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NEWS UPDATES Asean Affairs        7 January 2011

Lao travel operators wary of China rail link

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Lao bus and airline operators have expressed concerns about competition from a planned Laos-China high-speed rail link, state media reports said Thursday.

The US$7 billion joint venture agreed by the two governments last year is to connect the capital Vientiane to Luang Namtha on the border with China, running 421 kilometers through several provinces.

While the high-speed railway is expected to bolster tourism and trade when it goes into operation in 2015, local bus and air travel operators are wary, Lao media reported.

Chitprasong Transportation Company, Laos' largest bus service, expects the railway to cut into its business in the north of the country, the company's director Chitprasong Nhotninhom said.

"But if fares are higher than for buses, people will continue to use buses," Chitprasong said.

It was too early to tell what the impact of the rail link on state-run Lao Airlines might be, deputy director general Sengpaseuth Mathouchan said.

"Fares are a major factor in most passengers' considerations and ticket prices for the planned railway are yet to be announced," he said.

Lao Airlines last month purchased its fourth ATR 72 plane, with a capacity of 78 passengers, to meet the growing demand for domestic flights.

China holds 70 percent of the rail joint venture, with work expected to begin in April. Lao partners hold the remaining shares.

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