Summary：After two years of competing aggressively with the nation’s growing high-speed rail network, Chinese airlines are beginning to adopt a different approach: 'if you can't beat them, join them'.

After two years of competing aggressively with the nation’s growing high-speed rail network, Chinese airlines are beginning to adopt a different approach: 'if you can't beat them, join them'. Mutually beneficial solutions are emerging in the form of air-rail codeshare agreements that could pave the way for foreign airlines to also tap into China's vast interior even with a single gateway. China Eastern Airlines and Hainan Airlines are taking the lead, with the recent agreement between China Eastern and the Shanghai Railway Bureau and between Hainan Airlines and Yuehai Railway.
The moves are changing the relationship between airlines and rail, following a model successfully introduced in the European market. Using rail operations as an alternative to some short-haul feeder services will enable airlines to concentrate on longer routes (including international sectors), which is a key pillar of China’s aviation policy, while also enabling airlines to enhance their feeder traffic rather than losing this market to rail operators altogether. Direct rail links also increase airport (and airline) catchment areas for passengers that can allow them to be more competitive.
The global use of air-rail intermodal agreements has expanded in recent decades, mostly in Europe. These agreements offer a number of potential advantages for airlines, rail operators, intermodal airports and consumers and the arrangements generally enjoy regulatory support. Unlike cooperative agreements and alliances between airlines, which have attracted significant antitrust scrutiny, there has to date been no opposition by competition authorities in examining the competitive effects of intermodal agreements.
Airports, especially intermodal airports, are key to the interface between the two transportation industries. More than 130 airports around the world now have a direct link to a rail network or to a high-speed rail network, with the large number of airports in China currently under construction being developed with suitable inter-model transportation hubs to support this model. These rail links allow passengers to substitute short-haul air services for trains for some segments of their journey, and allow airports to better manage slot capacities when facing congestion, a key concern in many of China’s larger hubs.