Advanced Search
MyIDEAS: Login to save this article or follow this journal

Customer segmentation revisited: The case of the airline industry


Author Info

  • Teichert, Thorsten
  • Shehu, Edlira
  • von Wartburg, Iwan
Registered author(s):


    Although the application of segmentation is a topic of central importance in marketing literature and practice, managers tend to rely on intuition and on traditional segmentation techniques based on socio-demographic variables. In the airline industry, it is regarded as common sense to separate between business and economy passengers. However, the simplicity of this segmentation logic no longer matches the ever more complex and heterogeneous choices made by customers. Airline companies relying solely on flight class as the segmentation criterion may not be able to customize their product offerings and marketing policies to an appropriate degree in order to respond to the shifting importance and growing complexity of customer choice drivers, e.g. flexibility and price as a result of liberalization in the airline industry. Thus, there is a need to re-evaluate the traditional market segmentation criterion. By analyzing the stated preference data of more than 5800 airline passengers, we show that segmenting into business and leisure (a) does not sufficiently capture the preference heterogeneity among customers and (b) leads to a misunderstanding of consumer preferences. We apply latent class modeling to our data and propose an alternative segmentation approach: we profile the identified segments along behavioral and socio-demographic variables. We combine our findings with observable consumer characteristics to derive pronounced fencing mechanisms for isolating and addressing customer segments receptive for tailored product packages.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL:
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Elsevier in its journal Transportation Research Part A: Policy and Practice.

    Volume (Year): 42 (2008)
    Issue (Month): 1 (January)
    Pages: 227-242

    as in new window
    Handle: RePEc:eee:transa:v:42:y:2008:i:1:p:227-242

    Contact details of provider:
    Web page:

    Order Information:

    Related research



    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Peter M. Guadagni & John D. C. Little, 1983. "A Logit Model of Brand Choice Calibrated on Scanner Data," Marketing Science, INFORMS, vol. 2(3), pages 203-238.
    2. Vredin Johansson, Maria & Heldt, Tobias & Johansson, Per, 2006. "The effects of attitudes and personality traits on mode choice," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(6), pages 507-525, July.
    3. Anable, Jillian & Gatersleben, Birgitta, 2005. "All work and no play? The role of instrumental and affective factors in work and leisure journeys by different travel modes," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(2-3), pages 163-181.
    4. Rinus Haaijer & Michel Wedel & Marco Vriens & Tom Wansbeek, 1998. "Utility Covariances and Context Effects in Conjoint MNP Models," Marketing Science, INFORMS, vol. 17(3), pages 236-252.
    5. Inglada, Vicente & Rey, Belen & Rodri­guez-Alvarez, Ana & Coto-Millan, Pablo, 2006. "Liberalisation and efficiency in international air transport," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(2), pages 95-105, February.
    6. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387.
    7. Louviere, Jordan J, 2001. " What If Consumer Experiments Impact Variances as Well as Means? Response Variability as a Behavioral Phenomenon," Journal of Consumer Research, University of Chicago Press, vol. 28(3), pages 506-11, December.
    8. Swan, William M., 2002. "Airline demand distributions: passenger revenue management and spill," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 38(3-4), pages 253-263, May.
    9. Vermunt, Jeroen K. & Magidson, Jay, 2003. "Latent class models for classification," Computational Statistics & Data Analysis, Elsevier, vol. 41(3-4), pages 531-537, January.
    10. Jaehwan Kim & Greg M. Allenby & Peter E. Rossi, 2002. "Modeling Consumer Demand for Variety," Marketing Science, INFORMS, vol. 21(3), pages 229-250, December.
    11. Lindstädt, Hagen & Fauser, Bernd, 2004. "Separation or integration? Can network carriers create distinct business streams on one integrated production platform?," Journal of Air Transport Management, Elsevier, vol. 10(1), pages 23-31.
    12. Alamdari, Fariba & Mason, Keith, 2006. "The future of airline distribution," Journal of Air Transport Management, Elsevier, vol. 12(3), pages 122-134.
    13. Mason, Keith J., 2005. "Observations of fundamental changes in the demand for aviation services," Journal of Air Transport Management, Elsevier, vol. 11(1), pages 19-25.
    14. Jiang, Meilan & Morikawa, Takayuki, 2004. "Theoretical analysis on the variation of value of travel time savings," Transportation Research Part A: Policy and Practice, Elsevier, vol. 38(8), pages 551-571, October.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Hetrakul, Pratt & Cirillo, Cinzia, 2013. "Accommodating taste heterogeneity in railway passenger choice models based on internet booking data," Journal of choice modelling, Elsevier, vol. 6(C), pages 1-16.
    2. Bliemer, Michiel C.J. & Rose, John M., 2011. "Experimental design influences on stated choice outputs: An empirical study in air travel choice," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(1), pages 63-79, January.
    3. Vij, Akshay & Walker, Joan L., 2014. "Preference endogeneity in discrete choice models," Transportation Research Part B: Methodological, Elsevier, vol. 64(C), pages 90-105.
    4. Vespermann, Jan & Wald, Andreas, 2011. "Much Ado about Nothing? – An analysis of economic impacts and ecologic effects of the EU-emission trading scheme in the aviation industry," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(10), pages 1066-1076.
    5. Diana, Marco & Pronello, Cristina, 2010. "Traveler segmentation strategy with nominal variables through correspondence analysis," Transport Policy, Elsevier, vol. 17(3), pages 183-190, May.
    6. Torres, Ann M. & Barry, Chris & Hogan, Mairéad, 2009. "Opaque Web practices among low-cost carriers," Journal of Air Transport Management, Elsevier, vol. 15(6), pages 299-307.
    7. Hetrakul, Pratt & Cirillo, Cinzia, 2014. "A latent class choice based model system for railway optimal pricing and seat allocation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 61(C), pages 68-83.
    8. Balcombe, Kelvin & Fraser, Iain & Harris, Liam, 2009. "Consumer willingness to pay for in-flight service and comfort levels: A choice experiment," Journal of Air Transport Management, Elsevier, vol. 15(5), pages 221-226.
    9. Martinez-Garcia, Esther & Royo-Vela, Marcelo, 2010. "Segmentation of low-cost flights users at secondary airports," Journal of Air Transport Management, Elsevier, vol. 16(4), pages 234-237.


    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


    Access and download statistics


    When requesting a correction, please mention this item's handle: RePEc:eee:transa:v:42:y:2008:i:1:p:227-242. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.