Erasmus University Rotterdam
The expected effect of Fyra on air transport – learning from the past experiences from ICE
Master Thesis
Master in Economics and Business
Specialization in Urban, Port and Transport Economics
Student: Ziye Yao
Student number: 311602
Thesis supervisor:
Dr. Peran van Reeven
Department of Applied Economics
Erasmus School of Economics
Erasmus University Rotterdam
Date: 17 Nov 2011
Abstract
The high-speed train Fyra was introduced to Schiphol on September 2009. Since then, there have been many discussions about the possible effects of Fyra on air transport. Some argued it would increase the air transport while others argued the different way. This paper will discuss the possible future effect of Fyra by comparing Fyra with the ICE for Frankfurt airport. ICE was introduced ten years earlier than Fyra, and Frankfurt airport has the similar size and function as Schiphol airport. A difference-in-difference (DID) estimation will be performed with Schiphol airport as a control group to address the effect of the ICE on air transport. By comparing Fyra to ICE with the result from the DID estimation, along with some evidences and past researches for both airport, it would be able to estimate the expected effect of Fyra on air transport: Fyra is expected to reduce the air transport, but it would be socially beneficial. Furthermore, the effect of Fyra on air transport will be less significant than the effect ICE.
Acknowledgment
I would like to express my gratitude to all the people that helped me and supported me with my thesis.
Firstly, I would like to thank my thesis supervisor, Dr. Peran van Reeven for all the help and support. All the helpful discussion session with him and all the valuable suggestions and guidance from him was very important for me to complete this paper.
Secondly, I would like to thank my friend: Lei Shi, Man Xu, Yaxian, Wu and Yiming Zhong. For all the support and comfort they gave me during the writing process.
Finally, I would like to appreciate all the love and support from my parents.
Table of content
1. Introduction 5
1.1 Introduction 5
1.2 Problem Statement 6
1.3 Methodology 6
1.4 List of Chapters 6
2. Literature Review 7
2.1 Reasons why HST should increase air transport 7
2.2 Reasons why HST should decrease air transport 9
2.2.1 Social advantages of the decrease in air transport 13
2.3 Overview on the arguments from literatures 14
3. Case Study on ICE / Frankfurt airport 16
3.1 Information on Frankfurt airport 16
3.2 Information on ICE 17
3.2.1 The travel time of ICE 19
3.2.2 The price of ICE 20
3.3 Impact of ICE on air transport 20
3.3.1 Impact on the accessibility of the airport 21
3.3.2 Impact on the air/rail integration 21
3.3.3 Impact on the short-haul flights 22
4. Case study on Fyra / Schiphol airport and the comparison between the two case studies 24
4.1 Information on Schiphol airport 24
4.2 Information on Fyra 25
4.2.1 The travel time of Fyra 26
4.2.2 The price of Fyra 27
4.3 Impact of Fyra on air transport 28
4.3.1 Impact on the accessibility of the airport 29
4.3.2 Impact on the air/rail integration 29
4.3.3 Impact on short-haul flights 29
4.4 Comparison between the two case study 31
4.4.1 Comparison between the two airports 31
4.4.2 Comparison between ICE and Fyra 32
5. Data Analysis 34
5.1 Methodology and Data selection 34
5.2 DID regression for the effect of HST with one single ICE dummy 37
5.3 DID regression for the effect of HST with separate ICE dummies 39
6. Conclusion 42
6.1 The effect ICE on air transport 43
6.2 Estimation of the future effect of Fyra 44
6.3 Limitations and future researches 44
7. Reference: 46
7.1 Literature: 46
7.2 Websites: 48
1. Introduction
1.1 Introduction
The high-speed train services have been introduced in many countries during the past decades. It offers a faster and more efficient choice for the travellers compare to the traditional train services. Furthermore, many airports such as Schiphol airport, Frankfurt airport and Heathrow airport have introduced the high-speed train service to the airport to improve the intermodal transportation system at the airport and to increase the capacity of transporting air passengers to different destinations.
