Effects of Beijing-Shanghai high-speed rail on air travel: Passenger types, airline groups and tacit collusion. (May 2019)

• Record Type: Journal Article
• Authors: Ma, Wenliang; Wang, Qiang; Yang, Hangjun; Zhang, Anming; Zhang, Yahua
• Is Part Of: Research in transportation economics. Volume 74(2019)
• Page Start: 64
• Page End: 76
• Publication Date: 2019-05
• Subjects: L93 -- L92 -- L13; High-speed rail -- Air transport -- Business class -- Economy class -- Beijing-Shanghai -- Tacit collusion; Transportation -- Periodicals; 388.05
• DOI: 10.1016/j.retrec.2018.12.002
• Languages: English
• ISSNs: 0739-8859

Abstract

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.