Ctrip starts selling train tickets, part 2: status update

My last post on CTRP talks about that CTRP starts to sell train tickets. See the following:

Part 1 here.

It was pretty clear that it is directly related to China dismantled its biggest monopoly, as well as its biggest fiefdom, the Ministry of Railroad. See the following:

China dismantle railroad bureacy

It had been 11 days since CTRP started train service. This is just a quick status update.

First, on 3/16/2013, or, only 5 days after it started to sell train tickets, Ctrip stopped the train ticketing service again. See the following:

Shut down

Most Chinese thought that CTRP was being stopped by the old monopoly, the old Ministry of Railroad. But a few days later, Ctrip restart the train ticketing service:

Restarted again

Therefore, it was probably just technical related issues that cause it temporarily stopped the service. But now the service is back on. Note that all tickets requires 20 RMB insurance. It is possible that is how CTRP makes money on the tickets. It might split the insurance with the insurance company.

Since anybody can buy the tickets from the Ministry of Railroad (or whatever name the new company is going to be) directly, a customer will have to pay 20 RMB extra to get it from CTRP. Thus, it is not expected to add much revenue to CTRP in the short term.

But it still could be significant in the future.

Ministry of Railroad is going to be breaking up into two identities, a regulatory entity that is part of Ministry of Transportation and an operating entity, a Chinese railroad monopoly.

But it is possible that the regulatory entity will start to break up the ticket selling function of the monopoly. If it becomes the case, CTRP can really benefit. Especially it is starting to gain experience in working with China railroad company.

This case is a perfect demonstration of that China is anything but a law-based society. In this society, most often the one who is willing to break the rule (and more importantly, one who is smart enough to know which rule to break) will probably come out ahead.

At this point, Chinese government is still trying to break up the old bureaucracy. It is definitely not worry about something so small like ticket selling functions. I am pretty sure CTRP is doing something not strictly legal. But it is also probably not illegal since the old entity no longer exists.

At this point, CTRP is the only company that is doing this. it will be interesting to see if others follow.

Anyway, I will have to keep on following this story. I don't think it will help CTRP much in the short term. But the potential bounty in the future could be tremendous.

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Ctrip starts selling train tickets

I don't think I had ever writen a post about Ctrip (CTRP). This may be my first post regards CTRP.

Yesterday, Ctrip starts selling train tickets.

First, some background information, China's railroad ministry is notorious for horrible (and dangerous) service at high prices. But it is at the top of political hierarchy. It has its own ministry (the same level as transportation ministry). It had powerful politicians.

But two years ago, that politician was removed due to bullet train accident. Now, the ministry is demoted and will subject itself under the ministry of transportation.

See the following article: (China Plans Overhaul of Railway System)

China Plans Overhaul of Railway System

That left a sliver of opening. Today, CTRP started to sell cheap train tickets. See the following article:

A Netease article

or

A Sina article in English

The CTRP train ordering web site:

http://trains.ctrip.com/

This could be a game changer for CTRP. There are a lot more people taking train than airplane or hotel. Many order of magnitude more. In addition, price of high end train tickets (such as bullet train) can be very expensive, more expensive than airplane tickets.

But for now, we still have to wait a little longer to see if this change is for real. Will the government shut down CTRP new train ordering site? or if the CTRP train ordering site is with the blessing of the government?

Only time can tell. But this could be the start of something exciting.

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