Intercity network expansion by low-cost carrier or high-speed rail, from the environmental perspective

Abstract

This study investigates CO2 emissions when expanding the intercity transport network through low-cost carriers (LCCs) or high-speed rail (HSR). We establish an integrated economic model to derive the equilibrium service frequency, ticket price, traffic and load factor of an inter-city network with expansion through LCCs or HSR. Then, an empirical investigation was supplemented for a real case study in the Chinese market. It is found that although HSR is more emission-efficient per passenger-km, the HSR network expansion can cause more total emissions than the LCC network expansion. This is because LCCs have more flexibility to adjust frequency to maintain high load factors, and their shorter route distance and travel time can reduce total emissions. The HSR network expansion can bring fewer total emissions, only when the expanded small cities are closer to the existing network, and when they have sizable travel demand. This finding calls for caution to evaluate China's strategy to expand its transport network to remote and less-developed regions. In particular, the LCC development needs more favorable support, from the perspective of environmental protection. Our comparative results in terms of emissions and social welfare can also be referred by other major markets around the world to consider using LCCs to expand their inter-city transport networks.