High-speed rail may clip wings of budget airlines

Experts see this happening, but the carriers are not sweating yet - for it is 10 years away

A high-speed rail link between Singapore and Malaysia could cause serious damage to budget airlines, experts believe.

With train fares expected to be pegged to what low-cost airlines charge, and maybe lower, the 90-minute train ride should appeal to many.

Singapore-KL round-trip budget airfares typically range from about $80 to less than $200.

To make the rail option even more attractive, Singapore and Malaysia have agreed to co-locate their Customs and Immigration facilities at three places - Singapore, Iskandar Puteri and Kuala Lumpur.

This means commuters will be cleared by the authorities on both sides at the point of departure.

Singapore Management University assistant professor Terence Fan, who specialises in transport, said the extent of the impact will depend on train fares and station locations when the rail link opens in around 10 years' time.

From Bandar Malaysia - the KL stop - it is a 10-minute drive to the city centre, whereas from the airport, it takes about an hour.

While the Singapore-KL flight time is about 50 minutes, passengers need to also account for check-in and security clearance time at both ends.

He said: "If you take all these into account, then the 90-minute train ride is very competitive for travellers who currently take to the air."

Citing similar examples elsewhere, Prof Fan noted that when a high-speed rail system was introduced on the Taipei-Kaohsiung and London-Paris routes, budget carriers were badly affected.

From half-hourly flights throughout the day, the Taipei-Kaohsiung air link is now serviced by only a few flights a week.

Mr Abbas Ismail, course manager for aviation management and services at Temasek Polytechnic, said: "There is little the budget carriers can do fare-wise as fares are already low. They could choose to fly to more convenient locations such as Subang (airport) or redeploy aircraft to higher-yielding routes. Budget carriers would definitely feel a pressure on yields."

The new rail link is expected to carry about 20 million commuters a year.

Official data shows that about 1.2 million Malaysian residents visited Singapore in 2014, excluding citizens arriving by land.

Traffic between both countries through the Causeway and Second Link is estimated at 400,000 crossings both ways daily.

Despite the impending challenge, budget carriers are not sweating yet.

For one thing, the rail link is still at least 10 years away.

A spokesman for Scoot-Tigerair, which operates 21 Singapore-KL flights a week, said the rail connection could in fact create new opportunities. "With greater connectivity between Singapore and Malaysia provided by the new rail link, particularly to areas that are currently not served by flights, it will enable more land-air connections via Singapore for Malaysian travellers to fly to other destinations in our network, as well as for international travellers visiting the rail stops in Malaysia to connect through the Singapore hub."

A spokesman for Jetstar, which operates up to five flights a day to KL, said the airline welcomes the competition "as experience has shown that increased competition grows demand and encourages more people to travel for both business and leisure".

Cross-border bus operators have less to worry about, Mr Abbas said. "Buses will still be popular with the price-sensitive and time-insensitive leisure travellers," he said.

A bus trip takes about five hours with one-way tickets priced between $25 and $50.

A version of this article appeared in the print edition of The Straits Times on July 22, 2016, with the headline 'High-speed rail may clip wings of budget airlines'. Print Edition | Subscribe