IDEAS home Printed from https://ideas.repec.org/a/eee/transa/v46y2012i10p1641-1653.html
   My bibliography  Save this article

An analysis of destination choice for opaque airline products using multidimensional binary logit models

Author

Listed:
  • Lee, Misuk
  • Khelifa, Alexandre
  • Garrow, Laurie A.
  • Bierlaire, Michel
  • Post, David

Abstract

We investigate how customers respond to an opaque airline product offered by a European carrier. In this opaque product design, customers are randomly assigned to travel to one of approximately ten destinations; however, for a fee they may exclude one or more destinations from the choice set (or a particular package design) prior to learning which destination they will travel to. We use a multidimensional binary logit model to predict the probability that one or more alternatives will be chosen by a customer. Results show that customers are more likely to pay to exclude destinations located close to the origin airport and destinations that speak the same language as the origin airport. Length of stay, cost of living at the destination, and measures of destination attractiveness are also found to be significant predictors for some package designs. Based on these findings, we offer general recommendations for how to design opaque packages for airline customers.

Suggested Citation

  • Lee, Misuk & Khelifa, Alexandre & Garrow, Laurie A. & Bierlaire, Michel & Post, David, 2012. "An analysis of destination choice for opaque airline products using multidimensional binary logit models," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(10), pages 1641-1653.
    • Handle: RePEc:eee:transa:v:46:y:2012:i:10:p:1641-1653
    DOI: 10.1016/j.tra.2012.08.009
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0965856412001395
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tra.2012.08.009?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Peeta, Srinivas & Paz, Alexander & DeLaurentis, Dan, 2008. "Stated preference analysis of a new very light jet based on-demand air service," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(4), pages 629-645, May.
    2. Brey, Raúl & Walker, Joan L., 2011. "Latent temporal preferences: An application to airline travel," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(9), pages 880-895, November.
    3. Tsamboulas, Dimitrios A. & Nikoleris, Anastasios, 2008. "Passengers' willingness to pay for airport ground access time savings," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(10), pages 1274-1282, December.
    4. Lu, Jin-Long & Peeta, Srinivas, 2009. "Analysis of the factors that influence the relationship between business air travel and videoconferencing," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(8), pages 709-721, October.
    5. Scott Fay, 2004. "Partial-Repeat-Bidding in the Name-Your-Own-Price Channel," Marketing Science, INFORMS, vol. 23(3), pages 407-418, February.
    6. Chen, Ching-Fu, 2008. "Investigating structural relationships between service quality, perceived value, satisfaction, and behavioral intentions for air passengers: Evidence from Taiwan," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(4), pages 709-717, May.
    7. Guillermo Gallego & Robert Phillips, 2004. "Revenue Management of Flexible Products," Manufacturing & Service Operations Management, INFORMS, vol. 6(4), pages 321-337, January.
    8. Kinshuk Jerath & Serguei Netessine & Senthil K. Veeraraghavan, 2009. "Selling to Strategic Customers: Opaque Selling Strategies," International Series in Operations Research & Management Science, in: Christopher S. Tang & Serguei Netessine (ed.), Consumer-Driven Demand and Operations Management Models, edition 1, chapter 0, pages 253-300, Springer.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Catherine Cleophas & Daniel Kadatz & Sebastian Vock, 2017. "Resilient revenue management: a literature survey of recent theoretical advances," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 16(5), pages 483-498, October.
    2. Mumbower, Stacey & Garrow, Laurie A. & Newman, Jeffrey P., 2015. "Investigating airline customers’ premium coach seat purchases and implications for optimal pricing strategies," Transportation Research Part A: Policy and Practice, Elsevier, vol. 73(C), pages 53-69.
    3. Zhang, Yi & Hua, Guowei & Cheng, T.C.E. & Zhang, Juliang & Fernandez, Vicenc, 2020. "Risk pooling through physical probabilistic selling," International Journal of Production Economics, Elsevier, vol. 219(C), pages 295-311.
    4. Hotle, Susan L. & Castillo, Marco & Garrow, Laurie A. & Higgins, Matthew J., 2015. "The impact of advance purchase deadlines on airline consumers’ search and purchase behaviors," Transportation Research Part A: Policy and Practice, Elsevier, vol. 82(C), pages 1-16.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mumbower, Stacey & Garrow, Laurie A. & Newman, Jeffrey P., 2015. "Investigating airline customers’ premium coach seat purchases and implications for optimal pricing strategies," Transportation Research Part A: Policy and Practice, Elsevier, vol. 73(C), pages 53-69.
