Erasmus University Rotterdam

The expected effect of Fyra on air

transport – learning from the past

experiences from ICE

Master Thesis

Master in Economics and BusinessSpecialization in Urban, Port and Transport Economics

Student: Ziye YaoStudent number: 311602

Thesis supervisor: Dr. Peran van Reeven

Department of Applied EconomicsErasmus School of Economics

Erasmus University Rotterdam

Date: 17 Nov 2011

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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.

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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.

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Table of content

1. Introduction...................................................................................................................................51.1 Introduction............................................................................................................................... 51.2 Problem Statement.................................................................................................................61.3 Methodology.............................................................................................................................. 61.4 List of Chapters.........................................................................................................................6

2. Literature Review........................................................................................................................72.1 Reasons why HST should increase air transport.......................................................72.2 Reasons why HST should decrease air transport......................................................9

2.2.1 Social advantages of the decrease in air transport........................................132.3 Overview on the arguments from literatures...........................................................14

3. Case Study on ICE / Frankfurt airport.............................................................................163.1 Information on Frankfurt airport..................................................................................163.2 Information on ICE...............................................................................................................17

3.2.1 The travel time of ICE.................................................................................................193.2.2 The price of ICE.............................................................................................................20

3.3 Impact of ICE on air transport.........................................................................................203.3.1 Impact on the accessibility of the airport..........................................................213.3.2 Impact on the air/rail integration.........................................................................213.3.3 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....................................................................................244.2 Information on Fyra.............................................................................................................25

4.2.1 The travel time of Fyra...............................................................................................264.2.2 The price of Fyra...........................................................................................................27

4.3 Impact of Fyra on air transport......................................................................................284.3.1 Impact on the accessibility of the airport..........................................................294.3.2 Impact on the air/rail integration.........................................................................294.3.3 Impact on short-haul flights....................................................................................29

4.4 Comparison between the two case study...................................................................314.4.1 Comparison between the two airports...............................................................314.4.2 Comparison between ICE and Fyra......................................................................32

5. Data Analysis.............................................................................................................................. 345.1 Methodology and Data selection....................................................................................345.2 DID regression for the effect of HST with one single ICE dummy...................375.3 DID regression for the effect of HST with separate ICE dummies..................39

6. Conclusion....................................................................................................................................426.1 The effect ICE on air transport........................................................................................436.2 Estimation of the future effect of Fyra.........................................................................446.3 Limitations and future researches................................................................................44

7. Reference:.................................................................................................................................... 467.1 Literature:................................................................................................................................ 467.2 Websites:.................................................................................................................................. 48

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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.

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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.

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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.

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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.

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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

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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.

Table 2.1 Railway Market Share Compared to Airline Market Share on Madrid—Seville Route

Means of

Transport

Market

share

without

high-

speed

train

(1992)

Market share with high-speed train

1994 1996 1998 2000 2003

Air 71 20.1 18.4 17.9 16.6 15.9

Rail 29 79.9 81.6 82.1 83.4 84.1

Source: López-Pita and Robusté (2005)

Same as the Madrid-Seville line, another high-speed train line: Madrid –

Barcelona which was brought into use few years after the Madrid -Seville line

also had a significant impact on the air transport for these two destinations. As

López-Pita and Robusté (2005) stated in his paper that the appearance of high-

speed train for the Madrid-Barcelona would increase the market share of railway

from 11% to nearly 53% to 63% percent in the near future. Consequently, the

market share of airlines would drop rapidly from 89% to a much lower level

around 36% to 47 %. Before the high-speed train was introduced, the airline was

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dominating the transport market, but the high-speed train took more than half of

the passengers from the airlines which reduced their profit dramatically.

Park and Ha (2006) argued that high-speed train is extremely competitive in the

air transport market within a distance of 500 km which follows the evidence for

the Seoul-Daegu high-speed rail line started in 2004. As shown in table 2.2, both

the number of aircraft operations and number of passengers dropped around

72% only one year after the high-speed train (KTX-Korea Train Express) was

introduced.

Table 2.2 Changes of air traffic volumes on Seoul Gimpo and Daegu air route

Seoul-Daegu No. of aircraft operations No. of passengers

April and May 2003 2180 227,698

April and May 2004 599 63,315

% of changes -72.5 -71.3

Source: Park and Ha (2006)

Nevertheless, several important factors were mentioned that determine the

competitiveness of high-speed trains comparing to aircrafts. Gonza´lez-

Savignat(2004) suggested that the impact of the high-speed train services to air

services will decrease as the travel distances and travel time increases. Thus, he

suggested that the high-speed train would only remain absolutely competitive to

airplanes when the travel time is less than three hours. For longer journeys, the

airplanes will start to regain more and more competitiveness as the travel time

and distance increases. López-Pita and Robusté (2005) also found out that as the

journey time decreases the market share of railway would increase as a result

(refer Figure 2.1).

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Figure 2.1. Effect of Train Journey Time on the Proportion of Air and Rail Travelers

Source: López-Pita and Robusté (2005)

Park and Ha (2006) conducted a survey that showed the competitiveness of

high-speed train is negatively related to the ticket prices as table 2.3 shows.

Furthermore, Gonza´lez-Savignat (2004) also claimed that the purpose of the

travel also have an effect on the competitive of high-speed train. The leisure

travellers will be more strongly affected by the ticket price than the business

travellers. Thus, the price of the high-speed train might have a greater effect on

the leisure travellers.

Table 2.3 Probability of transport modal choice based on the high-speed train fares

Fare of KTX (W) Probability of choosing

air

Probability of choosing

high-speed train

35,000 0.142 0.858

40,000 0.202 0.798

45,000 0.208 0.720

50,000 0.374 0.626

Source: Park and Ha (2006)

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2.2.1 Social advantages of the decrease in air transport

Although the high-speed train could have substitution effect on the air transport,

it was suggested that the high-speed train taking away air passengers could also

have positive impacts on the environment. Since the high-speed train is more

environmental friendly than the air transport, it substituting air transport would

result in less pollution.

Nash (1991) suggested three environmental advantages for high-speed train

compare to the airplane: less land consumption, less noise and less energy

consumption. The construction of an airport need a lot of land for the runways,

since the air transport demand is increasing every year, it is likely that there will

be expansions of existing airports or constructions of new airports in the near

future. As the high-speed train could be a complement of air transport and eases

the pressure of airports, it could delay or even prevent the construction or

expansions of airports and thus save the land also reduce the noise production.

Furthermore, Nash claimed that high-speed trains consume less energy than

aircrafts. On average, every one hundred passengers for aircrafts consume 5.8

liters of petroleum per kilometer when the aircrafts are fully loaded. On the

other hands, every one hundred passengers for high-speed trains only consume

1.0 liters of petroleum per kilometer for the same situation.

Givoni and Banister (2006) predicted there would be less emission as a result of

the integration of rail and air. Both local air pollution and climate change

situation will be improved. Evidences were given with the case of the emission

reduction after the high-speed train services started on Heathrow-Paris route.

