High-Speed rail and air transport competition: A game theoretical approach to a potential European case study

Abstract

This study explores competition between High-Speed Rail (HSR) and air transport by analysing two strategically significant Eastern European corridors: Bucharest–Budapest (Northern Balkans) and Bucharest–Athens (Southern Balkans). Using a game-theoretical framework, the research integrates heterogeneous passenger value-of-time segments, modelling strategic fare and frequency decisions under realistic constraints. The total cost function incorporates a modal preference coefficient, reflecting passenger attitudes towards transport modes beyond traditional cost and time factors. Findings reveal that HSR is highly competitive on medium-distance routes like the Northern Balkans corridor due to its efficiency and scalability. Air transport maintains an advantage on longer routes, particularly where travellers value time highly. Increased total demand significantly boosts HSR profitability, while airlines experience declining profits amid intensified competition. Higher-income passengers benefit both modes, though HSR’s profitability relies more on market share than premium pricing. The analysis provides novel, policy-relevant insights, highlighting conditions for viable HSR infrastructure investments and implications for sustainability, regional integration, and resource allocation.