IDEAS home Printed from https://ideas.repec.org/a/eee/transb/v161y2022icp109-127.html
   My bibliography  Save this article

The Impact of High-Speed Rail Competition on Airline On-Time Performance

Author

Listed:
  • Jiang, Changmin
  • Wang, Kun
  • Wang, Qiang
  • Yang, Hangjun

Abstract

The rapid development of high-speed rail (HSR) has posed substantial competition to air transport. In this paper, we build an analytical model to investigate the impacts of HSR competition on profit-maximizing and welfare-maximizing levels of on-time performance (OTP) improvement efforts by the aviation sector (both airports and airlines), as well as the corresponding realized airline OTP levels. It is found that different from airline competition, HSR competition would decrease welfare-maximizing effort levels by both airports and airlines. The profit-maximizing airport and total effort level would also be discouraged. However, the profit-maximizing airline effort level can be raised when both total effort level by the aviation sector and inter-modal air-HSR service substitutability are sufficiently high (i.e., sufficiently low air-HSR horizontal and vertical differentiation). The airline OTP is determined by airports and airlines’ joined efforts to improve OTP and also the air traffic (“effort effect” vs. “traffic effect”). The impact of HSR competition on realized airline OTP depends on the relative dominance of either effect, which does not have clear-cut conditions. Thus it is possible but not necessarily true that the airline would end up with a better OTP in the presence of HSR competition. As a result, when intervening in airline OTP, the regulator needs to differentiate OTP requirements on a route basis, considering the presence of HSR competition and the air-HSR service substitutability.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:transb:v:161:y:2022:i:c:p:109-127
    DOI: 10.1016/j.trb.2022.05.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0191261522000753
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.trb.2022.05.004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Brueckner, Jan K. & Van Dender, Kurt, 2008. "Atomistic congestion tolls at concentrated airports? Seeking a unified view in the internalization debate," Journal of Urban Economics, Elsevier, vol. 64(2), pages 288-295, September.
    2. Wan, Yulai & Ha, Hun-Koo & Yoshida, Yuichiro & Zhang, Anming, 2016. "Airlines’ reaction to high-speed rail entries: Empirical study of the Northeast Asian market," Transportation Research Part A: Policy and Practice, Elsevier, vol. 94(C), pages 532-557.
    3. Zhang, Anming & Czerny, Achim I., 2012. "Airports and airlines economics and policy: An interpretive review of recent research," Economics of Transportation, Elsevier, vol. 1(1), pages 15-34.
    4. Brander, James A. & Zhang, Anming, 1993. "Dynamic oligopoly behaviour in the airline industry," International Journal of Industrial Organization, Elsevier, vol. 11(3), pages 407-435, September.
    5. Jiang, Changmin & Zhang, Anming, 2014. "Effects of high-speed rail and airline cooperation under hub airport capacity constraint," Transportation Research Part B: Methodological, Elsevier, vol. 60(C), pages 33-49.
    6. Basso, Leonardo J. & Zhang, Anming, 2008. "On the relationship between airport pricing models," Transportation Research Part B: Methodological, Elsevier, vol. 42(9), pages 725-735, November.
    7. D’Alfonso, Tiziana & Jiang, Changmin & Bracaglia, Valentina, 2016. "Air transport and high-speed rail competition: Environmental implications and mitigation strategies," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 261-276.
    8. Yang, Hangjun & Zhang, Anming, 2012. "Effects of high-speed rail and air transport competition on prices, profits and welfare," Transportation Research Part B: Methodological, Elsevier, vol. 46(10), pages 1322-1333.
    9. Tiziana D'Alfonso & Changmin Jiang & Yulai Wan, 2013. "Airport Pricing, Concession Revenues and Passenger Types," Journal of Transport Economics and Policy, University of Bath, vol. 47(1), pages 71-89, January.
    10. Gayle, Philip G. & Yimga, Jules O., 2018. "How much do consumers really value air travel on-time performance, and to what extent are airlines motivated to improve their on-time performance?," Economics of Transportation, Elsevier, vol. 14(C), pages 31-41.
    11. Yang, Hangjun & Ma, Wenliang & Wang, Qiang & Wang, Kun & Zhang, Yahua, 2020. "Welfare implications for air passengers in China in the era of high-speed rail," Transport Policy, Elsevier, vol. 95(C), pages 1-13.