Other than the environmental advantages, Givoni (2006) also suggested that as

the high-speed train could free the runway capacity for long-haul flights by

substituting the short-haul flights. For example, the high-speed train freed

around 20% of the runway capacity for London Heathrow airport. This might

improve the congestion problem at the airport.

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2.3 Overview on the arguments from literatures

Table 2.4 gives a summary on the effects of HST on air transport suggested in

different literatures.

Table 2.4 Summary of the literatures

Literature Research Method

Effect on air transport1

Main arguments/Evidences

Lopez-Pita and Anton (2003)

Descriptive /Case study

+ HST brings 3.5% of the air passengers (1.5 million) to the Lyon - Saint-Exupery airport after the first year, and 8.5%-13.5% air passengers (3-6 million) per year after five years.

Terpstra and Lijesen (2011)

Descriptive /Case study

+ Madrid airport gained 1.5% more market share after the first year HST was introduced.

Givoni and Banister (2006)

Descriptive /Case study

+/- HST has both complementary and substitution effect on the air transport depends on the characteristics of flights/HST seized 71% of the market share on London-Paris route in 2005.

Givoni (2006)

Descriptive /Case study

- High-speed trains have substitute effects to airplanes that might take away passengers from airlines/HST frees 20% of the runway in Heathrow.

Grimme (2007)

Descriptive /Case study

+/- 6.5% of the air passengers for Frankfurt airport used the Rail&Fly service /Air passengers dropped from 150,000 to 50,000 for the Cologne-Frankfurt line after HST was introduced.

Gonza´lez-Savignat(2004)

Survey/Demand Model

- 58% of the leisure travellers and 39% of the business travellers are expected to switch from airplanes to HST for Madrid-Barcelona line.; the competitiveness of high-speed train will reduce as travel distance and time increases.

de Rus and Nash(2007)

Descriptive /Case study

- HST reduced 50% of the demand for Madrid-Sevilla route.

López-Pita and Robusté (2005)

Descriptive /Case study/Demand model

- HST took 55% of passengers of the Madrid –Sevilla route from the airplane 10 years after it was built./ HST is estimated to take 42%-53% of the passengers from airplanes for Madrid-Barcelona line.

Park and Ha (2006)

SP - stated preference analysis and OLS

- The analysis estimated 14% passengers would choose air over HST train while the actual data showed 28% passengers would prefer air transport.

As the table 2.4 shows, both positive and negative effects of high-speed train on

air transport were mentioned. Some scholars even mentioned both positive and

1 “+” represents an increase in air transport, “-“ represents a decrease in air transport

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negative effects in one paper concerning different situations. Furthermore, most

of the researches done regarding the effect of high-speed train on air transport

were only case studies and descriptive reasoning. Moreover, most of the studies

were only concerning about the effect of HST on one specific air route. There

were only few literatures discussed about the overall effect of HST on air

transport. Thus, it is not possible to determine the effect of Fyra on air transport

just based on the literature review.

3. Case Study on ICE / Frankfurt airport

In this chapter, a case study will be given for ICE and Frankfurt airport.

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3.1 Information on Frankfurt airport

Frankfurt airport locates about 12 kilometers away from the city center. It is the

third busiest airport in Europe and the biggest airport in Germany ranked by

yearly passengers. According to the data from Airport Council International,

Frankfurt airport had 53,009,221 passengers (both terminal and transit) in year

2010 and 50,932,840 passengers in year 2009. The growth in passenger

numbers was around 4.1% for year 2009-1010. More than 50% of the

passengers of Frankfurt airport are transfer passengers, which makes Frankfurt

airport a big hub airport (Gelhusen and Wilken, 2006). Around 115 airlines run

at Frankfurt airport. It is also the primary hub and operation base for Lufthansa

airline- the biggest and flag airline in Germany.

Before the high-speed train (ICE) was introduced in Frankfurt airport, the only

train service at the airport was the RegionalBahn (a type of local stop train) and

S-Bahn (a railway system combines the city center and suburban areas). Limited

RegionalBahn trains were running through Frankfurt airport, connecting the

airport to Frankfurt city center and some of the nearby cities such as Mainz

(about 30km away from the airport) and Koblenz (around 120 km away from the

airport). The farthest city the regional train from the airport connects is

Saarbrücken which is about 180 kilometers away from the airport. The regional

stop trains normally runs on an hourly base, or with even less frequency. On the

other hand, the S-Bahn connects the airport to closer destinations such as

Wiesbaden (about 30km away from the airport) and Offenbach (about 20 km

away from the airport) with a higher frequency (per 15 minutes).

Other than the train connections, the Frankfurt airport is also accessible by other

means of transportation such as car, bus and taxi. Frankfurt airport is connected

to various highways including A3, A67 and A5. It takes about 10-15 minutes to

drive from the airport to Frankfurt city center. There are also bus connections to

some close destinations.

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3.2 Information on ICE

To improve the accessibility of the airport, and to meet the increasing demand

for the airport transportation, the Frankfurt am Main Flughafen Fernbahnhof

(Frankfurt Airport long distance railway station) was planned. It was opened in

the end on 27 May 1999 which brought the high-speed train service –Intercity

Express (ICE) to Frankfurt Airport. ICE is a high-speed train service running by

the Deutsche Bahn (DB), the German national railway operator.

ICE offers high-speed train services from Frankfurt airport to various

destinations in Germany and neighbor countries. Table 3.1 lists all the ICE

connections through Frankfurt airport and the main cities they stop by at the

moment. Figure 3.1 shows the ICE route for 2011, the red-circled stop is the

Frankfurt airport long-distance station. There were fewer lines and frequencies

when the ICE service was first introduced. Originally there were only two ICE

lines connects to cities farthest to Hannover, Stuttgart and Nurnberg.

Table 3.1 Main cities on the train route of ICE

Line Main cities on the ICE route2

ICE 20 Hamburg; Hannover; Frankfurt; Mannheim; Basel; (Zurich)

ICE 22 (Kiel) Hamburg; Hannover; Frankfurt; Mannheim; (Heidelberg); Stuttgart

ICE 31 Kiel; Hamburg; Dortmund; Duisburg; Dusseldorf; Köln; Koblenz; Frankfurt;

Mannheim; Basel SBB

ICE 41 (Dortmund); Essen; Düsseldorf; Duisburg; Cologne; Frankfurt;; Nurnberg;

Munich

ICE 42 Dortmund; Duisburg; Dusseldorf; Cologne; Stuttgart; Munich

ICE 43 Cologne; Mannheim; Freiburg; Basel

ICE 49 Cologne; Limburg; Frankfurt

ICE 50 Dresden; Leipzig; Frankfurt; (Wiesbaden)

ICE 78 Amsterdam; Duisburg; Dusseldorf

ICE 79 Brussels; Aachen; Cologne; Frankfurt

ICE 91 (Dortmund; Cologne); Frankfurt; Nurnberg; Vienna

(Source: DB Bahn)

2 only selected trains are going to the city in brackets

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Figure 3.1 The ICE route for 2011

Source: MFO.de

3.2.1 The travel time of ICE

The high-speed train service shortens the travel time from various destinations

to the airport. Table 3.2 shows the travel time from the airport to various

destinations before and after ICE was introduced. Furthermore, the travel time

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does not include the waiting time for transfer. As there was no direct

connections to the destinations before ICE was introduced, passengers has to

stop at Frankfurt main station first and then wait for the train services to their

final destinations, some of the journey even requires more than one changes.

