Competition in Air Transport: The Case of the High Speed Train

Mar Gonzalez-Savignat

ERES from European Real Estate Society (ERES)

Abstract: This article analyses the potential of the high-speed train to compete on the airline market. The context proposed is hypothetical, given that the high-speed train alternative is not yet available on the route subject to this research. In order to model passenger preferences relative to the characteristics of the alternatives, experimental design techniques are applied, which allow for the design of the market that will be evaluated by current airline passengers. Based upon the information collected, modal choices are analysed, estimating a logit model with both alternatives. Demand modelling allows for the obtaining of the utility that travelers derive from the travel alternatives according to their characteristics, based on which it is possible to predict the substitutability level of the high-speed train in comparison with the plane for different types of journey and travelers. Individual willingness to pay to save travel time under different contexts is also derived. The results obtained confirm that the high-speed train will have an important impact on the airline market, producing a considerable deviation of passengers towards the new railway service. The simulation of different policies related to service variables stresses the fact that this impact will mainly depend on travel time, given that as this time increases, the high-speed train will notably lose market share. This result is verified in the values of time obtained, as individuals derive greater welfare gains from a saving in travelling time that in other associated times. These results provide additional evidence to that which is not very widespread in contexts such as the one analysed in this article.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2001-06-01
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