Experts believe that through the flexible fare mechanism, the pressure on railway companies to repay debt and interest can be eased
Text: Deng Yujie
Editor: Lee H.Y. Yin
Recently, the price adjustment of high-speed rail has attracted attention.
On May 2, the official website of Railway 12306 issued four price adjustment announcements to optimize and adjust the published fares of EMU trains with a speed of 300 kilometers per hour and above running on the Wuhan-Guangzhou section of the Beijing-Guangzhou high-speed railway, the Shanghai-Kunming high-speed railway, the Shanghai-Kunming high-speed railway, and the Hangzhou-Ningbo section of the Hangzhou-Shenzhen railway, which will be implemented from June 15, 2024.
Specifically, there are two aspects, one is to increase the upper limit of fares, and the other is to lower the lower limit of fares. To put it simply, the high price is higher, the low price is lower, and the range of ticket prices will be larger.
According to the collation of a traveler, the reduction of the minimum fare is higher than the increase of the maximum fare, and the increase of the maximum fare of business class is higher than that of the maximum fare of second class.
For the above-mentioned price adjustment, the relevant person in charge of the China Railway Group responded that "it is a normal market behavior", and the operating costs of line maintenance, vehicle purchase, equipment renewal, labor and employment have changed greatly, and the existing single fare mechanism has obviously not adapted to the market-oriented business situation, and it is urgent to establish a market-oriented fare mechanism.
China Railway Group also mentioned that in view of the fact that it is still difficult to meet the demand for additional train groups during peak travel periods, the implementation of a flexible market-based fare mechanism is conducive to reasonably matching the relationship between capacity and demand through price leverage, and promoting the equalization of passenger flow.
The provinces and cities involved in this high-speed rail price adjustment are mainly concentrated in the Yangtze River Delta, Pearl River Delta and central and southern regions, including Shanghai, Zhejiang Province, Hunan Province, Hubei Province, Jiangxi Province and Guangdong Province. All of these provinces have one thing in common – they have a lot of visitors.
Huge passenger flows and efficient operations make it more likely that high-speed rail as an infrastructure will be profitable. However, it is undeniable that the construction of high-speed rail is still a costly project, and in order to improve the national railway network, profitable high-speed rail lines in developed areas will bear greater responsibility.
01
The price adjustment of high-speed rail has risen and fallen
During the "May Day" holiday, the official website of Railway 12306 issued four price adjustment announcements, deciding to optimize and adjust the published fares of EMU trains with a speed of 300 kilometers per hour and above running on the Wuhan-Guangzhou section of the Beijing-Guangzhou high-speed railway, the Shanghai-Kunming high-speed railway, the Shanghai-Kunming high-speed railway, and the Hangzhou-Ningbo section of the Hangzhou-Shenzhen railway.
The published fare mentioned in the announcement refers to the full-fare fare without discount.
Some of the adjusted fare caps for the four routes have increased from the current fares. For example, the Hangzhou-Ningbo section of the Hangzhou-Shenzhen Railway, the second-class seat from Hangzhou East Railway Station to Ningbo Station will be announced at 85 yuan from June 15, which is about 19.7% higher than the current published ticket price of 71 yuan; The first class seat increased by 13.3%, and the business class increased by 32.7%.
Among the longer lines, such as the Wuguang section of the Beijing-Guangzhou high-speed railway, the second-class seat from Wuhan Station to Guangzhou South Railway Station will be announced at 553 yuan from June 15, an increase of about 19.31% compared with the current published ticket price of 463.5 yuan; The first class seats increased by 19.8%, and the business class seats increased by 32.7%.
The increase in the maximum fare has been accompanied by a decrease in the minimum fare. The announcement cited the lowest fares at the beginning and end of the four high-speed rail adjustment sections.
For example, in the Hangzhou-Ningbo section of the Hangzhou-Shenzhen Railway, the lowest second-class ticket price from Hangzhou East Railway Station to Ningbo Station is 47 yuan, which is about 33.8% lower than the current fare; The lowest second-class ticket price from Wuhan Station to Guangzhou South Railway Station is 304 yuan, which is about 34.4% lower than the current fare.
According to the collation of a traveler, the reduction of the minimum fare is higher than the increase of the maximum fare. Taking the four high-speed rail adjustment sections as an example, the maximum fare increase for second-class seats has been maintained at about 19%, and the minimum fare has been reduced by about 34%.