Thus, account for the waiting time, ICE could actually save more time than table

3.2 shows.

Table 3.2 Travel Times before and after the high-speed train started its service at

Frankfurt Airport

Destination Travel time (BEFORE) Travel time (AFTER)

Amsterdam (the

Netherlands)

4h 45min 3h 56min

Basel(Switzerland) 3h 00min 2h 53min

Brussels(Belgium) 5h 00 min 2h 52min

London (UK) 7h 30min 5h 30min (BY Eurostar)

Munich (Germany) 3h 55min 3h 32min

Hanover (Germany) 3h 15min 2h 35min

Stuttgart(Germany) 1h 25min 1h 13min

Bonn/Sieburg (Germany) 1h 48min 0h 40min

Cologne (Germany) 2h 00min 0h 40 min

Source: Payne (1999) and DB website

3.2.2 The price of ICE

The price of ICE is higher than the normal train. Table 3.3 shows the price

difference between the normal trains and the high-speed train (ICE) from airport

to different destinations. It is obvious that passengers need to pay much more to

take the ICE train than the normal ones. Especially for the domestic passengers,

the differences in ticket costs are significant even with double amounts,

19

comparing to the amount of time saved (refer Table 3.2). Thus, passengers may

still choose the normal/ local train over the high-speed train because of the

higher price of the high-speed train.

Table 3.3 Price difference between normal train and ICE in EURO price

Destination Ticket Price (Normal

Train)

Ticket Price (high-speed

Train)

Amsterdam (the

Netherlands)

79 111.20

Basel(Switzerland) 72 50.9

Brussels(Belgium) 101 82

Munich (Germany) 42 91

Hanover (Germany) 42 83

Stuttgart(Germany) 33.60 57

Bonn/Sieburg (Germany) 30.10 68

Cologne 33.80 61

Source: DB website

3.3 Impact of ICE on air transport

High-speed trains are suggested to have various impacts on air transport. Most

frequently mentioned effects are on the accessibility of airport, air/rail

integration and short-haul flights. This section will access the impact of ICE on

air transport based on these three aspects.

3.3.1 Impact on the accessibility of the airport

The new Frankfurt Airport long distance railway station and the high-speed

service offers better access to the airport from various locations in Germany. As

mentioned earlier, the airport was not very well connected to train services

before the new long distance railway station was built and ICE was introduced. It

was very inconvenient and inefficient for the passengers to travel to the airport

by train especially if they have much luggage. However, after the Frankfurt

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Airport long distance railway station was built, air passengers can connect their

flight directly to high-speed trains bringing them to various destinations

including most of the major cities in Germany and even neighbor countries such

as Netherlands and Switzerland. Similarly, it makes it easier and faster for

passengers to access the airport from different locations.

The improved accessibility would help Frankfurt Airport to become a global

gateway. Payne (1999) believed an outstanding and competitive transport

infrastructure is crucial for an airport in the fast-growing globalism world. The

good connection between air and rail would encourage Frankfurt airport to

become more important and competitive in the European transport network.

3.3.2 Impact on the air/rail integration

The introduction of ICE at Frankfurt airport enabled the integration between

high-speed train and airplanes, which developed the intermodal system between

rail and air.

According to Freitag (2006) ,about 83 airlines and 42 package tour operators

were selling packages of air tickets and train tickets together in 2006 , the

passengers buying this kind of package would get a discount on the train ticket

price . This co-called Rail&Fly package had attracted 1.6 milliin passengers in

2005 which is about 6.5% of all passengers departing from Frankfurt Airport.

This trend is expected to be continuously increasing in the future.

Furthermore, Lufthansa airline took the advantage of the high-speed train and

offered the AIRail service with Deutsche Bahn AG and Fraport AG together.

According to the information on Frankfurt Airport Website, the AIRail system

coordinates the train schedule with the Lufthansa flight and made the check-in

procedure faster with Lufthansa check-in counters at the train station in Cologne,

Siegburg/Bonn or Stuttgart. The luggage can also be checked through the

counters at the train statin. A total of 27 airlines had made agreements with

Lufthansa to use the AIRail service to attract customers.

21

The integration between high-speed rail and air definitely offers Frankfurt

airport a competitive advantage while competing with other airports for long-

distance flights and intercontinental flights. For example, Lufthansa can now

compete with KLM for flights to China as they could offer Rail&Fly packages

directly from Amsterdam. Thus, the ICE could bring the airport more passengers.

3.3.3 Impact on the short-haul flights

As ICE shortens the travel time, it will become a strong competitor for the airline,

especially for the short-haul flights. Taking account into all the extra activities

needed for taking the airplane such as check-in, security-check and boarding,

most of the passengers will choose ICE over the plane for short-haul destinations

as it is faster and more convenient. Furthermore, as the introduction of Rail&Fly

ticket, and the AIRail service, it is possible that the airlines may use high-speed

train to substitute the short-haul flights as a feeder thus cut some of the flights.

The case study for Cologne-Frankfurt line will discuss more on this matter. The

Cologne Frankfurt high-speed rail line taking away passengers from airplane

could be a very good example for this effect.

Example: The Cologne-Frankfurt high-speed rail line

In August 2002, the Cologne-Frankfurt high-speed rail line was officially brought

into use. It is the fastest high-speed line in Germany connecting Cologne and

Frankfurt. The creation of this high-speed rail line shortened the travel time

between Cologne and Frankfurt Airport from two hours to only 50 minutes.

Thus, the ICE became a more attractive option than the airplane thus took away a

significant amount of passengers. Figure 3.2 shows the difference between the

number of seats offered and the number of passengers actually flying between

Cologne and Frankfurt from 1989 to 2006.

Figure 3.2 the difference between the number of seats offered and the number of passengers

actually flying between Cologne and Frankfurt

22

Source: Grimme (2007)

It is quite obvious from the graph that after the introduction of Cologne-

Frankfurt high-speed rail line, the demand for air services between Cologne and

Frankfurt dropped dramatically. The number of seats taken was further reduced

after the AIRail service was introduced in 2003 (Grimme, 2007). The number of

seats offered was decreased from more than 250,000 before 2002 to around only

100,000 in 2003, and with further reduction afterwards. The number of air

passengers reduced from around 160,000 before to less than 50,000 in 2003.

According to Grimme (2007), the frequency of the air service per day shrunk

from a maximum of 7 aircrafts per day to a maximum of 4 aircrafts per day and

the size of the aircrafts was also reduced. Furthermore, one can tell from the

trend that the air passenger will still be falling in the future.

