Date: December 4, 2014

Time: 2:00 pm

Venue: Room 1002, Administration Building, Zijingang Campus

Speaker: Professor ZHANG Anming, Sauder School of Business, The University of British Columbia, Canada

Topic: A High-Speed Rail Competition: Long-term Impacts on Airline Network, Market Coverage and Social Welfare

Host: Prof. LIU Nan, Department of Management Science and Engineering

Abstract: While the existing literature has focused on the short-term impacts, this paper investigates the long-term impacts of high-speed rail (HSR) competition on airlines. An analytical model is developed to study how an airline may change its network and market coverage when facing HSR competition on trunk routes. We show that prior to HSR competition, an airline is more likely to adopt a fully-connected network and cover less fringe markets if the trunk market is large. Under HSR competition, the airline will, for a given network structure, have a greater incentive to cover more fringe (regional or foreign) markets if the trunk market is large, or the airline network is close to hub-and-spoke. Further, the airline will, for any given market coverage, move towards a hub-and-spoke network when the trunk market is large, or the number of fringe markets covered by the airline network is large. Both effects are more prominent when the decreasing rate of airline density economies is large. We further show that HSR competition can induce the airline to adopt network structure and market coverage that are closer to the socially optimal ones, thereby suggesting a new source of welfare gain from HSR based on its long-term impacts on airlines. Implications for operators, policy makers and specific countries (such as China) are also discussed.

About the Speaker: Anming Zhang is a Special-Term Professor of Management Science at Shanghai Advanced Institute of Finance (SAIF), and YVR Authority Professor, Sauder School of Business and Centre for Transportation Studies, University of British Columbia (UBC). He served as Chair of the Operations and Logistics Division, Sauder School of Business, UBC (2003-2005), and as Director of UBC’s Centre for Transport Studies (2003-2004). He has been the Vice President (Academic & Program) for the World Air Transport Research Society (ATRS) since 2006.

Professor Zhang’s research interests include transport economics and policy, logistics and operations management, industrial organization, managerial economics, cost benefit analysis, shipping and international logistics, and air transport. He has published over 100 refereed journal papers (includes 12 papers were published by the top transportation journal: Transportation Research Part B) in the areas of transportation, logistics, industrial organization and trade policy.