The increase in the maximum fare of business class is higher than that of the maximum fare of second class. For example, the maximum fare of second-class seats from Hangzhou East Railway Station to Ningbo Station increased by 19.7%, and the maximum fare of business class increased by 32.7%. However, the announcement did not inform in detail of the reduction of the minimum fares for first-class and business seats, and only mentioned that the implementation of the fare between stations will be based on the published fare as the upper limit and 5.5% off as the lower limit to implement a multi-grade and flexible discount floating fare system.
It is understood that the last time the high price was raised was on May 30, 2023, and the fares of a number of high-speed rail bullet trains were optimized and adjusted, including the optimization and adjustment of the published fares of EMU trains running on the Liunan Passenger Dedicated, Jiaoji Passenger Dedicated, and Nanguang High-speed Railway, as well as the optimization and adjustment of the published fares of EMU trains running on the Nanjing-Hangzhou High-speed Railway and Shanghai-Nanjing Intercity with a speed of 300 kilometers per hour and above.
Among them, the implementation of the fare between stations will be the upper limit of the published fare, 6.6% off the lower limit, according to calculations, the announced fare increase at that time is about 10% to 20%.
02
Why these four?
The high-speed rail fare adjustment involves EMU trains with a speed of 300 kilometers per hour and above running on the Wuhan-Guangzhou section of the Beijing-Guangzhou high-speed railway, the Shanghai-Kunming high-speed railway, the Shanghai-Kunming high-speed railway, the Hangzhou-Hangzhou section of the Shanghai-Kunming high-speed railway, and the Hangzhou-Ningbo section of the Hangzhou-Shenzhen railway.
The adjustment interval of the four routes is located in the Yangtze River Delta, Pearl River Delta and the central and southern regions, involving Shanghai, Zhejiang, Hunan, Hubei, Jiangxi and Guangdong provinces.
These provinces and regions have a common characteristic, with a large flow of tourists and a large number of migrants.
Among the five major inter-provincial population inflow provinces, the first three are all provinces involved in this high-speed rail adjustment. According to the "Chinese Population Census Yearbook-2020" released by the National Bureau of Statistics, the five provinces with the largest cross-provincial inflow are Guangdong, Zhejiang, Shanghai, Jiangsu and Beijing.
Among them, Guangdong's inflow of population mainly comes from the southwest, the middle reaches of the Yangtze River and Henan. Guangdong Province has always been a major move-in and out-of-destination for the Spring Festival, and the passenger flow of the Spring Festival in 2024 will lead all provinces and cities. According to the Guangdong Provincial Department of Transportation, during the Spring Festival travel period (January 26 to March 5), Guangdong Province sent a total of about 128 million passengers, ranking first in the country.
Hunan, Hubei and Jiangxi provinces, as provinces in the middle reaches of the Yangtze River, are also major provinces for migrant workers.
Tong Zhongxian, a researcher at the Hunan Academy of Social Sciences, analyzed that Hunan and Guangdong are close to each other, adjacent to Guangdong, with convenient transportation, and the time distance is shorter after the opening of the high-speed railway, and the southern Hunan region is very closely connected with the Greater Bay Area. In addition, Hunan has a relatively large population, and is relatively rich in talents and labor. Guangdong attracts a lot of Hunan people.
In addition to the Spring Festival, holiday travel is also the peak period for passenger flow.
According to the China Railway Shanghai Bureau Group, during this year's "May Day" holiday, the Yangtze River Delta Railway sent nearly 18.12 million passengers in five days, with an average of more than 3.62 million passengers per day. Among them, 3.785 million passengers were sent on May 2, setting a new high for the number of passengers sent by Shanghai Bureau Group in a single day.
The same is true for the Guangzhou-Shenzhen region. According to data released by Guangzhou Railway Group, from May 1 to May 5, Guangzhou Railway sent a total of 12.458 million passengers, with a daily average of 2.4916 million passengers. On May 1, Guangzhou Railway ushered in the highest peak of passenger flow, sending 2.929 million passengers.
It is worth noting that three of the four adjustment routes start or end in Hangzhou.
