I was reading Marshall Jackson’s blog this weekend and noticed he had mentioned that President Obama has revealed his initial plans for high speed rail in this country. I asked myself if an expansion could hurt he airlines.
Short answer: absolutely.
One notable example is the Madrid – Barcelona route, which has historically been the world’s busiest. In February last year, a high speed rail line was opened between the two cities. While I don’t have the exact decrease in frequencies, take a look at this part in the notes to Iberia’s February traffic results:
According to the new Strategic Plan, the company reduced capacity in the domestic sector by 21.6%, leading to a load factor of 68.7%, similar to the level reached in February 2008. Average stage length grew by 6.5% in this sector, due to the higher reduction of capacity in flights between Barcelona – Madrid (this route began to be operated by the high speed train on the 20th of February 2008).
Edit: According to this Wall Street Journal article, the high speed trains have ” snatched half the route’s air-passenger traffic.” (Hat tip to my dad for the link.)
Some airlines here in the States could definitely be hurt by a high speed rail expansion. Any further improvement in the Northeast Corridor could negatively affect the Delta and US Airways shuttle operations, and I agree with Marshall that Southwest would get hurt (I think the intra-Texas and intra-California routes especially).
If this is ends up being an expansion of Amtrak, I’m very worried when it comes to competition with the airline industry. The air carriers are motivated by profits and losses (as they should). If a route isn’t performing well, the airline will adjust accordingly by either eliminating the route or trimming capacity, and the opposite happens on successful routes. Meanwhile, a government-funded train system with guaranteed funding can continue operating despite being unprofitable, making true competition difficult.
What I’m interested in is how the industry will respond. If this proposal gains steam the ATA might get involved, or the individual airlines might fight as well, which has happened in the past. Southwest, for example, fought an attempt to bring high speed rail to Texas in the 90s:
Southwest Airlines filed motions, restraining orders, applications for injuctions [sic] and lawsuits against the Texas High Speed Rail Authority (THSRA) seeking to prevent a high speed rail project from being built in Texas or to at least slow the progress of such a project.
You can read more on that here.
This is definitely something worth watching in the future.
Interesting post. I have to say, though, I live in the Northeast corridor and while I love trains, I don’t take them. Yes, they are far more convenient in that they deliver you downtown vice to irritating distances from your actual destination (yes, I’m talking to you BWI and Dulles). But, it simply remains cheaper to travel by air than by train. If federal subsidies reduced train fares… then, perhaps, airlines worries would be much more urgent.
High speed rail in France cut dramatically into then then Air Inter’s marketshare.
Long distance Rail makes sense for a mid market that is between car trips and air travel…somewhere between 500 and 800 miles. Because rail did not have the ability to compete in that space in the USA it was cut out of the market.
The 21st century reality is that rail also reduces oil usage and greenhouse gas emissions. Oil will go back to scarey prices again and flying will become more uncompetitive.
The time of decent high speed rail is way over due in the USA
There is likely not going to be enough funding for high-speed routes that aren’t going profitable. I’d guess (I am too lazy to look up the numbers) the DC-NYC-BOS route is one of the few that is profitable for Amtrak today.
Here in CA the high-speed system is finally gaining traction, with a recent ballot bond proposition getting approved by the voters and the stimulus funds likely helping drive it forward, too. It will still take another 10+ years, but I am looking forward to it (I’ll be living less than half a mile from the proposed tracks). Airlines like Southwest will have time to adapt.
As far as subsidies are concerned, well, we taxpapers fund airport construction, too, no? San Jose, CA, is building a new billion+ dollar terminal right now (and is facing about a 20% recduction in flights this year).
I think that passengers will migrate, no question. On the other hand, airlines hould be reconsidering the scope of their operations. People do not board the planes because they want to fly (that is, except people like me) but because they want to get somewhere. Thinking of only flying is limited, and the airlines should recognize they are in the transportation business.
If it is cheaper to operate a train for a route like DC-NYC and just as fast and convenient, a serious consideration should be to embrace the railway. This could be by simple codesharing, or even more effective investments. So the airlines actually profit from any possible lower operation cost, free up capacity in the air and provide a more wholesome service.
COs cooperation with Amtrak is commendable and many more successful examples can be found in Europe, where most serious Airports have a long distance/high speed rail link, airlines codeshare and you can check luggage at train stations and thus avoid the general lage-hub-check-in-madness.
