Effect of high-speed rail competition on airlines’ intertemporal price strategies

• Published in: Journal of air transport management Vol. 80; p. 101694
• Main Authors: Su, Min, Luan, Weixin, Sun, Tianyao
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 01.09.2019
• Subjects: Airlines; High speed rail; Intertemporal price; Leisure index; Variation coefficient; Leisure index; Airlines; Intertemporal price; High speed rail; Variation coefficient
• ISSN: 0969-6997; 1873-2089
• DOI: 10.1016/j.jairtraman.2019.101694

In China, serious development of high-speed rail (HSR) is expected to affect airlines' intertemporal price strategies, which are important means for airlines to optimize revenue. We present the impact using a panel dataset of 22 city pairs. We found that HSR competition makes the airlines' intertemporal price curve steeper, meaning that the price strategy for leisure and business travelers has changed. Additionally, the increase in leisure demand increases airlines' average price (especially along HSR competition routes), while the airlines' average price is relatively low on the routes with high business demand. Notably, with HSR competition, a different pricing strategy is presented, wherein airlines’ average price is higher on the routes with higher business demand. •An empirical analysis of the effects of HSR competition on the airlines' intertemporal and average prices in China.•The leisure index is defined and divides travelers into business and leisure.•Leisure index, variation coefficient, average discount, and random effects panel data models are employed.•The results indicate that HSR competition makes an airline's intertemporal price curve steeper.