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Modeling the competition among air-travel itinerary shares: GEV model development

  • Coldren, Gregory M.
  • Koppelman, Frank S.
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    This study reports the results of aggregate air-travel itinerary share models estimated using data from all East West markets in the United States and Canada. These models predict airline ridership at the itinerary level and aid carriers in long and intermediate term decision-making. Official and comprehensive schedule and bookings data is used to estimate generalized extreme value models capturing the inter-itinerary competition dynamic along three dimensions: time of day, carrier and level-of-service (nonstop, direct, single-connect, double-connect). Models incorporate one, two or three of these dimensions simultaneously. Model structures considered include multinomial logit and variations of the nested logit model (two-level nested logit, two-level weighted nested logit, three-level nested logit, three-level weighted nested logit and nested weighted nested logit). Independent variables for the models measure various itinerary service characteristics such as level-of-service, connection quality, carrier attributes, aircraft type, and departure time. Additionally, the advanced models yield inverse logsum and/or weight parameter estimates capturing the underlying competitive dynamic among air-travel itineraries. The results are intuitive, and the advanced models outperform the more basic specifications with regard to statistical tests and behavioral interpretations, giving insight into the competitive dynamic of air-carrier itineraries.

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

    Volume (Year): 39 (2005)
    Issue (Month): 4 (May)
    Pages: 345-365

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    Handle: RePEc:eee:transa:v:39:y:2005:i:4:p:345-365
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    1. Reiss, Peter C & Spiller, Pablo T, 1989. "Competition and Entry in Small Airline Markets," Journal of Law and Economics, University of Chicago Press, vol. 32(2), pages S179-202, October.
    2. Anderson, James E & Kraus, Marvin, 1981. "Quality of Service and the Demand for Air Travel," The Review of Economics and Statistics, MIT Press, vol. 63(4), pages 533-40, November.
    3. Morrison, Mark, 2000. "Aggregation Biases in Stated Preference Studies," Australian Economic Papers, Wiley Blackwell, vol. 39(2), pages 215-30, June.
    4. Philip K. Verleger Jr., 1972. "Models of the Demand for Air Transportation," Bell Journal of Economics, The RAND Corporation, vol. 3(2), pages 437-457, Autumn.
    5. Wen, Chieh-Hua & Koppelman, Frank S., 2001. "The generalized nested logit model," Transportation Research Part B: Methodological, Elsevier, vol. 35(7), pages 627-641, August.
    6. Coldren, Gregory M. & Koppelman, Frank S. & Kasturirangan, Krishnan & Mukherjee, Amit, 2003. "Modeling aggregate air-travel itinerary shares: logit model development at a major US airline," Journal of Air Transport Management, Elsevier, vol. 9(6), pages 361-369.
    7. De Vany, Arthur, 1974. "The Revealed Value of Time in Air Travel," The Review of Economics and Statistics, MIT Press, vol. 56(1), pages 77-82, February.
    8. Furuichi, Masahiko & Koppelman, Frank S., 1994. "An analysis of air travelers' departure airport and destination choice behavior," Transportation Research Part A: Policy and Practice, Elsevier, vol. 28(3), pages 187-195, May.
    9. Suzuki, Yoshinori & Tyworth, John E. & Novack, Robert A., 2001. "Airline market share and customer service quality: a reference-dependent model," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(9), pages 773-788, November.
    10. Proussaloglou, Kimon & Koppelman, Frank S., 1999. "The choice of air carrier, flight, and fare class," Journal of Air Transport Management, Elsevier, vol. 5(4), pages 193-201.
    11. Basar, Gözen & Bhat, Chandra, 2004. "A parameterized consideration set model for airport choice: an application to the San Francisco Bay Area," Transportation Research Part B: Methodological, Elsevier, vol. 38(10), pages 889-904, December.
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