The impacts of high-speed rail expansion on short-haul air passenger transport – Evidence from German domestic and international traffic

Abstract

This study presents an empirical assessment of the influence of (high-speed) long-distance train connections on air travel demand. Specifically, we examine the impact of changes in train travel speed on the number of air passengers within Germany and from Germany to major cities in neighboring countries. Our analysis uses a panel dataset of air passenger numbers on non-stop city-pair routes for the years 2002–2019. We also explore the effects of other variables, including average airfares, night train connections, the presence of low-cost carriers, and the market concentration of airlines (Herfindahl-Hirschman Index). The empirical approach is rooted in a structural gravity model, incorporating recent advancements in gravity modeling. Our results show that improved rail travel speed has a significant impact on the number of airline passengers in a given city pair. Specifically, a 1 % increase in train travel speed corresponds to an overall decrease in air passengers of 0.55 %. This effect is more pronounced for domestic routes, with an average decrease of 0.74 %, as well as for shorter distances and business class passengers. For international connections only, however, the effect is insignificant, but the provision of a night train connection has the potential to shift passenger traffic from air services to train services by between 10 % to over 30 %. Our estimated elasticities can be used to calculate the CO₂ emissions reduction potential for different modal shifts.