This example showed that the high-speed rail could definitely attract some of the

passengers from air services. The number of passengers shifted from air to rail

service depends on several factors, mostly the time saved, and also efficiency,

price, etc.

23

4. Case study on Fyra / Schiphol airport and the comparison between the two case studies

In this chapter, firstly a case study on Fyra and Schiphol airport will be given, and

then it will continue with the comparison between the two case studies.

4.1 Information on Schiphol airport

Schiphol airport locates around 9 kilometers away from Amsterdam city center.

It is the fifth busiest airport in Europe and the biggest and dominate airport in

the Netherlands according to the yearly passengers figures from Airport Council

International. Schiphol had 45,211,749 terminal and transit passengers in 2010

and 43,570,370 passengers in 2009. There was a 3.8% growth in passenger

numbers from year 2009 to 2010. Around 40% of the passengers of Schiphol

airport are transfer passengers. There are over 100 airlines operating in

Schiphol airport. It is also the hub and operation base for the Royal Dutch airline-

KLM.

Schiphol Airport already had fairly good train connections before the high-speed

train “Fyra” was introduced. It is located on the major train lines of the

Netherlands thus there was both a considerable amount of intercity (faster train)

and stop trains (slower train) going to most of the major cities or small towns in

the Netherlands. Each hour there are frequent train services between Schiphol

and the big cities such as Amsterdam and Rotterdam, there are ticket selling

points just outside the airport thus it is really convenient for the air passengers

to access or leave the Schiphol Airport.

Apart from the train service, Schiphol airport was also accessible by other means

of transportation such as car and bus. The airport is connected to the motorways

A4 and A9, and there are several buses leaving airports every hour to different

destination around the airport.

4.2 Information on Fyra

24

The Fyra train service is a high-speed train service planned by the NS

(Nederlandse Spoorwegen, the Dutch Railway Company) that runs between

Amsterdam, Schiphol Airport, Rotterdam, Breda, Antwerp and Brussels. It was

firstly launched in September 2009. The launch of Fyra was the first time that

there has been such a fast and efficient connection between Schiphol Airport and

some of the major cities in Rotterdam. NS Hispeed claimed that Fyra is a more

environmental friendly and energy efficient way than travelling by cars and

normal train and it was aiming to attract a large number of travellers and

commuters to switch their travelling choice with better service and efficiency

(NS Hispeed factsheets, 2009).

Fyra only runs between Amsterdam, Schiphol airport and Rotterdam when it

was firstly introduced. The service was extended to Breda in April 2011 and the

service to Antwerp and Brussels is expected to be available in mid-2012. The NS

is also planning to upgrade the train and accelerate the speed in the near future.

Figure 4.1 shows the operation route of Fyra after it is completed.

Figure 4.1 operation route of Fyra

25

Source: Hispeed.nl

4.2.1 The travel time of Fyra

After the Fyra was introduced, travel time between Schiphol Airport and its

destinations have been shortened. As table 4.1 shows, the travel time between

Schiphol and Rotterdam/Breda was almost reduced by half but the travel time

between Schiphol and Amsterdam still remained the same. This is quite

reasonable considering that there was already a fast intercity connection

between Amsterdam and Schiphol Airport. Furthermore, Amsterdam and

Schiphol Airport is only 9 kilometers apart thus it is quite hard for the trains to

raise its speed. The intercity between Rotterdam and Schiphol Airport have two

more stops then the Fyra (Leiden and Den Haag), and to go from Schiphol to

Breda passengers need to change the train once in Den Haag, thus shortened

travel time between Schiphol Airport and these two cities can be saved from the

stop times and transfer times. The current top speed for Fyra is 160 km/h, and

after the acceleration of the train speed, the top speed will increase to 250km/h

which makes it even faster to travel between Schiphol and Den Haag/Breda

(refer Table 4.2). However, the travel time between Amsterdam and Schiphol

will still remain the same.

Table 4.1 Travel time difference with and without Fyra

26

Destination Travel time (by intercity) Travel time (by Fyra)

Amsterdam 17 min 17 min

Rotterdam 46 min 26 min

Breda 1h 36 min 53 min

Source: NS.nl and Hispeed.nl

Table 4.2 Travel time difference with and without Fyra(after speed upgrade)

Destination Travel time (by intercity) Travel time (by Fyra)

Amsterdam 17 min 17 min

Rotterdam 46 min 19 min

Breda 1h 36 min 41 min

Antwerp 1h 05 min 31min

Brussels 2h 35 min 1h 30min

Source: NS.nl and Hispeed.nl

4.2.2 The price of Fyra

Fyra has a higher price than the normal train. A supplement ticket is needed

when the passenger travels with Fyra besides the normal train ticket. When Fyra

was introduced, NS Hispeed set up a relatively high supplement fair (refer Table

4.3).

Table 4.3 The price of normal train and Fyra in 2009

Destinati

on

Price 2nd

class

(Normal

train)

Price 1st

class

(Normal

Train)

Price 2nd

class (Fyra)

Price 1st

class

(Fyra)

Suppleme

nt 2nd

class

(Fyra)

Supplemen

t1st class

(Fyra)

Amsterda

m

4.00 6.70 6.10 9.30 2.10 2.60

Rotterda

m

10.90 18.50 17.00 26.20 6.10 7.70

(Source: treinreiziger.nl)

However, after Fyra was introduced, the result was not as good as predicted. The

number of passengers was far away behind expectation. Most of the time Fyra

27

only gets a 50% load on second class while the first class is almost empty, and

that is the better scenario. The NS suffered a serious financial difficulty due to

the low income of Fyra and they decided to lower the supplement fare of Fyra

since the 1st of February 2011. (NOS.nl)

As Table 4.4 shows, the supplement fare reduced about 60% compare to the

fares before the price cut. However, it is still questionable whether the

passengers would be willing to pay extra fairs to save not much time, especially

when the normal intercity train has higher frequency than Fyra. Furthermore, it

would be almost certain that the passenger would choose the travel by Fyra

between Amsterdam and Schiphol since they have the same travel time but Fyra

is more expensive than the normal trains.

Table 4.4 The price of normal train and Fyra in 2011 after the price cut

Destination Price 2nd

class

(Normal

train)

Price 1st

class

(Normal

Train)

Price 2nd

class

(Fyra)

Price 1st

class

(Fyra)

Supplement

2nd class

(Fyra)

Supplement1st

class (Fyra)

Amsterda

m

3.70 6.30 4.40 7.30 0.70 1.00

Rotterdam 10.70 18.20 12.80 21.00 2.10 2.80

Breda 16.90 28.70 20.30 33.10 3.40 4.40

(Source: Hispped.nl and NS.nl)

4.3 Impact of Fyra on air transport

This section will address the impact of Fyra on air transport based on the

accessibility of airport, air/rail integration and short-haul flights.

