THE COMPETITION BETWEEN AVIATION AND HIGH-SPEED

RAILWAY

Li Chaonan

School of Economics and Management, Beijing Jiaotong University, Haidian, Beijing, China

Keywords: Aviation, High-speed Railway, Competition, Share Rate.

Abstract: In this article, we mainly want to analyze the competition between high-speed railway and aviation in

China, and study whether the opening of high-speed railway will have tremendous impact on the airlines.

Firstly, we analyze the development and trends of both the high-speed railway and aviation in China.

Secondly, we compare the advantages of these two travel tools. Thirdly, we take the examples in and

outside China that high-speed railway affects the operation of airlines. And then we use the Share Rate

Model to analyze the share rate of these two transportations in different mileages and reach the results.

When the mileage is below 900 km, the high-speed railway occupys more percents of passengers than the

aviation. With the increase of mileage, the share rates of these two ways are getting closer to each other.

And at the 900 km, each way occupys 50% of passengers.

1 INTRODUCTION

In China, from 2003 till now, especially in the latest

three years, the development of high-speed railway

is surprising. China uses no more than ten years to

catch up with and finally surpass the construction of

high-speed railway in all the western countries.

The rapid development of high-speed railway

does improve passengers’ travel status, but at the

same time, it results in strong impact on other modes

of transport, especially on aviation. In this article,

we’d like to analyze the competition between these

two modes and use Share Rate Model to do some

quantitative analysis.

2 THE DEVELOPMENT

AND TRENDS OF AVIATION

AND HIGH-SPEED RAILWAY

2.1 The Aviation

2.1.1 The Development

Since 1978, in which China began to carry out the

policy of reform and opening up, the total turnover

and transport passengers of Chinese aviation each

has an increase of about 20%. From January to

September in 2010, the passengers turnover got an

increase of 17.8% compared with the same period in

2009. And It is estimated that the whole 2010, the

transport of passengers can be as many as 0.266

billion, and ranks second all over the world.

Now there are 176 airports, 1610 transport

aircrafts and 1000 general aircrafts in China, and the

airlines can be as much as 300, with a total mileage

of 500 thousand kilometres, which cover 91% of the

economic area.

2.1.2 The Trends

Firstly, as for 2030, China will own a well-known

air company and its overall strength can rank into

the top 5 all over the world. Secondly, China will

accomplish the build of 3 international airports and

10 national hub airports. The quantity and location

of airports can meet the air transport demand of 95%

population.

2.2 High-speed Railway

2.2.1 The Development

In China, the High-speed Railway refers to the

railway system whose top speed is 200 km/h above

and travel speed is 160 km/h above.

At present, China has open several high-speed

railways, such as Beijing-Tianjin Railway

(01/08/2008), Shijiazhuang-Taiyuan Railway

259

Chaonan L..

THE COMPETITION BETWEEN AVIATION AND HIGH-SPEED RAILWAY.

DOI: 10.5220/0003555702590262

In Proceedings of the 13th International Conference on Enterprise Information Systems (ICEIS-2011), pages 259-262

ISBN: 978-989-8425-54-6

 2011 SCITEPRESS (Science and Technology Publications, Lda.)

(01/04/20009), Wuhan-Guangzhou Railway

(26/12/2009), Zhenzhou-Xi’an Railway

(28/01/2010), and Shanghai-Hangzhou Railway

(26/10/2010). And in June of 2011, the longest high-

speed railway——Beijing-Shanghai Railway will be

completed and put into operation.

Now in China, the whole mileage of high-speed

railways which have been put into operation can

reach as long as 7500 km, in which the newly-built

ones are about 4500 km, and the promoted railways

of old ones are almost 3000 km with travel speed of

200-250 km/h. With no doubt, the railway mileage

of our country has ranked No.1 in the world.

2.2.2 The Trends

According to the 《 Long-term Railway Network

Plan (2008 revision)》, as for 2020,the total mileage

of China’s railways may reach 120000 km or above,

and Double-track rate and power rate reach 50% and

60%. Basically speaking, it will build a rational

layout, clear structure, perfect function, smooth

convergence of the railway network. And the

transportation capacity can meet the needs of

national economic and social development. In

addition, its main technical equipment will reach or

approach the international advanced level.

