Competitive Intensity of High speed Rail and Its Effect on Regional Airlines

Competitive Intensity of High speed Rail and Its Effect on Regional Airlines

High-speed trains travel at a minimum speed of 250 kmph or 155 mph. This report explores the current status of high-speed rail and how it is affecting airlines in different markets.

Airlines that once saw low-cost carriers as their only threat are now encountering more competition from high-speed rail operators, especially as some develop lower-cost services. Legacy airlines are considering their options to compete with—or even collaborate with—rail operators, low-cost carriers, and each other to provide better service, remain cost competitive, and retain customers by giving them additional options for their itineraries.

High-speed rail in Europe has seen growth and has replaced some domestic routes, but the intra-Europe market still presents numerous opportunities for air carriers with plenty of routes that are either underserved or not served by rail. Travel in India and the United States is still ruled by airlines. The US rail network is poorly developed, and India is still a growing market for air travel. Japan, the innovator of high-speed rail with its bullet train, has many domestic travelers who use both air and rail service. High-speed rail service in China, the country with the most route kilometers of any in the world, has prompted some airlines to remove short-haul flights, but medium-haul flights are giving rail tough competition.