    12. Jiang, Changmin & Zhang, Anming, 2015. "Airport congestion pricing and terminal investment: Effects of terminal congestion, passenger types, and concessionsAuthor-Name: Wan, Yulai," Transportation Research Part B: Methodological, Elsevier, vol. 82(C), pages 91-113.
    13. Xiaowen Fu & Anming Zhang, 2010. "Effects of Airport Concession Revenue Sharing on Airline Competition and Social Welfare," Journal of Transport Economics and Policy, University of Bath, vol. 44(2), pages 119-138, May.
    14. Santos, Georgina & Robin, Maël, 2010. "Determinants of delays at European airports," Transportation Research Part B: Methodological, Elsevier, vol. 44(3), pages 392-403, March.
    15. Wang, Chunan & Jiang, Changmin & Zhang, Anming, 2021. "Effects of Airline Entry on High-Speed Rail," Transportation Research Part B: Methodological, Elsevier, vol. 154(C), pages 242-265.
    16. Xia, Wenyi & Jiang, Changmin & Wang, Kun & Zhang, Anming, 2019. "Air-rail revenue sharing in a multi-airport system: Effects on traffic and social welfare," Transportation Research Part B: Methodological, Elsevier, vol. 121(C), pages 304-319.
    17. Jiang, Changmin & Wang, Chunan, 2021. "High-speed rail pricing: Implications for social welfare," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 155(C).
    18. Zhang, Fangni & Graham, Daniel J. & Wong, Mark Siu Chun, 2018. "Quantifying the substitutability and complementarity between high-speed rail and air transport," Transportation Research Part A: Policy and Practice, Elsevier, vol. 118(C), pages 191-215.
    19. Albalate, Daniel & Bel, Germà & Fageda, Xavier, 2015. "Competition and cooperation between high-speed rail and air transportation services in Europe," Journal of Transport Geography, Elsevier, vol. 42(C), pages 166-174.
    20. James A. Brander & Anming Zhang, 1990. "Market Conduct in the Airline Industry: An Empirical Investigation," RAND Journal of Economics, The RAND Corporation, vol. 21(4), pages 567-583, Winter.
    21. Zhu, Feng & Wu, Xu & Cao, Chengxuan, 2021. "High-speed rail and air transport competition under high flight delay conditions in China: A case study of the Beijing-Shanghai corridor," Utilities Policy, Elsevier, vol. 71(C).
    22. Wenyi Xia & Kun Wang & Anming Zhang, 2018. "Air Transport and High-speed Rail Interactions in China: Review on Impacts of Low-cost Carriers, Rail Speed, and Modal Integration," Advances in Airline Economics, in: Airline Economics in Asia, volume 7, pages 103-122, Emerald Group Publishing Limited.
    23. Wauthy, Xavier, 1996. "Quality Choice in Models of Vertical Differentiation," Journal of Industrial Economics, Wiley Blackwell, vol. 44(3), pages 345-353, September.
    24. Tan, Xinlong & Jia, Rongwen & Yan, Jia & Wang, Kun & Bian, Lei, 2021. "An Exploratory analysis of flight delay propagation in China," Journal of Air Transport Management, Elsevier, vol. 92(C).
    25. Li, Xiaoyu & Jiang, Changmin & Wang, Kun & Ma, Jun, 2018. "Determinants of partnership levels in air-rail cooperation," Journal of Air Transport Management, Elsevier, vol. 71(C), pages 88-96.
    26. Xia, Wenyi & Zhang, Anming, 2016. "High-speed rail and air transport competition and cooperation: A vertical differentiation approach," Transportation Research Part B: Methodological, Elsevier, vol. 94(C), pages 456-481.
    27. Hanming Fang & Long Wang & Yang Yang, 2020. "Competition and Quality: Evidence from High-Speed Railways and Airlines," NBER Working Papers 27475, National Bureau of Economic Research, Inc.
    28. Castillo-Manzano, José I. & Pozo-Barajas, Rafael & Trapero, Juan R., 2015. "Measuring the substitution effects between High Speed Rail and air transport in Spain," Journal of Transport Geography, Elsevier, vol. 43(C), pages 59-65.
    29. Cai, Dong-ling & Xiao, Yi-bin & Jiang, Changmin, 2021. "Competition between high-speed rail and airlines: Considering both passenger and cargo," Transport Policy, Elsevier, vol. 110(C), pages 379-393.
