Channel NewsAsia
Updated: 02/21/2013 06:07 | By Channel NewsAsia

Fare structure of high—speed rail will determine impact on buses, airlines

Fare structure of high—speed rail will determine impact on buses, airlines


Fare structure of high—speed rail will determine impact on buses, airlines

SINGAPORE: Travellers have welcomed the move to build a high—speed rail link between Singapore and Kuala Lumpur.

Industry players, however, said the impact on buses and airlines will depend on the future rail link’s fare structure.

Presently, those travelling by bus between Singapore and Kuala Lumpur pay as little as $25 per trip for the five—hour ride.

This is in contrast to just 90 minutes on the high—speed rail link to be built by 2020.

Some say they do not mind paying more — for speed and predictability on the rail link.

"It is more secure and more safety. And the timing will be more fixed."

"I’m expecting about S$80 to S$90 per trip, per one—way trip."

The Express Bus Agencies Association says the rail option may have a "tremendous impact" on the industry, and called on operators to be "prepared to re—strategise".

This includes complementing the rail service, by offering services to smaller towns from the stations along the rail line.

Still, it feels bus operators will retain some market share.

Mr Sebastian Yap, who is from the Association’s Terminal Services sub—committee elaborates.

"We have to look at the fare structure, to me the high speed train cannot be cheaper than bus, there’s no way about it. So in terms of the pricing, I think we still have a bit of a competitive edge," he said.

Flights between Singapore and Kuala Lumpur can take up about 40 minutes to an hour, with budget carriers offering cheap fares.

But industry watchers say budget carriers are less likely to see an impact, compared to full—service ones.

Mr Siva Govindasamy, Managing Editor from Flight global Asia, said: "The bigger impact could actually be on the full—service carriers, because passengers — the premium passengers, are the ones who would want to get from point A to point B comfortably.

"So if this high—speed rail system offers a premium proposition for these business people who need to get from Kuala Lumpur to Singapore comfortably and very fast, then I think it’s the full—service carriers who could have a bigger impact, because the leisure passengers are still price—sensitive.

"The budget airlines cater to these leisure passengers, so they might not have an impact, as trends worldwide point that while the high—speed rail system — while efficient, are more expensive and that’s the case here, then it might affect the full service carriers more than the budget carriers."

Mr Logan Velaitham, CEO of AirAsia Singapore, said: "This high—speed rail introduction to be implemented in 2020 is not going to be a big challenge to us because being a low—cost carrier, the biggest competitor for us is cost itself and if we keep our costs low as much as possible.

"Therefore we can compete against any form of alternative travel mode that is coming in. No doubt there will be some market shifting over to this mode of travel given the fact, the convenience they want to have or a stopover along the way which is hard beyond our reach."

When contacted, Tiger Airways said it will "re—strategise accordingly should business conditions change or new opportunities arise."

Singapore’s Transport Ministry said that the Iskandar— Malaysia Joint Ministerial Committee will study details of the system including its alignment.

Separately, Malaysia’s Transport Minister Kong Cho Ha said that based on initial study, the line may have five new stations stopping by Negeri Sembilan, Malacca and Iskandar Johor, before heading to Singapore.

The stops are Seremban (Negeri Sembilan), Ayer Keroh (Melaka), Muar, Batu Pahat and Iskandar Johor (johor).

— CNA/de

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