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Scheduled service versus personal transportation: The role of distance

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  • Bilotkach, Volodymyr
  • Fageda, Xavier
  • Flores-Fillol, Ricardo

Abstract

This paper presents a theoretical and empirical analysis of the relationship between frequency of scheduled transportation services and their substitutability with personal transportation (using distance as a proxy). We study the interaction between a monopoly firm providing a high-speed scheduled service and private transportation (i.e., car). Interestingly, the carrier chooses to increase the frequency of service on longer routes when competing with personal transportation because by providing higher frequency (at extra cost) it can also charge higher fares which can boost its profits. However, in line with the results of earlier studies, frequency decreases for longer flights when driving is not a viable option. An empirical application of our analysis to the European airline industry confirms the predictions of our theoretical model.

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Bibliographic Info

Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 40 (2010)
Issue (Month): 1 (January)
Pages: 60-72

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Handle: RePEc:eee:regeco:v:40:y:2010:i:1:p:60-72

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Keywords: Short-haul routes Long-haul routes Flight frequency Distance;

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References

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Citations

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Cited by:
  1. Fageda, Xavier, 1975- & Flores-Fillol, Ricardo, 2010. "Technology, business models and network structure in the airline industry," Working Papers 2072/151552, Universitat Rovira i Virgili, Department of Economics.
  2. De Borger, Bruno & Fosgerau, Mogens, 2012. "Information provision by regulated public transport companies," Transportation Research Part B: Methodological, Elsevier, vol. 46(4), pages 492-510.
  3. Volodymyr Bilotkach & Kai Hüschelrath, 2013. "Airline Alliances, Antitrust Immunity, and Market Foreclosure," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1368-1385, October.
  4. Fageda, Xavier & Flores-Fillol, Ricardo, 2011. "Air services on thin routes: Regional versus low-cost airlines," Working Papers 2072/179624, Universitat Rovira i Virgili, Department of Economics.
  5. Bilotkach, Volodymyr & Fageda, Xavier, 1975- & Flores-Fillol, Ricardo, 2012. "Airline Consolidation and the Distribution of Traffic between Primary and Secondary Hubs," Working Papers 2072/211632, Universitat Rovira i Virgili, Department of Economics.
  6. Ofelia Betancor & Juan Luis Jiménez, 2011. "When trains go faster than planes: the strategic reaction of airlines in Spain," ERSA conference papers ersa11p295, European Regional Science Association.
  7. Fageda, Xavier & Flores-Fillol, Ricardo, 2012. "Air services on thin routes: Regional versus low-cost airlines," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 702-714.
  8. Socorro, M. Pilar & Viecens, M. Fernanda, 2013. "The effects of airline and high speed train integration," Transportation Research Part A: Policy and Practice, Elsevier, vol. 49(C), pages 160-177.
  9. Xavier Fageda & Ricardo Flores-Fillol, 2011. "Air services on thin routes: Regional versus low-cost airlines," IREA Working Papers 201123, University of Barcelona, Research Institute of Applied Economics, revised Oct 2011.
  10. Fageda, Xavier, 1975- & Flores-Fillol, Ricardo, 2012. "Airport Congestion and Airline Network Structure," Working Papers 2072/211753, Universitat Rovira i Virgili, Department of Economics.
  11. Volodymyr Bilotkach, 2011. "Multimarket Contact and Intensity of Competition: Evidence from an Airline Merger," Review of Industrial Organization, Springer, vol. 38(1), pages 95-115, January.
  12. Jan K. Brueckner & Dan Luo, 2013. "Measuring Strategic Firm Interaction in Product-Quality Choices: The Case of Airline Flight Frequency," CESifo Working Paper Series 4066, CESifo Group Munich.
  13. Antonio Manresa & Ferran Sancho, 2012. "Leontief versus Ghosh: two faces of the same coin," Working Papers XREAP2012-18, Xarxa de Referència en Economia Aplicada (XREAP), revised Oct 2012.

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