    30. Zhang, Rui & Johnson, Daniel & Zhao, Weiming & Nash, Chris, 2019. "Competition of airline and high-speed rail in terms of price and frequency: Empirical study from China," Transport Policy, Elsevier, vol. 78(C), pages 8-18.
    31. Jiang, Changmin & Zhang, Anming, 2016. "Airline network choice and market coverage under high-speed rail competition," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 248-260.
    32. Fu, Xiaowen & Lei, Zheng & Liu, Shaoxuan & Wang, Kun & Yan, Jia, 2020. "On-time performance policy in the Chinese aviation market - An innovation or disruption?," Transport Policy, Elsevier, vol. 95(C), pages 14-23.
    33. Wang, Kun & Xia, Wenyi & Zhang, Anming & Zhang, Qiong, 2018. "Effects of train speed on airline demand and price: Theory and empirical evidence from a natural experiment," Transportation Research Part B: Methodological, Elsevier, vol. 114(C), pages 99-130.
    34. Emile Quinet & Roger Vickerman, 2004. "Principles of Transport Economics," Books, Edward Elgar Publishing, number 2581.
    35. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
    36. 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.
    37. Fu, Xiaowen & Homsombat, Winai & Oum, Tae H., 2011. "Airport–airline vertical relationships, their effects and regulatory policy implications," Journal of Air Transport Management, Elsevier, vol. 17(6), pages 347-353.
    38. Jiang, Changmin & D'Alfonso, Tiziana & Wan, Yulai, 2017. "Air-rail cooperation: Partnership level, market structure and welfare implications," Transportation Research Part B: Methodological, Elsevier, vol. 104(C), pages 461-482.
    39. Li, Hongchang & Strauss, Jack & Lu, Liu, 2019. "The impact of high-speed rail on civil aviation in China," Transport Policy, Elsevier, vol. 74(C), pages 187-200.
    40. A. Michael Spence, 1975. "Monopoly, Quality, and Regulation," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 417-429, Autumn.
    41. D’Alfonso, Tiziana & Jiang, Changmin & Bracaglia, Valentina, 2015. "Would competition between air transport and high-speed rail benefit environment and social welfare?," Transportation Research Part B: Methodological, Elsevier, vol. 74(C), pages 118-137.
    42. Behrens, Christiaan & Pels, Eric, 2012. "Intermodal competition in the London–Paris passenger market: High-Speed Rail and air transport," Journal of Urban Economics, Elsevier, vol. 71(3), pages 278-288.
    43. Park, Yonghwa & Ha, Hun-Koo, 2006. "Analysis of the impact of high-speed railroad service on air transport demand," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 42(2), pages 95-104, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rategh, Yalda & Tamannaei, Mohammad & Zarei, Hamid, 2022. "A game-theoretic approach to an oligopolistic transportation market: Coopetition between incumbent systems subject to the entrance threat of an HSR service," Transportation Research Part A: Policy and Practice, Elsevier, vol. 165(C), pages 144-171.
    2. Lee, Kangoh, 2023. "Airline operational disruptions and loss-reduction investment," Transportation Research Part B: Methodological, Elsevier, vol. 177(C).
    3. Zhao, Congyu & Jia, Rongwen & Dong, Kangyin, 2023. "How does smart transportation technology promote green total factor productivity? The case of China," Research in Transportation Economics, Elsevier, vol. 101(C).
    4. Wang, Luojia & Du, Kerui & Shao, Shuai, 2024. "Transportation infrastructure and carbon emissions: New evidence with spatial spillover and endogeneity," Energy, Elsevier, vol. 297(C).
    5. Yang, Binxin & Wu, Guangdong, 2023. "Multi-criteria analysis of cross-regional railways interconnection under the post COVID-19 pandemic crisis: A hybrid BWM-FAISM-DFS evaluation framework," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 179(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Zhu, Feng & Wu, Xu & Cao, Chengxuan, 2021. "High-speed rail and air transport competition under high flight delay conditions in China: A case study of the Beijing-Shanghai corridor," Utilities Policy, Elsevier, vol. 71(C).
    3. Wang, Wei & Sun, Huijun & Wu, Jianjun, 2020. "How does the decision of high-speed rail operator affect social welfare? Considering competition between high-speed rail and air transport," Transport Policy, Elsevier, vol. 88(C), pages 1-15.
