Working Paper: NBER ID: w27475
Authors: Hanming Fang; Long Wang; Yang Yang
Abstract: The entry of High-Speed Railways (HSR) represents a disruptive competition to airlines, particularly for short- to medium-distance journeys. Utilizing a unique dataset that contains the details of all flights departing from Beijing to 113 domestic destinations in China since January 2009, we employ a difference-in-differences approach to examine the effects of HSR entry on the quality of service provided by airlines as proxied by their on-time performance, and to identify the channels through which competition leads to quality improvement. We document two main findings. First, the competition from the entry of HSR leads to significant reductions in the mean and variance of travel delays on the affected airline routes. Second, the reductions in departure delays--which are controlled mostly by airlines, and the duration of taxi-in time--which are controlled mostly by destination airports, are identified as the main sources of the improvement in the airlines' on-time performance.
Keywords: High-Speed Rail; Airlines; Competition; Quality Improvement
JEL Codes: L1; L91; O18; R4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| HSR entry (R28) | airline OTP (L93) |
| HSR entry (R28) | mean travel delays (L91) |
| HSR entry (R28) | variance of travel delays (C69) |
| HSR entry (R28) | likelihood of arrival delays of 15 minutes or longer (L93) |
| HSR entry (R28) | departure delays (L93) |
| HSR entry (R28) | taxi-in times (R41) |