4.3.1 Impact on the accessibility of the airport

28

The Fyra was not likely to have a significant impact on the accessibility of

Schiphol airport considering the fact that Schiphol already had very good train

connections. As previously mentioned in 4.1, the train connection at Schiphol

airport was already quite sophisticated and mature before Fyra was introduced.

Passengers could access Schiphol airport by intercity or stop train from various

locations in the Netherlands. There were already direct train connections from

Schiphol airport to the major cities, such as Rotterdam and Amsterdam. As Fyra

was planned for the big cities which already had a good and comparatively fast

(refer Table 4.1) train service, the introduction of Fyra did not have a significant

impact on the development of airport. Since there are also direct train service to

Antwerp and Brussels, even after the Fyra extend its service to these two cities, it

is still not expected to have any major affects over the development of Schiphol

airport.

4.3.2 Impact on the air/rail integration

Fyra did not really improve the intermodal service of air and rail. There is

currently no Air&Rail package offered by any airlines or travel agencies in

Schiphol since Fyra only connects short distance destinations. Furthermore, the

air and rail integration was already quite convenient before Fyra was introduced,

and most of the passengers still choose to access the airport by normal trains.

Therefore, Fyra did not make a big difference.

4.3.3 Impact on short-haul flights

Fyra may not have any significant effect on short-haul flights at all. At the

moment, Fyra only have three destinations: Amsterdam, Rotterdam and Breda.

None of those destinations would attract many passengers to travel by airplane,

not to mention that Breda does not even have an airport.

However, there are currently other kinds of high-speed trains running in

Schiphol airport. Considering Fyra will extend its service to Brussels and

29

Antwerp, it is worth take a look at the effects of those high-speed trains on short-

haul flights.

There are currently several numbers of Thalys running through Schiphol each

day connecting to Antwerp, Brussels and Paris. Furthermore, passengers could

access the ICE service at Amsterdam Central station that connects to Germany

cities such as Dusseldorf and Frankfurt. Table 4.5 shows the travel time

difference between high-speed train, normal train and airplane (including the

time needed for all the processes to get on the airplane such as check-in,

boarding, to and go from the city center) from Amsterdam central station to the

destinations that can be reached by high-speed train at the moment. Comparing

to travel by airplane, travelling by high-speed train saves only a little amount of

time, or nearly same amount of time. Count in all the other factors discussed

before that might affect the travellers’ decision- less steps required (Check-in,

boarding, travel to/out of the city center, etc) and cheaper price, it is reasonable

to estimate that some of the air passengers will start to travel by the high-speed

train instead of airplane.

Table 4.5 travel time from Amsterdam Central Station to HST destinations

Destination Travel time (High

speed train 2010)

Travel time (Normal

Train)

Travel time (Airplane)

Brussels 1h 44min 2h 51min 2h 30min

Paris 3h 13 min 4h 09min 3h 30min

Frankfurt 3h 56min 3h 56min 4h 10min

Source: Terpstra and Lijesen (2011)

Jorritsma (2010) stated in his paper that 5.7 million journeys to France and

Belgium was made in 2010 after the Thalys was introduced according to NS

Internationaal. Jorritsma (2010) also mentioned that Muconsult (2007) used a

logistic regression model to estimate to possible impact of high-speed train

competing with airplane. He estimated that around 1.6 million potential

passengers would choose to take high-speed train instead in 2020 for the routes

Amsterdam-Paris/London/Brussels. About 16,000 flights per year (assuming

30

100 passengers per flight) will be reduced on Schiphol in 2020 which is

approximately 2.5% of the total flights operated at Schiphol.

4.4 Comparison between the two case study

4.4.1 Comparison between the two airports

Frankfurt and Schiphol airport have the similar situations in terms of size,

function and growth rate (refer Table 4.6): they have the similar yearly

passenger numbers; they are both the biggest airports in its countries; they are

only two places different in the airport ranking; they are both the hubs for the

national airlines; around half of the passengers were transfer passengers. Thus,

the two airports are quite comparable.

Furthermore, the two airports had the similar accessibility by car and bus before

HST was introduced. However, the two had different conditions concerning the

accessibility by train before the high-speed train was introduced: Schiphol

airport had better train connections (refer Table 4.7) Considering Frankfurt had

the ICE in 1999 and Schiphol only had Fyra in 2008, it is quite reasonable that

the Frankfurt would have a worse train connection back then, but this difference

should be taken into consideration in the later discussion and analysis.

Table 4.6 Summary of the situation of Frankfurt and Schiphol airport

Airport Airport

rankin

g

Yearly

Passenger

(2010)

Growth

rate

(2009-

2010)

Hub airport for

airlines?

Percentage

transfer

passengers

Frankfurt 3 53,009,221 4.1% Yes (Lufthansa) 50%

Schiphol 5 45,211,749 3.8% Yes (KLM) 42%

Table 4.7 Accessibility of the airport before HST

Airport Accessibility Accessibility (Bus) Accessibility (Train)

31

(Car)

Frankfurt Connects to 3

highways

Fair amount and

frequency of buses to

near destinations

Only RegionalBahn and S-

Bahn

Schiphol Connects to 2

highways

Fair amount and

frequency of buses to

near destinations

Both intercity and stop

trains.

4.4.2 Comparison between ICE and Fyra

ICE and Fyra both shortened the travel time from various destinations to the

airports while ICE had a stronger effect on travel time than Fyra. Furthermore,

they both have higher prices than the normal train.

However, there are also quite a few differences between ICE and Fyra. Firstly,

ICE connects to both domestic and international destinations while Fyra only

runs inside the Netherlands. Moreover, ICE has dozens of various destinations in

every part of Germany while Fyra only connects to three destinations. Secondly,

Ice had a positive influence on both accessibility of the airport and air/rail

integration but Fyra had almost no impact on these two aspects. Finally, ICE

took a considerable amount of air passengers from short-haul flights. On the

other hand, Fyra did not have significant effects on short-haul flights since the

destination of Fyra were too close to the airport for the passengers to take

airplanes in the first place. Nevertheless, when Fyra extend its destinations to

Antwerp and Brussels it might have some impact on short-haul flights.

Table 4.8 Summary of the impact of HST on different aspects

High- Travel Travel cost Accessibilit Air/rail Short-haul flights

32

speed

train

time y of the

airport

integration

ICE Shorten

ed

Increased Improved Improved Took a significant

amount of passengers

away

Fyra Less

shorten

ed

Increased No

significant

impact

No

significant

impact

No significant impact

The case study could give us some insights on what happened to the airports

after the high-speed train was launched. However, it is still quite limited to

conclude the effects of high-speed trains just based on these facts. Therefore, it is

necessary to collect some actual data about the two airports and perform some

analysis to dig deeper into the real scenarios.

5. Data Analysis

5.1 Methodology and Data selection

33

Two indicators are chosen to examine the effect of high-speed trains on airports:

air transport movements and monthly air passengers since they represent the

most direct effect on the passenger flows and airlines.

