The impact of high speed rail on airport competition

Abstract

We study the effects of introducing a high speed train connection on competition between airports, focusing on the new HST-link between Amsterdam and Brussels. We conduct a detailed analysis regarding the airport choice of passengers living in the Netherlands, Belgium, Luxembourg, Northern France and Western Germany. We compare the results with Spain, where a high speed train between Madrid and Barcelona has recently been inaugurated. We estimate a multinomial logit model of airport choice and predict future market shares, based on access time, frequency, average fare and airport specific constants. Direct and cross-elasticities are calculated and finally future market shares are predicted, incorporating changes in access time due to the introduction of the high speed train. We find that the introduction of a high speed train connection benefits the airport with the higher level of service most. This is in line with general economic reasoning that stronger suppliers benefit more from increased competition.