The main reason for the optimization and adjustment of fares, which accounts for the majority proportion of Hangzhou, is also the large passenger flow. Wu Weiqiang, a professor at Zhejiang University of Technology, believes that in recent years, Hangzhou East Railway Station has become the largest passenger station in the Yangtze River Delta Railway, and during holidays, the average daily passenger flow is more than 200,000 passengers, which can be regarded as a super station.
Huge passenger flows and efficient operations can make high-speed rail as an infrastructure profitable. At present, most of the profitable high-speed rail lines also involve the Yangtze River Delta and Pearl River Delta regions, such as the Beijing-Shanghai high-speed railway, Shanghai-Nanjing high-speed railway, Nanjing-Hangzhou high-speed railway and Guangzhou-Shenzhen-Hong Kong high-speed railway.
Li Hongchang, a researcher at the Sustainable Transportation Innovation Center and deputy dean of the School of Economics and Management of Beijing Jiaotong University, believes that routes with strong market demand, a relatively high proportion of business travelers, and strong passenger payment capacity can carry out more flexible and diverse ticket prices.
03
Behind the market behavior, China Railway has huge debts
Regarding the above-mentioned price adjustment, the relevant person in charge of China Railway Group responded that "it is a normal market behavior". As for whether the follow-up service quality will be further improved, the relevant person in charge said, "Stay tuned."
Before 2016, high-speed rail fares were centrally managed by the state, mainly calculated and formulated on the basis of construction and operating costs.
In February 2016, the National Development and Reform Commission (NDRC) issued the Notice on Reforming and Improving the Passenger Fare Policy for High-Speed Rail EMUs, which stipulates that railway transport companies can set their own prices for high-speed rail bullet train tickets.
After the adjustment of the pricing body, the high-speed rail fare needs to consider the comprehensive factors such as the market demand of the high-speed rail, the supply capacity of the high-speed rail transportation, the financial balance of the railway system, and market competition.
Li Hongchang believes that the financial balance of the railway system should also be considered.
On April 30, China Railway Group released its 2023 financial accounts. In 2023, China Railway Group's operating performance will be the best year in history, with total revenue and net profit both breaking historical records, achieving operating income of 1,245.4 billion yuan, a year-on-year increase of 10.5%, and a net profit of 3.3 billion yuan.
Although it turned a profit and even broke the profit record, the huge debt behind it cannot be ignored. As of December 31, 2023, China Railway Group's liabilities were 6.13 trillion yuan.
The reason for the huge debt is the construction of a high-speed rail network. From 2013 to 2022, the national railway fixed asset investment was 665.7 billion yuan, 808.8 billion yuan, 823.8 billion yuan, 801.5 billion yuan, 801 billion yuan, 802.8 billion yuan, 802.9 billion yuan, 781.9 billion yuan, 748.9 billion yuan and 710.9 billion yuan respectively.
As an infrastructure, high-speed rail continues to be invested. The "Medium and Long-term Railway Network Plan" (2016-2025) proposes that by 2025, the scale of the high-speed railway network will reach about 38,000 kilometers, and on the basis of the original planning of "four vertical and four horizontal" main framework, a high-speed railway network with "eight vertical and eight horizontal" main channels as the skeleton, regional connection lines, and intercity railways will be supplemented.
While the vast majority of high-speed rail in the central and western regions is not profitable, high-speed rail lines with large passenger flows in developed regions have taken on more responsibility. Li Hongchang believes that the railway is facing tremendous pressure to repay the principal and interest, and by adjusting the ticket system and fares, the overall income of the railway can be continuously increased.
It is worth mentioning that the growth rate of China Railway Group's liabilities has narrowed, and the debt ratio has decreased, with liabilities increasing by only 0.33% at the end of 2023 compared with the same period last year, and total assets increasing by 1.63% year-on-year.
China Securities believes that the driving force for the new round of price increases not only includes passive price increases driven by rising costs, but also the supply side of the supply side to improve profitability under the tide of inflation.
Photo/National Bureau of Statistics
From October 2023 to January 2024, the national consumer price index (CPI) was negative year-on-year, causing the market to worry about deflationary pressure. Pan Gongsheng, Governor of the People's Bank of China, responded that with the continuous improvement of domestic demand and changes in the external price situation, China's price level will rebound moderately in 2024. The central bank will take maintaining price stability and promoting a moderate recovery in prices as an important consideration in its monetary policy.