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Mizutani, Jun; Sakai, Hiroki
Journal of air transport management, January 2021, 2021-01-00, Volume: 90Journal Article
In Japan, High Speed Rail (HSR) extended its network in 2011 and 2015, and Low Cost Carriers (LCC) entered into the domestic airline market in 2012. We compared the effects of the extension of the HSR network and the entry of LCCs on the airfares of the incumbent Full Service Carriers (FSC). We conducted Difference in Differences analysis with passenger level data to evaluate these market changes, and found that the effects of the HSR extension on FSC's airfares were consistently negative and larger in the short haul markets, while the effects of the entry of LCCs were inconsistent. HSR seems to be a stronger competitor than LCC to FSC and this finding could be affected by capacity, which is large for HSR while small for the LCCs. •We compared the impacts of the extension of HSR network and the entry of LCC on the airfares of the incumbent FSC in Japan.•DID analysis with the individual passenger level data was conducted to evaluate the impacts.•We could conclude that HSR was a stronger competitor for FSCs than LCCs.
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