the benefits that firms obtain when locating near one another (Campos, Javier, and Gines, 22). Agglomeration occurs as a result of clustering of firms and businesses at the same positions and locations or, more principally in transport service improvements between surroundings which diminish distance and time between them (Zhang and Anming, 130). Conventional transport cost benefit analyses can account for some of the effects that arise from these developments, such as the reduction in straight transport costs and travel times (Campos, Javier, and Gines, 22). China Airline Industry has created foreign markets more agglomeration benefits as compared to High-Speed Rail. It is because of the accessibility to international markets and the wide access to foreigners who access the enterprises and businesses close to airports (Zhang and Anming, 130). Moreover, the airlines have promoted the development of more foreign direct investment as compared to High Speed Rail (Campos, Javier, and Gines, 20). However, they are not accountable for the increase and wider productivity improving effects that occurs from growing markets for products and inputs, better harmonizing between producers and consumers, and enhanced education and distribution of tacit knowledge through face-to-face communication Even though, High-Speed Rail has encouraged and effected changes transport costs the agglomeration benefits are incomparable with that caused by China Airline industry (Chou, Jui-Sheng, and Changwan, 6946). Regional Economic Impacts: In a broad sense, local economic effects are the whole of effects upon the economy of a given area. High Speed Rail has resulted in huge domestic economic effects as compared to China Airline Industry. High Speed Raid has created an enabling environment for operation of business. China’s domestic high-speed rail linking mainland China with Hong Kong could probably weaken Dragonair’s southern China system, a likelihood the carrier is more and more beginning to consider (Zhang and Anming, 142). In addition Hong Kong Airline has continued to become more scarce due to the implementation of High Speed Rail. Many people have opt to use the High Speed Rail low HSR prices, maximum train speeds, convenient station locations, and integrated border control (Campos, Javier, and Gines, 20). It has promoted domestic market accessibility and transport of goods However, the term is often used in a narrower sense to denote those economic impacts that are not, or not fully, accounted for by conventional transport cost benefit analyses (Cheng and Yung-Hsiang, 53). Conclusion In conclusion due to the rising need to stay relevant in the competitive transport industry, Chinese carriers are considering partnering with the high speed rail transport systems (Zhang and Anming, 139). These are strategies by the airline industry to gain considerable benefits and to expand rapidly. For instance, China Eastern has realized 24,000 air-rail tickets in 2012. Works Cited Nolan, Peter. China and the global economy: national champions, industrial policy and the big business revolution. Palgrave Macmillan, 2001. Cheng, Yung-Hsiang. "High-speed rail in Taiwan: New experience and issues for future development." Transport policy 17.2 (2010): 51-63. Zhang, Anming. "Analysis of an international air-cargo hub: the case of Hong Kong." Journal of Air Transport Management 9.2 (2003): 123-138 Campos, Javier, and Gines De Rus. "Some stylized facts about high-speed rail: A review of HSR experiences around the world." Transport Policy 16.1 (2009): 19-28 Szamosszegi, Andrew, and Cole Kyle. An analysis of state-owned enterprises and state capitalism in China. Capital Trade, Incorporated for US-China Economic and Security Review Commission, 2011. Fu, Xiaowen, Anming Zhang, and Zheng Lei. "Will China’s airline industry survive the entry of high-speed rail?." Research in Transportation Economics35.1 (2012): 13-25 Chou, Jui-Sheng, and Changwan Kim. "A structural equation analysis of the QSL relationship with passenger riding experience on high speed rail: An empirical study of Taiwan and Korea." Expert Systems with Applications 36.3 (2009): 6945-6955 Read More