Competition between airlines and railways in Japan focusing on the travel time

Abstract

This study estimates the price elasticity of demand per airline route using a demand function and airfare function with Japanese data including the access and egress cost to clarify the relationship between airlines and railways by focusing on the travel time. The study also estimates the access and egress cost elasticity of demand per airline route to explore the effect of the access and egress cost on the demand. From the results of estimation, We conclude that reducing the total travel time would increase the airline demand and change the relationship between airlines and railways. Additionally, we consider that passengers would be more sensitive to the cost in the case that the average access and egress cost ratio exceeds 30% than in the case that the average ratio is under 30%.