Competition in Air Transport

Abstract

This article analyses the potential of the high speed train to compete with the airline market. The context proposed is hypothetical, given that the high speed train alternative is not yet available on the route subject to 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 us to predict the substitutability level of the high speed train in comparison with the plane for different types of journey and traveller. The results obtained confirm that the high speed train will have an important impact on the airline market, with 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 lose market share.

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