Demand Shocks, Airline Pricing,and High-speed Rail Substitution

2019-05-21

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Authors

Feng Wei; Jihui Chen; Lan Zhang


Abstract

We study the high-speed rail (HSR) substitution for air travel through the demand shocks triggered by two events: the launch of Beijing–Shanghai high-speed railways (the ‘Jing-hu’ HSRs) and the Wenzhou train accident. Using a difference-in-difference approach, we find that, compared to those in the control group, mean airfares for routes along the Jing-hu HSRs decline by 30.6 per cent upon the launch, but rebound by 27.6 per cent following the accident. Furthermore, the two events have a larger impact on low-cost carriers and regional airlines, on tourism routes, and on flights that depart during evening hours than their counterparts.


Supported by the 111 Project B16040

URL:https://www.researchgate.net/publication/319433706_Demand_Shocks_Airline_Pricing_and_High-Speed_Rail_Substitution_Evidence_from_the_Chinese_Market