3 THE COMPETITION

BETWEEN AVIATION

AND HIGH-SPEED RAILWAY

3.1 The Comparison of Advantages of

Aviation and High-speed Railway

3.1.1 The High-speed Railway

(1) The high-speed railway network is planned

perfectly.

According to the 《 Long-term Railway Network

Plan (2008 revision), in the coming few decades,

there will be several railways beginning to be built,

and after they are put into use, they can cover three

most economically developed areas in China: Bohai

area, Yangzi River area, Zhujiang area. And these

areas are also the most important regions for the

aviation, so the two travel tools may have intense

competition.

(2) The capacity of transportation is strong and the

transport frequency is high.

The aviation is always faced with high-end

customers, including the businessmen and travellers.

And the transport capacity of each aircraft is limited.

An aircraft can convey about 200 to 600 passengers,

no more than 800.In addition, the airline is fixed and

an aircraft can not stop at more than 2 stations.

On the contrary, the high-speed railway is faced

with the ordinary passengers and the train can add its

car if necessary. At the same time, the train will stop

at several deports in the line. So a train can transport

about 1500 to 5000 passengers.

(3) The train is pretty safe and its operation is

regular.

The high-speed railway operates in the closed

environment with automation, and it has a series of

safe-protection system to ensure the safety of

passengers. So the operation safety of train is the top

one among so many travel tools.

In addition, the operation of high-speed railway

is not so easy to be effected by bad weather, even in

the strong wind.

(4) The train is environmently friendly and the profit

is considerable.

The power energy of high-speed railway is

electricity, not oil and other liquid fuels, so it is very

environmentally friendly. But the aircraft need to

consume fuels.

At the same time, if the high-speed railway is

perfectly planned, the economic benefit will be high.

The Tokaido Shinkansen in Japan with draw all the

build money after put into operation about 7 days.

3.1.2 The Aviation

(1) The advantages in the long-distance airline

In the long-distance airlines, the aviation has more

advantages than the high-speed railway, especially

in the mileage of 1500 km. Because with the

increase of mileage, the aviation can be more

efficient.

(2) Pricing advantage

The aviation makes the price of air ticket according

to the relationship of supply and demand, and it can

use such as bundled pricing to make diversity of

different passengers to attract their interests and

ensure its own profits.

But the price of train ticket is almost fixed, and

the pricing methods are limited.

(3) Cost advantage

The building cost of high-speed railway is much

higher than the aviation, at the same time, the high

cost means high risk. For example, the cost per

kilometer of Beijing-Shanghai railway is about

0.167 billion, and the price of it may be 600 to 800

yuan. But the air ticket price between these two

cities can be as low as 400 yuan.

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(4) The advantage in international airline

The aviation can run the international airlines and

transport international passengers, but the high-

speed railway could not carry out the international

business because our country haven’t built railways

with other neighbour countries.

3.2 The Experience of Competition

between High-speed Railway and

the Aviation

3.2.1 Experience in Other Countries

(1) Japan

Since 1964, Japan gradually open several new

railway routes, which makes the airline from Tokyo

to Osaka and Nagoya stopped and two years later the

route from Tokyo to Sendai also closed.

Japanese Airlines was founded in August 1951.

In January 19

, 2010, it submitted the bankruptcy

protection to the court, which was the biggest

bankruptcy in Japan. The reasons for it are sundry,

but the most important one is the strong impact from

Shinkansen.

Japanese Airlines bankruptcy is a typical

example that high-speed railway defeats the aviation

in history.

(2) France

In 1983, The French high-speed rail (TGV) opened

the fast lane from Paris to Lyon, which almost get

the France Flights to a corner and forced it to give

up the air routes in this area.

Generally speaking, in the market of 2 hours

travel time, TGV accounts for 90% to 95% share. In

the market of 3 hours, TGV occupys 60% share, and

in the 4 hours market, TGV accounts for 38% share.

3.2.2 Domestic Experience

(1) Shijiazhuang-Taiyuan high-speed railway

In April 1

, 2008, Shijiazhuang-Taiyuan high-speed

railway opened and everyday there are 8 trains from

Taiyuan to Beijing. The opening of high-speed

railway had a really obvious effect on the airlines

from Taiyuan to Beijing.

