Optimization of ticket pricing for high-speed railway considering full competitive environment

Abstract

The rapid development of high-speed railways (HSR) worldwide has provided a fast, convenient, safe, and comfortable mode of transportation. It is also an important public transportation tool for green travel, contributing to the reduction of carbon emissions. HSR has a strong competitive advantage in long-distance passenger transportation, but it faces significant competition from the aviation industry. Airlines attract passengers with discounted fares and differentiated pricing strategies, apart from shorter travel times. Therefore, it is necessary for railway enterprises to enhance their competitiveness through differentiated pricing methods for HSR. In this study, we focus on optimizing a long-distance origin-destination (OD) pair and creating a competitive market environment by considering all operating trains and flights for the selected OD pair. We aim to improve the realism of the study by considering passengers’ fully rational travel choice behavior. To reduce the complexity of variables, passengers are grouped based on their expected departure time and income level. A mixed integer linear programing model is developed to address the problem, aiming to minimize overall travel costs for passengers while ensuring that the income of the railway enterprise does not fall below a specified value. By setting this specific value, the maximum revenue of HSR train tickets can be obtained.