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Effects of Beijing-Shanghai high-speed rail on air travel: Passenger types, airline groups and tacit collusion

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  • Ma, Wenliang
  • Wang, Qiang
  • Yang, Hangjun
  • Zhang, Anming
  • Zhang, Yahua

Abstract

This paper analyzes the effects of the busiest and most profitable high-speed rail (HSR) line in China — the Beijing-Shanghai HSR — on the aviation markets paralleling this HSR line. In general, we find that both airfare and air travel demand decreased significantly after the entry of the Beijing-Shanghai HSR. In particular, economy-class airfares dropped more than business-class fares did, while the decline in the demand for business-class travel was larger than it was for economy-class travel. The frequency of and the number of seats on the HSR line were significantly and negatively associated with air travel demand, especially with demand for business-class travel. Our results show that the entry of the HSR line led to airfare convergence on the Beijing-Shanghai airline route, which might indicate the existence of tacit collusion among the operating carriers. Governments, airlines and airport authorities need to work together to improve the on-time performance of this profitable route which is currently plagued with frequent flight delays.

Suggested Citation

  • Ma, Wenliang & Wang, Qiang & Yang, Hangjun & Zhang, Anming & Zhang, Yahua, 2019. "Effects of Beijing-Shanghai high-speed rail on air travel: Passenger types, airline groups and tacit collusion," Research in Transportation Economics, Elsevier, vol. 74(C), pages 64-76.
    • Handle: RePEc:eee:retrec:v:74:y:2019:i:c:p:64-76
    DOI: 10.1016/j.retrec.2018.12.002
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    5. Asep Yayat Nurhidayat & Hera Widyastuti & Sutikno & Dwi Phalita Upahita, 2023. "Research on Passengers’ Preferences and Impact of High-Speed Rail on Air Transport Demand," Sustainability, MDPI, vol. 15(4), pages 1-26, February.
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    12. Wang, Jiaoe & Huang, Jie & Jing, Yue, 2020. "Competition between high-speed trains and air travel in China: From a spatial to spatiotemporal perspective," Transportation Research Part A: Policy and Practice, Elsevier, vol. 133(C), pages 62-78.
    13. Mizutani, Jun & Sakai, Hiroki, 2021. "Which is a stronger competitor, High Speed Rail, or Low Cost Carrier, to Full Service Carrier? – Effects of HSR network extension and LCC entry on FSC's airfare in Japan," Journal of Air Transport Management, Elsevier, vol. 90(C).
    14. Zhang, Anming & Wan, Yulai & Yang, Hangjun, 2019. "Impacts of high-speed rail on airlines, airports and regional economies: A survey of recent research," Transport Policy, Elsevier, vol. 81(C), pages 1-19.
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    20. Gu, Hongyi & Wan, Yulai, 2020. "Can entry of high-speed rail increase air traffic? Price competition, travel time difference and catchment expansion," Transport Policy, Elsevier, vol. 97(C), pages 55-72.
    21. Jiang, Changmin & Wang, Kun & Wang, Qiang & Yang, Hangjun, 2022. "The Impact of High-Speed Rail Competition on Airline On-Time Performance," Transportation Research Part B: Methodological, Elsevier, vol. 161(C), pages 109-127.
    22. Panrawee Rungskunroch & Yuwen Yang & Sakdirat Kaewunruen, 2020. "Does High-Speed Rail Influence Urban Dynamics and Land Pricing?," Sustainability, MDPI, vol. 12(7), pages 1-18, April.
    23. Jiang, Changmin, 2021. "Aviation tax and railway subsidy: An integrated policy," Transportation Research Part B: Methodological, Elsevier, vol. 146(C), pages 1-13.
    24. Chen, Zhe & Jiang, Hai, 2020. "Impacts of high-speed rail on domestic air cargo traffic in China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 142(C), pages 1-13.
    25. Mizutani, Jun & Sakai, Hiroki, 2023. "The effects of frequent flyer programs in the competition with high speed rail: A case study of air passenger preference in Japan," Journal of Air Transport Management, Elsevier, vol. 106(C).

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    More about this item

    Keywords

    High-speed rail; Air transport; Business class; Economy class; Beijing-Shanghai; Tacit collusion;
    All these keywords.

    JEL classification:

    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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