The expansion of high-speed rail (HSR) service is often regarded as a potentially effective, lower-carbon substitute for intercity air travel. It is experiencing unprecedented development and growth in China; however, its impact on the air market is yet to be investigated. An ex post analysis of the influence of HSR and low-cost carriers on air pricing and demand is carried out in this study by considering 23 city pairs with different lengths using panel data, of which 14 city pairs face HSR competition and 7 city pairs have low cost airlines operating. Our findings reveals that inter and intra modal competition can induce airlines to reduce fares, and a higher on time rate can lead to higher air fares. We also find that higher HSR frequencies and longer air travel time can result in reduction in air travel demand, whereas low-cost carriers have led to a modest increase in air traffic. These results have significant implications on future transport policy.
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