Before the opening of high-speed rail, there were

more than 20 flights from Taiyuan to Beijing, and

the average load factor can reach about 70%.But

from April to June, several flights from Taiyuan to

Beijing is closed and only reserved flights in the

day. At the same time, the load factor decreased to

less than 50%.

(2) Taipei railway

In 2007, the high-speed railway from Taipei-

Kaohsiung was open and daily delivery of

passengers was up to 30 million, which made the

current Taipei to Kaohsiung and Tainan air traffic

decreased by 50% or more.

3.3 The Model to Compare the

Substitutes between High-speed

Railway and Aviation

3.3.1 Modeling

We use the Share Rate Model to compare the

substitutes between high-speed railway and aviation

with mathematics method.

(1) First step:

∑

)(

(1)

P : the probability of transport way

n : the number of transport ways.

u : the utility function of passenger to choose

transport way

i .

(2) Second step:

(efficient, economy, comfort, safety, habits,

the time value of passengers)

Efficient means the total time a travel tool needs

to convey passengers to the destination.

Economy means the cost of a travel tool.

Comfort means the environment of a travel tool

and service attitude quality.

Safety means the extent a travel tool can meet

the safety demand of passengers.

Habits mean the the passengers’ preference of

travel tools.

The time value of passenger means the

opportunity cost of choosing a travel tool.

(3)Third step:

Based on the second step, we propose the model

below:

iii

PWt

cCbBaA

×+××+

βα

)(

(2)

u : utility function;

A : efficient;

B : safety;

C : safety;

mileage;

V : travel speed;

t : the waiting time of

transport way

;

:the time value of passenger;

P :

price;

: the weight of time;

: the weight of

price;

a : the weight of comfort; b :the weight of

safety.

THE COMPETITION BETWEEN AVIATION AND HIGH-SPEED RAILWAY

261

3.3.2 The Data

(1) Speed data

The average speed of high-speed railway is 300

km/h (In terms of the speed data of the operating

high-speed railway now). In detail, the low speed

high-speed railway’s speed is 275 km/h and the

high-speed railway can reach a speed of 350 km/h.

The speed of aviation is 800 km/h.

Table 1: Parameters 1.

comfort safety habit speed

High-speed

Railway

10 10 10 300 km/h

Aviation 9.5 8.5 7.5 800 km/h

Table 2: Parameters 2.

Waiting

time

Price

(1 level)

Price

(2 level)

High-speed

Railway

1 h 0.6 yuan/km 0.45 yuan/km

Aviation 1.5 h 0.75 yuan/km 0.6 yuan/km

Weight：a=0.15，b=0.35，c=0.5， =0.67，

=0.33，W=2.59。

Note: These data are calculated and analyzed

through the operation of these two travel tools. The

original data are from the website of National

Bureau of Statistics of China and experience data.

3.3.3 The Results of Calculation

(1) Using the average speed data of high-speed rail

——300 km/h.

Figure 1: Share rate.

According to the model and data we listed above, we

make the graph as this. From this graph, we can see

that the share rate between high-speed railway and

aviation is changing with the increase of mileage.

(2) Using the classified data of high-speed rail. The

low speed railway’s speed is 275 km/h and the high-

speed railway can reach a speed of 350 km/h.

Table 3: Share rates in different distances.

Mileage Share Rate

Low speed

high-speed

railway 275

km/h

300-700 km 75-90%

700-900 km 70-50%

900-1100 km 20-50%

1100-1500 km 25%-10%

High-speed

railway 350

km/h

300-700 km Above 90%

700-900 km 75-55%

900-1100 km 50-25%

1100-1500 km 25-10%

4 CONCLUSIONS

Through the analysis of the experience abroad and in

China, and combined with the calculation with the

Share Rate Model, we found that the high-speed

railway may affect the aviation with the increase of

mileage to some exert. The result is below.

When the mileage is below 900 km, the high-

speed railway occupys more percent of passenger

than the aviation. With the increase of mileage, the

share rates of these two ways are getting closer to

each other. And at the 900 km, each way occupys

50% of passengers.

5 FUTURE WORK

In this article, we do some basic analysis of the

competition between aviation and high-speed

railway using the Share Rate Model. The future

work must be the explanation and analysis of the

results we get, combined with the experiences in

reality.

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