Welfare implications for air passengers in China in the era of high-speed rail

Article

Yang, Hangjun, Ma, Wenliang, Wang, Qiang, Wang, Kun and Zhang, Yahua. 2020. "Welfare implications for air passengers in China in the era of high-speed rail." Transport Policy. 95, pp. A1-A13. https://doi.org/10.1016/j.tranpol.2020.04.007
Article Title

Welfare implications for air passengers in China in the era of high-speed rail

ERA Journal ID40708
Article CategoryArticle
AuthorsYang, Hangjun (Author), Ma, Wenliang (Author), Wang, Qiang (Author), Wang, Kun (Author) and Zhang, Yahua (Author)
Journal TitleTransport Policy
Journal Citation95, pp. A1-A13
Number of Pages13
Year2020
PublisherElsevier
Place of PublicationUnited Kingdom
ISSN0967-070X
1879-310X
Digital Object Identifier (DOI)https://doi.org/10.1016/j.tranpol.2020.04.007
Web Address (URL)https://www.sciencedirect.com/science/article/pii/S0967070X19309850
Abstract

Despite facing the rapid expansion of high-speed rail (HSR) services, China’s airline industry has experienced substantial growth in the last decade. Using panel data from 2007 to 2016, this paper assesses the welfare changes for both economy- and business-class air passengers in China due to the HSR entry. We found that the demand for air travel is inelastic and that the HSR entry has led to significant welfare changes for air passengers. Specifically, air passengers in the short-distance markets were worse off, largely driven by a dramatic cut in flight frequency. However, over time, their welfare could improve when flight frequencies were restored. In contrast, in the medium- and long-distance markets, air passengers could be better off immediately after the HSR entry, thanks to the lower airfare and insignificant drop in flight frequency. However, a reduction in welfare was observed in the long run, after airlines gradually reduced the flight frequency.

KeywordsAirline competition; high-speed rail; welfare analysis; business class; economy class
ANZSRC Field of Research 2020350901. Air transportation and freight services
380109. Industry economics and industrial organisation
380117. Transport economics
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Byline AffiliationsUniversity of International Business and Economics, China
Capital University of Economics and Business, China
School of Commerce
Institution of OriginUniversity of Southern Queensland
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