The high-speed train service “Fyra” was introduced in September 2009 which runs between Amsterdam, Schiphol, Rotterdam and Breda. The whole route of Fyra is not yet completed; it will extend its service to Antwerp and Brussels in the near future. Furthermore, the operator of Fyra- NS Hispeed is also planning to increase the speed of Fyra in the near futuer. The Fyra service is new to Schiphol, so there have not been many discussions - both positive and negative about the possible effects of having Fyra on air transport. Thus, it would be interesting to see how Fyra would affect the air transport.
Furthermore, it will be too limited to examine Fyra alone to investigate the impact of Fyra. Thus, it is necessary to choose another airport as a reference. In this case, Frankfurt airport will be a good choice. Frankfurt airport had longer history of high-speed train (the Intercity Express-ICE) services for more than 10 years and the integration of air and rail was considered successful. Furthermore, Frankfurt airport has the similar size and function as Schiphol airport. Therefore, it would also be interesting to compare the real case between ICE and Fyra. Learning from the past experiences of ICE and Frankfurt airport would give more evidences to forecast the possible impact of Fyra in the future.
1.2 Problem Statement
After the introduction of Fyra to Schiphol, there have been quite a few debates on whether it is worth the huge amount of investment. Some argued that Fyra is a revolution in the traditional transport market and it would benefit the Schiphol airport while others believed it was a failure that it rarely had any actual influence on Schiphol. This paper is going to examine what are the possible effects of Fyra on air transport.
1.3 Methodology
This paper will address the research question by literature review, case study and also data analysis.
Firstly, the literature review would give a general discussion on the impacts of HST to air transport. Secondly, a case study on both ICE/Frankfurt airport and Fyra/Schiphol airport will give evidences on what happened with the two airports after HST was introduced. Thirdly, a difference-in-difference estimation will be done. The DID analysis estimates the net effect of a treatment to a certain group by comparing the treatment group to a control group. In this case, it could address the past effect of HST on air transport, and by comparing the control group Schiphol to the treatment group Frankfurt group we could estimate the future effect of Fyra on air transport.
1.4 List of Chapters
Chapter 2 will discuss the different arguments from various literatures about the effect of HST on air transport. Following the literature review the case study on ICE/Frankfurt airport will be given in Chapter 3. Chapter 4 will continue with another case study on Fyra/Schiphol and the comparison between the two case studies. In Chapter 5, the methodology and result of the DID estimation will be presented. The paper will end with Chapter 6 which gives the conclusion of this study with a few limitations and possible future researches.
2. Literature Review
There have been many discussions regarding the possible effects of HST on air transport. Some argued that it would increase air transport while other suggested the opposite way. The main arguments and reasoning for both sides will be discussed in this chapter.
2.1 Reasons why HST should increase air transport
Several literatures argued that HST would increase the air transport. Two main reasons were mentioned the most while researchers argued that the high-speed train could increase the air transport: the HST could improve the accessibility of the airport, thus attract more passengers; or it could also act as a complement for the airplane thus feed more passengers to the airport.
According to Gelhusen and Wilken (2006), air passengers will tend to choose an airport with relatively good train service accessibility. The high-speed train brings the airport a better accessibility and connection and thus it would make the airport more preferred by the travellers. Similar arguments were also made by Lopez-Pita and Anton (2003), they claimed that the high-speed train services would bring more passengers to the airport and presented the case for the Lyon- Roissy and Satolas airport (now the Lyon - Saint-Exupery airport). After the high-speed train service started, it became much easier and faster for passengers to access the airport, and that had a huge impact on the passenger flows. For the year after the high-speed train service was connected to the airport, almost 3.5 percent of the air passengers took the high-speed train to access the airport, which is almost 1.5 million passengers. Furthermore, this effect is expected to develop in the future. Between 8.5% and 13.5% air passengers are expected to take the high-speed train by 2005, and high-speed train are anticipated to bring around 3 to 6 million more passengers to the airport every year.