    4. Jiang, Mei & Jiang, Changmin & Xiao, Yi-bin & Wang, Chunan, 2021. "Air-HSR cooperation: Impacts on service frequency and environment," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 150(C).
    5. Li, Zhi-Chun & Tu, Ningwen & Fu, Xiaowen & Sheng, Dian, 2022. "Modeling the effects of airline and high-speed rail cooperation on multi-airport systems: The implications on congestion, competition and social welfare," Transportation Research Part B: Methodological, Elsevier, vol. 155(C), pages 448-478.
    6. Xia, Wenyi & Jiang, Changmin & Wang, Kun & Zhang, Anming, 2019. "Air-rail revenue sharing in a multi-airport system: Effects on traffic and social welfare," Transportation Research Part B: Methodological, Elsevier, vol. 121(C), pages 304-319.
    7. Su, Min & Luan, Weixin & Fu, Xiaowen & Yang, Zaili & Zhang, Rui, 2020. "The competition effects of low-cost carriers and high-speed rail on the Chinese aviation market," Transport Policy, Elsevier, vol. 95(C), pages 37-46.
    8. Jiang, Changmin & Wang, Chunan, 2021. "High-speed rail pricing: Implications for social welfare," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 155(C).
    9. 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.
    10. Jiang, Changmin & D'Alfonso, Tiziana & Wan, Yulai, 2017. "Air-rail cooperation: Partnership level, market structure and welfare implications," Transportation Research Part B: Methodological, Elsevier, vol. 104(C), pages 461-482.
    11. Wang, Chunan & Jiang, Changmin & Zhang, Anming, 2021. "Effects of Airline Entry on High-Speed Rail," Transportation Research Part B: Methodological, Elsevier, vol. 154(C), pages 242-265.
    12. Avenali, Alessandro & Bracaglia, Valentina & D'Alfonso, Tiziana & Reverberi, Pierfrancesco, 2018. "Strategic formation and welfare effects of airline-high speed rail agreements," Transportation Research Part B: Methodological, Elsevier, vol. 117(PA), pages 393-411.
    13. Gu, Hongyi & Wan, Yulai, 2022. "Airline reactions to high-speed rail entry: Rail quality and market structure," Transportation Research Part A: Policy and Practice, Elsevier, vol. 165(C), pages 511-532.
    14. Wang, Yixiao & Sun, Luoyi & Teunter, Ruud H. & Wu, Jianhong & Hua, Guowei, 2020. "Effects of introducing low-cost high-speed rail on air-rail competition: Modelling and numerical analysis for Paris-Marseille," Transport Policy, Elsevier, vol. 99(C), pages 145-162.
    15. Wang, Chunan & Jiang, Changmin, 2022. "How do pandemics affect intercity air travel? Implications for traffic and environment," Transportation Research Part A: Policy and Practice, Elsevier, vol. 166(C), pages 330-353.
    16. Wang, Yixiao & Pels, Eric & Teunter, Ruud H. & Sun, Luoyi & Wu, Jianhong, 2023. "Railway liberalization, airport congestion toll, and infrastructure pricing: Modelling and numerical analysis for European and Chinese markets," Transportation Research Part A: Policy and Practice, Elsevier, vol. 170(C).
    17. Wang, Kun & Xia, Wenyi & Zhang, Anming & Zhang, Qiong, 2018. "Effects of train speed on airline demand and price: Theory and empirical evidence from a natural experiment," Transportation Research Part B: Methodological, Elsevier, vol. 114(C), pages 99-130.
    18. Xia, Wenyi & Zhang, Anming, 2016. "High-speed rail and air transport competition and cooperation: A vertical differentiation approach," Transportation Research Part B: Methodological, Elsevier, vol. 94(C), pages 456-481.
    19. Hou, Meng & Wang, Kun & Yang, Hangjun, 2021. "Hub airport slot Re-allocation and subsidy policy to speed up air traffic recovery amid COVID-19 pandemic --- case on the Chinese airline market," Journal of Air Transport Management, Elsevier, vol. 93(C).
    20. Jiang, Changmin, 2021. "Aviation tax and railway subsidy: An integrated policy," Transportation Research Part B: Methodological, Elsevier, vol. 146(C), pages 1-13.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transb:v:161:y:2022:i:c:p:109-127. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/548/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.