To evaluate the change in the indicators before and after the high-speed train

was introduced, difference-in difference (DID) estimation would be the most

appropriate method.

The difference-in difference estimator evaluates the impact of a treatment (in

this case having the high-speed train service) by comparing the outcomes for

two groups. Group 1 (the treatment group) is exposed to a treatment in the

second period but not the first period and group 2 (the control group) is not

exposed to the treatment for both time periods. In this case, Schiphol will be the

control group for Frankfurt since it only had less than two years of high-speed

train service. By comparing the outcomes (the two indicators) for Schiphol and

Frankfurt airport, we will be able to see how high-speed train affected the air

transport in the long run, thus estimate Fyra it would affect the air transport in

the future.

The model of DID estimation is given by the following equation (Albouy, D, n.d.):

Yi = + Ti + ti + (Ti ·ti)+ iα β γ δ ε

Where Yi is the outcome of the treatment (two indicators), Ti is the dummy that

group dummy and accounts the average permanent differences between theβ

two groups. ti is the time dummy and tells the common time trend for the twoγ

groups. (Ti ·ti) is the interaction variable for the group dummy and time dummy,

and represents the actual effect of the treatment (high-speed train). δ

By performing a regression analysis, we could get the DID estimator. The two

indicators will be treated as dependent variables to see how they would react on

the changes in the high-speed train services and time. A natural logarithm will be

taken on both of the dependent variables to remove heteroscedasticity problem

34

for the regression. Since the values of the indicators are too big, the variance of

the error term for the regression analysis would not be constant and thus the

standard errors for the test will be biased. Taking the natural logarithm of the

variables would smaller the variances and thus makes the analysis easier and

more accurate.

Seven independent variables will be included in different regressions based on

different purpose:

Frankfurt Airport dummy: this variable will evaluate the difference between Frankfurt airport and Schiphol airport regards the indicators in average.

ICE dummy (later noted as ICE): this variable will show how the ICE service would affect the dependent variables.

Fyra dummy (later noted as Fyra): this variable will show how the Fyra service would affect the dependent variables. This dummy shows the immediate effect of Fyra.

ICE dummy * time (later noted as ICE*date): this is an interaction variable of ICE dummy and dates. It shows the continuous effect of ICE on the dependent variables.

Fyra dummy * time (later noted as Fyra*date): this is an interaction variable of Fyra dummy and dates. It shows the continuous effect of Fyra on the dependent variables.

Time dummy for each year (later noted as i.year): it would show how the dependent variables would change along the years, thus exclude the effect of year on the indicators. The first year 1980 will be used as a reference.

Time dummy for each month (later noted as i.month): it would show the trend of the dependent variables for different months, thus exclude the effect of year on the indicators. January of each year will be used as a reference.

To check if all the independent variables can be put in the same regression

analysis, first a correlation between the variables should be tested. As a result,

the correlation between ICE and ICE*date; Fyra and Fyra*date is too high to be

put in the same regression, thus two different regressions should be done

regarding immediate effects and continuous effects. Table 5.1 summarizes the

independent variables and dependent variables for each regression.

Table 5.1 Dependent and independent variables chosen for the regression analysis

Immediate or

Continuous effect

Dependent

variable

Independent

variables (ICE

effect for the

whole time period)

Independent variables

(ICE effect for separate

time periods)

35

Immediate effect Log Air Transport

Movements

Frankfurt airport

dummy , ICE, Fyra ,

i.year, i.month

Frankfurt airport dummy ,

ICE 1st yr, ICE 2nd yr, ICE 3rd

year onwards, Fyra , i.year,

i.month

Log Monthly air

passengers

Continuous effect Log Air Transport

Movements

Frankfurt airport

dummy , ICE *date,

Fyra *date, i.year,

i.month

Frankfurt airport dummy ,

ICE 1st yr, ICE 2nd yr, ICE 3rd

year onwards*date, Fyra ,

i.year, i.month

Log Monthly air

passengers

Furthermore, in this case with the Schiphol and Frankfurt airport, the situation is

a little different from the theory. As Schiphol, the control group already had Fyra

for two years, and there are no control group with no HST connection, the

previous DID estimation may not be very solid. Thus, a different regression could

be done to improve the above model. To access the possible future effect of Fyra,

we could separate the ICE dummy into dummies for each year during the first

few years. Thus, there will be five dummies for ICE instead of one in the

following regression tests: ICE 1st year, ICE 2nd year, ICE 3rd year, ICE 4th year

and ICE 5th year and onwards. This will enable us to examine the effect of ICE for

the first four years separately and for the fifth year and onwards. Therefore, we

can predict the possible future effect of Fyra according to the trend of the change

in effects of ICE on indicators.

Regressions with one single ICE dummy to examine the overall effect of ICE and

possibility the effect of Fyra on the indicators will be discussed in section 5.2.

And regressions with separate ICE dummies will be discussed in section 5.3.

5.2 DID regression for the effect of HST with one single ICE dummy

Four different regression analyses were done with single ICE dummy, to examine

both the immediate and continuous effect of HST on the two indicators. The

results are summarized in Table 5.2. The first number in each cell is the

36

coefficient for the various dummies. The “*” represents significance level of the

dummies where “***” means that the dummy is significant at a 0.1% level, “**”

means that the dummy is significant at a 1% level and “*” means that the dummy

is significant at a 5% level. The numbers in the brackets are the robust standard

error.

Table 5.2 Summary of the result of the DID regression (with single ICE dummy)

Air transport movement (immediate effect)

Air transport movement (continuous effect)

Number of monthly passengers(immediate effect)

Number of monthly passengers (continuous effect)

Frankfurt airport

0.220***(0.0082) 0.220***(0.0080)

0.371***(0.0101) 0.374***(0.0099)

ICE -0.080***(0.009) -0.190***(0.012)ICE*date -0.00015***

(0.000017)-0.00036***(0.000021)

Fyra -0.050 **(0.016) No significant effect

Fyra*date -0.000097***(0.000279)

No significant effect

Constant 9.53***(0.014) 9.52***(0.013) 13.62***(0.015) 13.62***(0.015)R2 0.980 0.980 0.985 0.985Number of observations: 600

Note that the year dummy and month dummy are also included in the regression

analysis, the result is not shown in the table since they are not very relevant for

the discussion. Furthermore, the test results for Schiphol airport maybe biased

since there is no control group with no HST connection. However, these results

will still be discussed just as a reference.

For the continuous effect of HST on air transport movement, we can conclude

that having a high–speed train service would having a slightly negative

continuous effect for both Frankfurt (-0.015%) and Schiphol Airport (-0.0097%).

Furthermore, ICE and Fyra also have a negative immediate effect on the air

37

transport movement, with the coefficient for ICE around -7.95% and the

coefficient for fyra around -5.06%.