Other than improving the accessibility of the airport, the high-speed train service has also been claimed to have “complementary effect” to airplanes and airlines which could also increase the air transport. It was suggested that the high-speed train could offer an intermodal connection between air and rail, or act as a “feeder” for airplanes thus attract more travellers.
As Terpstra and Lijesen (2011) stated, the high-speed train could be complementary to air services by acting as a “feeder” that brings passengers to the airports with a shorter travel time. Especially for the bigger airports, such as Madrid airport- the biggest airport in Spain, which gained 1.5% more market shares after the first year which the high-speed train was introduced. Givoni and Banister (2006) also mentioned the complementary effect of the high-speed train that it could bring air passengers to a hub airport instead of an airplane. He suggested that having high-speed train connections would make the airport a better choice for a hub airport. If the airport has a rather good railway access with a fast and convenient transfer option between rail and air, airlines could then include the high-speed train into their own services to transport air passengers from different locations without an airport access. The high-speed train services could also be brought into locations that already have airport accesses. Either way, the high-speed train could offer a faster access to the airport thus make the airport a more attractive choice. The airlines offering the rail-air connection services would also be a more attractive choice for the travellers.
Moreover, Grimme (2007) suggested that the efficiency and easiness to access the airport brought by intermodal service between air and high-speed rail would make the airport more attractive to air passengers. In fact, airlines and travel agencies were already using the intermodal service as a marketing campaign. Train tickets and air tickets were sold together with a certain amount of discount.
2.2 Reasons why HST should decrease air transport
Other than the arguments that the high-speed train would increase the air transport, there are also arguments that the high-speed train could decrease the air transport. Various scholars suggested that the high-speed train has substitution effect on airplanes besides the complementary effect which would take away passengers from airplanes especially for the short-haul flights.
While Givoni and Banister (2006) talked about how the airport could be benefit from the high-speed trains, Givoni (2006) also suggested that the high-speed train could be a perfect substitute of the airplane within short distances since it could offer less travel times. The high-speed train would take away some passengers from the airplane for the hub access. Since the high-speed train offers fast and direct service to the airport, passengers taking airplanes for transfer flights before may change their preference and switch to take the high-speed train. Grimme (2007) also claimed that the fast developing intermodal service between air and high-speed rail made high-speed rail an attractive substitute for short-haul flights. The high-speed train would encourage the air passengers to take the train other than a feeder flight within a short distance for transfer flights. Similar ideas were also found in various literatures.
Gonza´lez-Savignat(2004) claimed that the high-speed train is becoming a great alternative for airplanes within a certain range of distances. He suggested that the high-speed trains would have a strong impact on the demand of air travel in the future, an important share of current air passengers will be attract to the new high-speed train services.
Similar arguments were also expressed by de Rus and Nash (2007) that the high-speed train might decrease the air transport demand with a case study of the Spanish transport market. He introduced the case of the impact of high-speed train to the air demand for the Madrid-Seville which was part of the first high-speed line in Spain. The introduction of the Madrid-Seville line added another option for the passengers for the Madrid-Seville corridor. Among all the existing means of transportation for the Madrid-Seville line such as airplane and normal trains, the high-speed train had the lowest generalized cost but costs more travel time compare to the airplane. However, despite the extra travelling time, the high-speed train still took 50% passenger from the air services for the Madrid-Seville line. The airport Seville suffered almost 25% reduction in usage since it had a heavy amount of a air services for the Madrid-Seville line. Another paper wrote by López-Pita and Robusté (2005) also argued that as the travel time were considerably reduced for travelling by train after the high-speed train services were introduced, the railway again became more attractive to the passengers compare to the air services. Thus, there was a substantial change in the market share of air and rail as table 2.1 shows.