Travel demand estimation risk for high‐speed railway transport considering travel price competition

The Hokkaido Shinkansen (HS) bullet train line is under consideration to open in 2020. In this study, travel demand is estimated for the HS. Because some explanatory variables that are used for such estimation can have estimation errors, travel demand estimation risk is also calculated. In addition, because the HS can compete with airlines for modal share, the impacts of travel price competition (TPC) on the travel demand and the demand estimation risk are also estimated. In this study, the travel demand estimation risk is measured as the variance or the SD of the stochastic travel demand. The analysis reveals the following: the modal share of HS is 16% less when TPC is considered than when it is not considered; TPC causes the travel demand estimation risk to decrease; the probabilities of the HS operating at a deficit with and without consideration of TPC are calculated as 31.2% and 1.25%, respectively, and the increase in the mean consumer surplus accruing from the HS is calculated as JPY 47bn/year ($US588m/year) without TPC and as JPY 66bn/year ($US825m/year) with TPC. Copyright © 2012 John Wiley & Sons, Ltd.