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Consumer willingness to pay for in-flight service and comfort levels: A choice experiment

Author

Listed:
  • Balcombe, Kelvin
  • Fraser, Iain
  • Harris, Liam

Abstract

In the competitive aviation market as a result of the emergence of low cost carriers, charter airlines have had to reconsider their approach to service provision. Specifically, the reduction in service and comfort levels offered by the low cost airlines provides charter carriers with an opportunity to differentiate their product based on the quality of the offering. To consider this strategic option we employ an on-line choice experiment to examine consumer choices with respect to the bundle of services on offer when deciding to purchase a flight. With these data we use the Bayesian methods to estimate a mixed logit specification. Our results reveal that in principle passengers are willing to pay a relatively large amount for enhanced service quality.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:jaitra:v:15:y:2009:i:5:p:221-226
    DOI: 10.1016/j.jairtraman.2008.12.005
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    References listed on IDEAS

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    1. Rose, John M. & Hensher, David A. & Greene, William H., 2005. "Recovering costs through price and service differentiation: Accounting for exogenous information on attribute processing strategies in airline choice," Journal of Air Transport Management, Elsevier, vol. 11(6), pages 400-407.
    2. Teichert, Thorsten & Shehu, Edlira & von Wartburg, Iwan, 2008. "Customer segmentation revisited: The case of the airline industry," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(1), pages 227-242, January.
    3. Dennis, Nigel, 2007. "End of the free lunch? The responses of traditional European airlines to the low-cost carrier threat," Journal of Air Transport Management, Elsevier, vol. 13(5), pages 311-321.
    4. Espino, Raquel & Martín, Juan Carlos & Román, Concepción, 2008. "Analyzing the effect of preference heterogeneity on willingness to pay for improving service quality in an airline choice context," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 44(4), pages 593-606, July.
    5. Hess, Stephane & Adler, Thomas & Polak, John W., 2007. "Modelling airport and airline choice behaviour with the use of stated preference survey data," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 43(3), pages 221-233, May.
    6. Hess, Stephane & Polak, John W., 2005. "Mixed logit modelling of airport choice in multi-airport regions," Journal of Air Transport Management, Elsevier, vol. 11(2), pages 59-68.
    7. Bieger, Thomas & Wittmer, Andreas, 2006. "Air transport and tourism—Perspectives and challenges for destinations, airlines and governments," Journal of Air Transport Management, Elsevier, vol. 12(1), pages 40-46.
    8. David Hensher & William Greene, 2003. "The Mixed Logit model: The state of practice," Transportation, Springer, vol. 30(2), pages 133-176, May.
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    Citations

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    Cited by:

    1. Chen, Hsi-Tien & Chao, Ching-Cheng, 2015. "Airline choice by passengers from Taiwan and China: A case study of outgoing passengers from Kaohsiung International Airport," Journal of Air Transport Management, Elsevier, vol. 49(C), pages 53-63.
    2. Gao, Yi & Koo, Tay T.R., 2014. "Flying Australia–Europe via China: A qualitative analysis of the factors affecting travelers' choice of Chinese carriers using online comments data," Journal of Air Transport Management, Elsevier, vol. 39(C), pages 23-29.
    3. Diaconu (Maxim) Laura, 2012. "The Evolution of the Low-Cost Airlines Between 2000 and 2011. Comparative Analysis Across American and European Low-Cost Operators," Annals - Economic and Administrative Series -, Faculty of Business and Administration, University of Bucharest, vol. 6(1), pages 115-128, December.
    4. Hugon-Duprat, Cindy & O'Connell, John F., 2015. "The rationale for implementing a premium economy class in the long haul markets – Evidence from the transatlantic market," Journal of Air Transport Management, Elsevier, vol. 47(C), pages 11-19.
    5. Merkert, Rico & Beck, Matthew, 2017. "Value of travel time savings and willingness to pay for regional aviation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 96(C), pages 29-42.
    6. repec:eee:touman:v:32:y:2011:i:2:p:235-243 is not listed on IDEAS
    7. repec:ags:ndjtrf:262674 is not listed on IDEAS
    8. Kurtulmuşoğlu, Feride Bahar & Can, Gülin Feryal & Tolon, Metehan, 2016. "A voice in the skies: Listening to airline passenger preferences," Journal of Air Transport Management, Elsevier, vol. 57(C), pages 130-137.
    9. repec:eee:transa:v:121:y:2019:i:c:p:147-163 is not listed on IDEAS
    10. Kuo, Chung-Wei & Jou, Rong-Chang, 2017. "Willingness to pay for airlines’ premium economy class: The perspective of passengers," Journal of Air Transport Management, Elsevier, vol. 59(C), pages 134-142.
    11. Tsai, Tsung-Hsien, 2016. "Homogeneous service with heterogeneous products: Relationships among airline ticket fares and purchase fences," Journal of Air Transport Management, Elsevier, vol. 55(C), pages 164-175.
    12. repec:eee:jaitra:v:75:y:2019:i:c:p:170-184 is not listed on IDEAS
    13. Mesa-Arango, Rodrigo & Ukkusuri, Satish V., 2014. "Attributes driving the selection of trucking services and the quantification of the shipper’s willingness to pay," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 71(C), pages 142-158.
    14. repec:gam:jsusta:v:11:y:2019:i:11:p:3213-:d:238535 is not listed on IDEAS
    15. repec:gam:jsusta:v:11:y:2019:i:13:p:3621-:d:244807 is not listed on IDEAS
    16. repec:eee:joreco:v:50:y:2019:i:c:p:351-361 is not listed on IDEAS
    17. repec:kap:transp:v:45:y:2018:i:1:d:10.1007_s11116-016-9730-6 is not listed on IDEAS
    18. Maertens, Sven, 2011. "The market potential of all-premium class services on medium haul leisure routes from Germany," Journal of Air Transport Management, Elsevier, vol. 17(3), pages 181-186.
    19. repec:eee:transa:v:106:y:2017:i:c:p:116-129 is not listed on IDEAS
    20. Yi-Wen Kuo & Cheng-Hsien Hsieh & Cheng-Min Feng & Wen-Ya Yeh, 2013. "Effects of price promotions on potential consumers of high-speed rail," Transportation Planning and Technology, Taylor & Francis Journals, vol. 36(8), pages 722-738, December.

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