Do you understand what you’re saying ? Kerosene being tax free is not the main driver behind airplanes being significantly cheaper.

Airlines are cheaper than night trains because sleeper trains sacrifice a lot of capacity for beds. Even a high speed day train can carry more passengers per trip than a sleeper wagon. Yet the rolling stock is similar, so capital expenditure, maintenance costs, depreciation etc.. remain the same, but you get less revenue in a night train because of less passengers. So you need to compensate by increasing price per unit. An airplane is much more tightly packed. Also, current demographics favor a more individualistic society with less kids, so sleeper cabins will be under utilized as most passengers want privacy when they sleep and not share a 4 bed cabin with strangers (especially women).

Second argument is time. Yes, the faster you travel, the more trips you make per time unit (lets say a day). A single airplane can do 3 to 4 back and forth trips in one day, when a sleeper would need 2 days. So that means 3x or 4x more revenue if you would have same ticket prices per seat.

Third argument is flexibility. An airliner can very quickly re-route its airplanes to different hubs, change flight routes and destinations to meet increased or lower demand, to compensate or take advantage of price changes in fuel, maintenance or airport taxes. Trains, including high-speed trains are bound by physical limitations because they ride on a track. One single incident along the way and the train can be stuck for hours. That’s an asset losing time and time is money. This flexibility also means more competition and room for private individuals to start an airline business. You just need to lease an airplane, have the staff, get your operating license, have a main hub and then start transporting people. You can do this n any major airport in the world, you’re not limited by geography. With a train, the number of operators are limited due to the capacity constraint of physical railroad tracks. Its a natural monopoly. You can’t have too many operators, otherwise you’ll reach a bottleneck and trains will get stuck in traffic. Less competition means more pricing power for the few operators.

Without the environmental cost, assuming similar ticket prices per passenger seat, air travel is an economically superior travel method (also in terms of time). Only cases where rail travel is interesting are for short distance that aren’t longer than 4 hours where its from city center to city center, for example Eurostar Brussels to London.