High-speed rail is not competition but complementation.
For longer distance travel (more than 300 miles), probably not – it would need to be examined on a case by case scenario. The future of travel in general should seek to blend air, rail, and bus better anyway, so in some cases, it might actually be something that can be embraced by a broader population, including the airlines.
Pending on how fast the new high-speed rail actually is, I think airlines will have greater troubles with short-haul routes. Think about it – all the time it takes to check-in, get through security, baggage (if you check), etc. Right now, taking the train from 30th street station in Philadelphia on Amtrak to Penn Station in NYC is already a much quicker way to get to New York (especially Manhattan) than flying. If they increase the speeds and make it more European, I think airlines (specifically regionals) will have difficulties.
Trains need frequency, speed, and reliability to take a big share of the passenger business. High traffic density is needed,too.
Since Japan started high-speed trains between Tokyo and Osaka in the sixties with completely new track, no level crossings, no freight trains, and no tight curves, they have been a success. Those other countries that have tried to emulate Japan without all of the above have found more investment is required to bring the service up to the Japanese standard. This has already happened in France, Germany and Spain, and I think Taiwan, in all of which air traffic on comparable routes has fallen away.
An interesting article and one that we have done much research on. These routes will be profitable as soon as the journey time gets below the 3 hour mark, distance is not the real factor. Above that time it will be mostly leisure travellers, below you will see many more business travellers and therefore the higher end traveller. The actual market share between air and rail shifts dramatically towards the railway as soon as this journey time dips under 3 hours – we are talking 70-90%. Some airlines in Europe have dropped their services altogether as soon as this happens on the same route. However, if you cant beat them, join them. AF and KLM have done just that by investing in railway operations ready for 2010 deregulation in europe.
“The actual market share between air and rail shifts dramatically towards the railway as soon as this journey time dips under 3 hours” –Philip Martin
The US isn’t Western Europe nor Japan nor Taiwan. For journeys under 3 hours the market share dramatically shifts over to the AUTOMOBILE, not rail. Building moderate speed rail will not change this, even by the Feds own studies. The automobile has many inherit advantages such as door to door and leaving based on your own schedule that neither rail nor airlines can offer.
More so in this case the proposed funding isn’t enough to build out anywhere near the proposed moderate speed rail lines. It appears highly unlikely that any high speed rail of the sort we’re talking about for the Madrid – Barcelona line will get built, including the proposed routes in California. Keep in mind that @$8-10 billion in bonds to fund the proposed lines was passed last fall but that to build out the proposed system could very well cost $50billion to build. And that’s just Cali. It’s very unlikely that enough of anything will get built in terms of rail to have much of any change on any form of travel, let alone flying.
If we take in some other factors such as the “carbon footprint” and the distance (which I did actually say doesnt play a factor but against the car will) then even the US will benefit from train travel. I agree its all about investment and interoperability, but transfer services – if well done, will provide door to door. But again I agree with Allen – its about investment.
If it were easy to improve the speeds and frequencies on the Northeast Corridor, maybe the shuttle flights would lose some customers and have to cut back on flights. Would that be bad for airlines in general? LaGuardia slots are limited, and if the shuttles gave up some, they would probably be used for longer flights on other routes.
That won’t happen any time soon, however. The NEC has no more spare slots than LGA. Wonder why Acelas run hourly but not every half hour, even though they are basically running full? No room for more trains. The tracks are full of Acelas, long distance trains to the South and Midwest, Regionals, Keystone trains, and commuter trains, with not a minute to spare for additional trains between NYC and D.C.
You’d need another couple of tracks for most of the distance, another tunnel under the Hudson, or two tunnels under the Hudson, new tunnels in Baltimore, new or much wider bridges over the Delaware, Susquehana, and other rivers and inlets. That’s all many billions and many years away.
It will be much cheaper and quicker to get some trains running up to 110 mph Detroit-Chicago and Chicago-St. Louis than to add capacity in the NEC. And that is why those Acela tickets remain expensive and flying is cheaper: Supply is limited, the product (wider seats, walkable aisles, big windows, center-city stations, etc.) is superior, so the prices stay to a market-clearing high level.
if bunch of the small carrier airlines loose proffet by the high speed Rail, then they should change their rout for non HSR Corridor like up in the mountains, accross the ocean, and other small towns whare high speed train doesn’t go.