Mixed Logit Analysis of International Airline Choice

Abstract

Mixed logit models were used to investigate air passengers’ choices of international carriers. The stated preference experiments were designed on the basis of eight service attributes of airlines (i.e., airfare, preferred departure time, flight frequency, punctuality, check-in service, on-board food service, cabin service, and seat space). Empirical data were collected from Taiwanese passengers who had just flown from Taipei, Taiwan, to Tokyo, Japan, or from Taipei to Hong Kong, China. The results of the multinomial logit model confirmed that the important determinants influencing carrier choice consisted of all service attributes of airlines except on-board food service. The nested logit models further indicated that competitive structures existed between airlines and degrees of competition varied across air routes. The mixed logit models, which include random parameters of service attributes and interact with socio-economic and trip characteristics, adequately capture the systematic heterogeneity in travelers’ preferences. Passengers are willing to pay more for long-distance travel and service quality attributes (especially check-in and cabin services). In particular, passengers who do not travel often, buy air tickets from nontravel agencies, or take nonbusiness trips have higher values of willingness to pay for service attributes. The findings offer valuable insights for international air carriers to develop marketing strategies.