The factors affecting people’s willingness in participating in and paying for upgrading their seats from the economy class to the premium class

Abstract

As information technology develops rapidly and network information becomes more and more transparent, it is urgent for airlines to increase their flight carrying rates through marketing to maximize profits before take-off. While the seat bidding strategy has been one of the business models adopted by many airlines in recent years, it has not been implemented yet in Taiwan’s airlines. In order to understand the seat bidding behavior of passengers, this study adopted the double-hurdle model to explore the factors affecting passengers’ participation in seat bidding and calculated the prices they were willing to pay. Moreover, this study investigated the effects of long and short flight distances on passengers’ participation in seat bidding and the prices they were willing to pay for either flight distance. According to the results, the factors affecting the participation of passengers in seat bidding were different for long-distance and short-distance trips, while a common factor between them was that young people and passengers with preliminary knowledge of such activities were more willing to participate. According to the analysis on the prices people were willing to pay, the price difference that passengers of long-haul flights and short-haul flights were willing to pay for upgrades was about 55 and 24% of the reference price, respectively. The information obtained in this study can serve as a reference for future research or for airlines.