Investigating business traveller heterogeneity: Low-cost vs full-service airline users?

Abstract

This paper investigates business traveller heterogeneity using data from a survey carried out amongst airline passengers. Traditional methods employed are usually based on mean responses, thus providing an incomplete picture of what business travellers perceive to be the main sources of differentiation in the airline industry. Factor analysis was used to find types of travellers through grouping of preferred attributes. Then, ordered discrete response methods were used to assess which attributes are perceived in a different way by the two types of travellers identified by factor analysis, controlling for route and passenger characteristics. The results show that a substantial portion of business travellers, who previously did not fly for business reasons, use low-cost air services. Furthermore, after having experienced the low-cost product, business passengers tend to reassess the valuation of some attributes in a way which is more favourable to the LCC. Hence, we conclude that LCC marketing strategies should be aimed at getting business travellers to experience the low-cost product.