Social Efficiency Measurement and Comparison of Airlines and Railway Companies in Japan’s Domestic Intercity Travel Market

Recent public awareness of the environmental impact of CO2 emissions provides a new perspective on the discussion of modal choice between aviation and railways. This argument is becoming especially intense in Japan and Western European countries. However, this question does not have a clear-cut answer, and its answer is rather ambiguous when one compares the life cycle CO2 emissions of these two transport modes; while the railway causes lower environmental damage relative to air transport and other modes of transport in terms of marginal CO2 emissions for its transport service operations, railway transport incurs a substantial amount of CO2 emission in the stage of infrastructure construction. It is thus important not only to take into account the CO2 emission caused by transport service operations but also to include the CO2 emission from infrastructure construction in social efficiency analysis and benchmarking. In other words, social efficiency measurement that takes into account life cycle CO2 emissions should form a fundamental basis for discussing the mode choice argument. Another important issue when considering socially efficient choices of passenger transport modes is the value of time spent by travellers using alternative modes since time is an input for passengers to use transport services.