Overall, the regression analysis showed a negative relationship between having a

high-speed train and air transport movements for both airports. This might be

resulted by airlines cutting short-haul flights. For both Fyra and ICE, the absolute

values of the coefficients are quite small, indicating that the air transport

movements are only slightly influenced by the high-speed train. The possible

explanation could be that the airlines may launch new air (long-haul) routes as

the cut of short-haul flights frees runway capacity. Furthermore, the air

transport movement data also contains data for cargo planes and it won’t be

affected by the high-speed train.

The test result for effects on Fyra on air transport movement is significant,

although the coefficient is very small. This result is not consistent with what

expected in the case study. However, the air transport movement data is not for

passenger transportation alone, and Schiphol also had other high-speed train

running (Thalys) at the same time. All these elements would have affect the

result of the analysis. Thus, it could still be the case that Fyra does not have very

much effect on air transport movements for passengers.

Nevertheless, the air transport movement contains information on both cargo

transportation and passenger transportation. Since the cargo transportation is

unlikely to be affected by the high-speed train, it might be more relevant to take

a look at the other indicator: monthly air passengers to address the effect of HST

on air transportation.

The regression result suggested that ICE has both negative continuous (-0.036%)

and immediate (-19%) effects on the number of monthly air passengers while

Fyra does not have a significant impact on the number of monthly passengers.

38

The regression result showed a bigger effect of ICE on air transport movement

for the first two year than the time period after the third year. Furthermore, the

immediate effect of the whole period (-7.95%) is a bit stronger than the

immediate effect from third year onwards (-7.52%).

The ICE had stronger effect on the number of monthly air passengers than the air

transport movement, proves the number of monthly air passengers is a more

relevant indicator since it only shows the outcome on the air passengers. The

main reason of the negative relationship between ICE and monthly air passenger

numbers is that the ICE would take away passengers from short-haul flights.

On the other hand, Fyra does not have significant effect on the number of

monthly air passenger. It is consistent with the estimation in the case study.

There are two possible reasons to explain this result: firstly, Fyra will not take

passengers away from the short-haul flights. Secondly, the passengers may still

choose to take normal trains other than Fyra since the normal trains offers

similar time and lower price.

5.3 DID regression for the effect of HST with separate ICE dummies

Another four different regression analyses were done in this section to examine

the effect of ICE for the each of the first few years and also long-term effect of

ICE. By comparing to the trend in the effect of ICE we can thus predict the future

effect of Fyra. The results are summarized in Table 5.3. The first number in each

cell is the coefficient for the various dummies. All the dummies are significant at

a 0.1% level and are represented by “***”. The numbers in the brackets are the

robust standard error.

Table 5.3 Summary of the result of the DID regression (with separate ICE dummies)Air transport movement

Air transport movement

Number of monthly

Number of monthly

39

(immediate effect)

(continuous effect) passengers(immediate effect)

passengers (continuous effect)

Frankfurt airport

0.220***(0.0082)

0.220***(0.0082) 0.373***(0.0098)

0.373***(0.0098)

ICE 1st year -0.089***(0.013)

-0.090***(0.013) -0.117***(0.016) -0.118***(0.016)

ICE 2nd year -0.108***(0.012)

-0.108***(0.012) -0.122***(0.017) -0.123***(0.017)

ICE 3rd year -0.114***(0.13) -0.114***(0.13) -0.199***(0.019) -0.199***(0.019)ICE 4th year -0.071***

(0.014)-0.071***(0.014) -0.203***(0.017) -0.201***(0.017)

ICE 5th year and onwards

-0.069***(0.0094)

-0.215***(0.012)

ICE 5th year and onwards*date

-0.00012***(0.0000017)

-0.00039***(0.000020)

Constant 9.52***(0.013) 9.52***(0.013) 13.62***(0.015) 13.62***(0.015)R2 0.980 0.980 0.986 0.986Number of observations: 600

Note that the independent variables Fyra, Fyra*date, year dummy and month

dummy were also included in the regression, but the results are not reported in

the table since they are not quite relevant to the analysis. Furthermore, the ICE

dummies for each of the first four years will not be tested for continuous effect

since they only represent the difference for one year. Thus, it would not not

comparable to the continuous effect on the dummy “ICE 5th year and onwards”.

Therefore, the following analysis will be focused on the coefficients for

immediate effect to observe a trend in the change in effects of ICE.

The regression result for immediate effect of ICE on immediate effect for

different time periods showed an increase trend for negative effects during the

first three years (from -9% to -11.4%), and then from the fourth year after ICE

was introduced, the strength of the negative effects appeared a decreasing trend

(from -11.4% to -6.9%).

40

Possible explanation for the trend could be that airlines react to the high-speed

train firstly by cutting the short-haul flights, but later they might announce new

air routes. The same trend can be applied to the Fyra case in the future after it

extends its service to Brussels. There might be an increase trend of the effect of

Fyra in the beginning, after few years the effect will be less strong. Furthermore,

the effect of Fyra might be less strong than ICE since Fyra has much less

destinations than ICE.

However, as explained earlier in section 5.2, the air transport movement is not

the best indicator for the change in air transport as it contains information on

both cargo transportation and passenger transportation. Thus, it might be more

relevant to look at the other indicator.

The regression result showed an increasing trend in the negative effect of ICE on

monthly air passenger numbers from the first year to the fifth year and onwards

(from -11.7% to -22.5%). Furthermore, the increasing trend in the strength of

negative effect became more and more steady as time passes.

Three possible reasons could cause the increasing trend in the effect of ICE on

monthly air passengers. Firstly, the passengers might need time to get to know

and adapt the new ICE train. Secondly, the airlines might also need time to

improve the intermodal system. Thirdly, the ICE train developed more and more

destinations and routes over time, thus might take away more passengers as it

expand its services. Furthermore, after the passengers and airlines have been

fully adapted to the new ICE service, and after the ICE network became mature,

the effect of ICE will become less violent. This might explain why the growth in

the negative effect of ICE on air passengers became steadier after a few years.

The future effect of Fyra on monthly air passengers is very likely to have the

same trend as ICE. The effect might become stronger in the next few years.

Furthermore, after Fyra expands to Brussels and Antwerp in the future, the effect

of Fyra are expected to have a significant growth. However, considering that Fyra

41

much less destinations, the effect of Fyra on passengers will not be as strong as

ICE.

6. Conclusion

There have been many discussions about the effect of Fyra on air transport but

there are no solid conclusions yet. This paper examines the possible effect of

Fyra on air transport from different aspects.

The literature review offered different point of views on the effects of high-speed

trains. Some argued that it would increase the air transport while others argue

that it would decrease the air transport. Furthermore, there are also arguments

that even though the high-speed train might decrease the air transport but it

would improve the environment and congestion at the airport.

Most of the literatures only contain descriptive reasoning or case studies on a

certain air route and it is hard to draw a conclusion on the effect of Fyra just

based on the literature view. Thus it was necessary to continue the research with

case study and data analysis. Frankfurt airport was selected to compare with

Schiphol airport since they have the similar size and function. Furthermore,

Schiphol airport was treated as the control group to see the future effects of Fyra

on air transport. Following conclusions was drawn after the case study and

analysis:

6.1 The effect ICE on air transport

Conclude from the case study, ICE was introduced ten years earlier than Fyra. It

runs through Frankfurt airport to almost every part of Germany, and also

neighbor countries. There were quite a few evidences suggest that ICE improved

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the accessibility of the airport and intermodal system between rail/air of the

airport, but it also took away passengers from short-haul flights.

