Chinese high-speed rail must navigate a difficult earnings environment.
SHANGHAI -- The state-owned operator of a high-speed
passenger train between Beijing and Shanghai has turned an annual net
profit for the first time since service began in 2011, a document from a
shareholder reveals.
Beijing-Shanghai High-Speed Railway Co. does not release earnings. But the document, disclosed for a bond issuance, shows a roughly 6.6 billion yuan ($985 million) profit in 2015. Sales came to 23.4 billion yuan.
The route cost 220 billion yuan to set up and covers the 1,300km distance in as little as under five hours. It serves an annual 130 million riders. Last year's profit per customer came to about 50 yuan.
Although
many flights are available between the two cities, their frequent
delays due to weather and other conditions make the train service
popular among business travelers.
But fares are intentionally held down with income levels in mind, likely eroding the railway operator's earnings. The second-class fare of about 550 yuan comes to a little less than 7 yen (7 cents) per kilometer, or just a quarter of the figure for Tokyo-Osaka bullet train service in Japan.
Many high-speed rail lines are being constructed in China as the government seeks to stimulate the economy with infrastructure investment and make travel to regional cities more convenient. But even the key service route between Beijing and Shanghai bled red ink for years, suggesting tight earnings conditions for many other routes.
Beijing-Shanghai High-Speed Railway Co. does not release earnings. But the document, disclosed for a bond issuance, shows a roughly 6.6 billion yuan ($985 million) profit in 2015. Sales came to 23.4 billion yuan.
The route cost 220 billion yuan to set up and covers the 1,300km distance in as little as under five hours. It serves an annual 130 million riders. Last year's profit per customer came to about 50 yuan.
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But fares are intentionally held down with income levels in mind, likely eroding the railway operator's earnings. The second-class fare of about 550 yuan comes to a little less than 7 yen (7 cents) per kilometer, or just a quarter of the figure for Tokyo-Osaka bullet train service in Japan.
Many high-speed rail lines are being constructed in China as the government seeks to stimulate the economy with infrastructure investment and make travel to regional cities more convenient. But even the key service route between Beijing and Shanghai bled red ink for years, suggesting tight earnings conditions for many other routes.
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