Abstract
We study how air travel consumers departing from a multi-airport region trade-off across airport and airline supply characteristics. We empirically investigate this trade-off by estimating a weighted conditional logit model of airport–airline choice, using survey data on travels departing from one of three San Francisco Bay Area airports and arriving at one of four airports in greater Los Angeles in October 1995. Non-price characteristics like airport access time, airport delay, flight frequency, the availability of particular airport–airline combinations, and early arrival times are found to strongly affect choice probabilities. We calculate marginal effects and counterfactual scenarios to compare the values of these characteristics among each other and across traveler type. In order to examine the robustness of the conditional logit model, we estimate a mixed logit model, and find that the results are similar. We attribute the similarity to our strictly defined travel market and to our distinction between leisure and business travelers, thus controlling for two important sources of consumer heterogeneity. We consider the implications of our empirical findings on vertical integration between airlines and airports, on the effectiveness of “airport dominance,” and on the competitive effect of entry by low cost carriers.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