The result of the DID regression were consistent with the evidences in the case

study. ICE had negative effects on both air transport movements and monthly air

passengers, especially on the monthly air passengers. It might be caused by ICE

taking away short-haul air passengers.

Although ICE had a negative effect on air transport, it was still a necessary and

beneficial investment, for the following reasons:

Firstly, Frankfurt airport had a worse train connection twelve years ago compare

to what Schiphol had two years ago. Thus, ICE was much more essential to the

airport at that time to improve the accessibility and air/rail integration.

Furthermore, as ICE has many long-distance destinations it would offer a faster

and more convenient train service to the travellers. Secondly, as ICE substituted

for a considerable amount of short-haul flights, it could be more environmental

friendly. ICE produces fewer emissions and has more capacities than the

airplane. Furthermore, it could free the airport runway, thus enable the airport

to plan more long-distance flights and it could improve the congestion at the

airport. Thirdly, ICE offered great champion opportunities for both the airport

and the airlines. The introduction of AIRail and Air&Rail service increase the

competitiveness of both the airport and airlines to some extent.

Overall, ICE did have a strong effect on the air transport. The introduction of ICE

was overall socially beneficial and crucial even though it reduces air transport.

6.2 Estimation of the future effect of Fyra

Learning from the past experience with ICE, Fyra is very likely to have more

effect on air transport in the future when it extends its service to Beligum and

when travellers and airlines start to adapt to the service. However, the effect will

most likely to be small for several reasons:

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Firstly, before Fyra was introduced, there was already a mature train system in

Schiphol airport, and another high-speed train Thalys is already running through

Schiphol airport to Brussels. Thus, even if Fyra extends its service to Brussels it

might not make a very big difference. Secondly, as the size of Germany is much

bigger than the Netherlands, the destinations of ICE are mostly hours away from

Frankfurt Airport. Compare to ICE, the destinations of Fyra was relatively close

to the Airport. The farthest destination of Fyra at the moment is Breda with a

journey time less than one hour. It would not make much a difference for the

travellers.

Therefore, to conclude: Fyra is expected to have increasing stronger effects on

air transport in the future, it might reduce air transport but there will be social

benefits. However, the effects are not expected to be very significant. Compare to

ICE, Fyra is expected to be less socially beneficial and less crucial to the air

transport.

6.3 Limitations and future researches

This paper gives a more solid evaluation on the effect of ICE and Fyra on air

transport based on evidences and data analysis than the previous researches.

However, there are still a few limitations.

Firstly, while doing the DID estimation, Schiphol, as the control group already

had two years of experience with HST. In theory, the control group for DID

estimation should not be exposed to the treatment at all. Thus, this might affect

the accuracy of the DID estimation. For future research, one could include one

more control group with an airport haven’t had any high-speed train

connections.

44

Secondly, the indicator “air transport movements” include both the cargo and

passenger transportations. As the high-speed train does not affect cargo

movements, the result might have less relation with the effect of HST. Thus, for

future research, one could exclude the cargo out of the air transport movement.

7. Reference:

7.1 Literature:

45

Albouy, D. n.d. Program Evaluation and the Difference in Difference Estimator.

Section notes. Economics 131. University of California, Berkeley

<http://emlab.berkeley.edu/users/webfac/saez/e131_s04/diff.pdf>

de Rus G. and Nash C. 2007. In what circumstances is investment in HSR

worthwhile?. ITS Working Paper 590, Institute for Transport Studies University

of Leeds.

de Rus, G. and Inglada, V. 1997. Cost-benefit analysis of the high-speed train in

Spain. The Annals of Regional Science, 31, pp. 175-188.

Givoni, M. 2006. Development and impact of the Modern High-speed Train: A

Review. Transport Reviews 26 (5): 593-611.

Givoni M. 2007. Environmental benefits from mode substitution: Comparison of

the environmental impact from aircraft and high-speed train operations.

International Journal of Sustainable Transportation 1 (4): 209-230.

Givoni, M., Banister, D. 2006. Airline and railway integration. Transport Policy, 13

(5): 386-397

Gonzalez-Savignat M. 2004. Competition in air transport: The case of the high

speed train. Journal of Transport Economics and Policy 38(1): 77-108.

Grimme, W. 2007. Experiences with Advanced Air-Rail Passenger Intermodality

– The case of Germany. DLR Working Paper

Grimme, W. 2006. Air/Rail Intermodality – Recent Experiences from Germany.

Aerlines Magazine, issue 34 ,

Jorritsma, P. (2009), “Substitution opportunities of High Speed Train for air

transport”, Aerlines Magazine, issue 43.

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López-Pita, A. and Robustè, F. (2005) Impact of High-Speed lines in relation to

very high frequency air services, Journal of Public Transportation, 8(2), 17-35.

López-Pita, A., and F. Robusté. 2003. The effects of high-speed rail on the

reduction of air congestion. Journal of Public Transportation 6 (1): 37–52.

Nash, C. A. 1991. The case for high speed rail. Working Paper 323. Institute for

Transport Studies, The University of Leeds.

Park, Y. & Ha, H. 2006. Analysis of the impact of high-speed railroad service on

air transport demand, Transportation Research Part E: Logistics and

Transportation Review, vol. 42, no. 2, pp. 95-104.

Terpstra, I., Lijesen, M. 2011. High-Speed Train as a Feeder for Air Transport.

Aerlines Magazine. issue 49

Wooldridge, J.2007. Lecture 10: Difference-in-Differences Estimation. NBER

Summer Institute.

<http://www.nber.org/WNE/Slides7-3107/slides_10_diffindiffs.pdf>

7.2 Websites:

Airport Council International

< www.airports.org >

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DB -Deutsche Bahn

< www.db.de >

Frankfurt Airport

< www.frankfurt-airport.com>

Fraport AG

< www.fraport.com>

Fyra

< http://www.fyra.com/index.php?page=ns-hispeed-factsheets&hl=de_DE>

“Heteroscedasticity” - notes from University of Notre Dame

< http://www.nd.edu/~rwilliam/stats2/l25.pdf >

MFO.de

<http://www.mfo.de/for-guest-researchers/prepare-your-stay/ice-

mainlines-2011.pdf>

NOS- Nederlandse Omroep Stichting

<http://nos.nl/artikel/215615-exploit...problemen.html>

NS - Nederlandse Spoorwege:

<www.ns.nl>

NS Hispeed

<www.nshispeed.nl>

Schiphol Airport

<www.schiphol.nl>

Treinreiziger .nl

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<http://www.treinreiziger.nl/reizen/fyra/

prijzen_treintickets_fyra_standaard_tarief >

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