UBS: Covid-19 could speed up shift from plane to train in EU and China

This article from UBS discusses how COVID-19 may accelerate the shift from plane to train across the EU and China for short- and medium-distance travel.

Covid-19 is showing countries what clean air means, how to cope without travelling, & how clean environments & healthier populations cope better with disease. We expect acceleration in shift from planes to high speed rail in Europe & China.

Clearly, consumers and governments globally are becoming more climate-aware. The Covid-19 outbreak is showing industrialised countries not only what clean air means and how to cope without travelling, but also how a cleaner environment and healthier populations cope better with diseases. Some investments ($300bn-plus) for projects to lower carbon emissions may be diverted to supporting the transport and travel industries, but we do not believe the developed world will abandon its ambition of “net zero” carbon emissions by 2050, nor that consumers will no longer want to optimise the use of their time by taking longer train journeys.

We therefore expect an acceleration in the shift from planes to high-speed rail (HSR) in both Europe and China. In this report, we analyse how governments could pursue the expansion of HSR (>€100bn in EU and >RMB800bn in China), generating incremental demand for new equipment to boost speeds and density. On the flipside, our analysis suggests this could slow global air traffic growth to 4.6% per annum over 2018-28: no growth in intra-European traffic, 6.1% within China, and 2.8% in the US. Such a scenario implies airlines could save up to 3.4m tonnes of CO2 by cutting the fleet in-service by c96 units per annum.

To read the full article, please see here.