    2. Zhang, Yi & Hua, Guowei & Cheng, T.C.E. & Zhang, Juliang & Fernandez, Vicenc, 2020. "Risk pooling through physical probabilistic selling," International Journal of Production Economics, Elsevier, vol. 219(C), pages 295-311.
    3. David Post & Martin Spann, 2012. "Improving Airline Revenues with Variable Opaque Products: “Blind Booking” at Germanwings," Interfaces, INFORMS, vol. 42(4), pages 329-338, August.
    4. Scott Fay & Jinhong Xie, 2008. "Probabilistic Goods: A Creative Way of Selling Products and Services," Marketing Science, INFORMS, vol. 27(4), pages 674-690, 07-08.
    5. Ruomeng Cui & Hyoduk Shin, 2018. "Sharing Aggregate Inventory Information with Customers: Strategic Cross-Selling and Shortage Reduction," Management Science, INFORMS, vol. 64(1), pages 381-400, January.
    6. Wen, Chieh-Hua & Huang, Chia-Jung & Fu, Chiang, 2020. "Incorporating continuous representation of preferences for flight departure times into stated itinerary choice modeling," Transport Policy, Elsevier, vol. 98(C), pages 10-20.
    7. Scott Fay & Robert Zeithammer, 2017. "Bidding for Bidders? How the Format for Soliciting Supplier Participation in NYOP Auctions Impacts Channel Profit," Management Science, INFORMS, vol. 63(12), pages 4324-4344, December.
    8. Sarker, Rumana Islam & Kaplan, Sigal & Mailer, Markus & Timmermans, Harry J.P., 2019. "Applying affective event theory to explain transit users’ reactions to service disruptions," Transportation Research Part A: Policy and Practice, Elsevier, vol. 130(C), pages 593-605.
    9. Yuhan Ge & Qing Yuan & Yaxi Wang & Keunsoo Park, 2021. "The Structural Relationship among Perceived Service Quality, Perceived Value, and Customer Satisfaction-Focused on Starbucks Reserve Coffee Shops in Shanghai, China," Sustainability, MDPI, vol. 13(15), pages 1-19, August.
    10. Ma, Jie & Tse, Ying Kei & Wang, Xiaojun & Zhang, Minhao, 2019. "Examining customer perception and behaviour through social media research – An empirical study of the United Airlines overbooking crisis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 127(C), pages 192-205.
    11. Bezerra, George Christian Linhares & Gomes, Carlos F., 2016. "Measuring airport service quality: A multidimensional approach," Journal of Air Transport Management, Elsevier, vol. 53(C), pages 85-93.
    12. Songhong Chen & Jian Ming Luo, 2023. "Understand Delegates Risk Attitudes and Behaviour: The Moderating Effect of Trust in COVID-19 Vaccination," IJERPH, MDPI, vol. 20(5), pages 1-18, February.
    13. Guillermo Gallego & Haengju Lee, 2020. "Callable products with dependent demands," Naval Research Logistics (NRL), John Wiley & Sons, vol. 67(3), pages 185-200, April.
    14. Harald Bathelt & Sebastian Henn, 2014. "The Geographies of Knowledge Transfers over Distance: Toward a Typology," Environment and Planning A, , vol. 46(6), pages 1403-1424, June.
    15. Francesco Bripi, 2019. "Business travels, multinational firms and international trade," Questioni di Economia e Finanza (Occasional Papers) 523, Bank of Italy, Economic Research and International Relations Area.
    16. Fay, Scott, 2008. "Selling an opaque product through an intermediary: The case of disguising one's product," Journal of Retailing, Elsevier, vol. 84(1), pages 59-75.
    17. Chen, Lu & Li, Yong-Quan & Liu, Chih-Hsing, 2019. "How airline service quality determines the quantity of repurchase intention - Mediate and moderate effects of brand quality and perceived value," Journal of Air Transport Management, Elsevier, vol. 75(C), pages 185-197.
    18. Koo, Tay T.R. & Hossein Rashidi, Taha & Park, Jin-Woo & Wu, Cheng-Lung & Tseng, Wen-Chun, 2017. "The effect of enhanced international air access on the demand for peripheral tourism destinations: Evidence from air itinerary choice behaviour of Korean visitors to Australia," Transportation Research Part A: Policy and Practice, Elsevier, vol. 106(C), pages 116-129.
    19. Ko, Young Dae & Kwag, Sung Il & Oh, Yonghui, 2020. "An efficient airline seat reallocation algorithm considering customer dissatisfaction," Journal of Air Transport Management, Elsevier, vol. 85(C).
    20. Nguyen-Phuoc, Duy Quy & Vo, Nguyen S. & Su, Diep Ngoc & Nguyen, Vinh Hoang & Oviedo-Trespalacios, Oscar, 2021. "What makes passengers continue using and talking positively about ride-hailing services? The role of the booking app and post-booking service quality," Transportation Research Part A: Policy and Practice, Elsevier, vol. 150(C), pages 367-384.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transa:v:46:y:2012:i:10:p:1641-1653. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/547/description#description .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.