Airline type and tourist expenditure: Are full service and low cost carriers converging or diverging?

Abstract

Since some years ago low-cost carriers (LCCs) are becoming less and less low-cost-like, as well as full-service airlines are becoming less and less full-service-like, thus contributing to lessen the differences between users of one airline type and the other. LCCs have made air travel available to all budgets and enabled tourists to spend more at destination by reallocating their trip expenditure. The objective of this article is to observe if airline types have been converging regarding travellers’ expenditure allocation and total trip expenditure. We use repeated cross sections of the Spanish tourist expenditure survey between 2006 and 2014, and compositional data analysis with a total in order not to confound effects involving expenditure allocation with those involving expenditure volume. Results show that users of both airline types converge in their allocation of the trip budget (between transportation and at-destination expenses, and within at-destination expenses), but diverge with regard to total trip expenditure.