Airline Choice Research Articles

A study on passengers' airport choice behavior using hybrid choice model: A case study of Seoul metropolitan area, South Korea

Improving explanatory power is significantly important to understand variables that affect attitudes and perceptions in the decision process. This paper estimates not only tangible attributes but also intangible perceptions and attitudes using a hybrid-choice model to study air passengers' flight choice behavior. The empirical study was conducted for the choice behavior of air passengers at Seoul Metropolitan Area, South Korea. The analysis uses a two-level Nested Logit model in order to examine which factors have more effect on passengers’ choice of airport and airline simultaneously by using airport and airline choice attributes. The study also estimated the parameters in the equations relating the latent variable by using Structural Equation Model (SEM). The results indicate that the models with latent variables have improved Goodness-of-Fit when compared to classical discrete choice models and effectively capture psychological factors that affect choice behavior of passengers.

Analyzing key socio-economic and socio-demographic drivers of domestic passengers’ airline choice behavior in Turkey using multinomial and mixed logit models

The main objective of this paper is to determine the key factors affecting passengers' domestic airline choice in Turkey. This study utilized the data of a self-administered survey conducted to 2473 passengers in 11 different airports. The data were analyzed using multinomial and mixed logit (ML) models. The analysis results reveal that ML model is useful to explain preference heterogeneity of passengers' airline choice behavior. The estimation results also indicate that several demographic, socio-economic, and travel destination characteristics were found as the significant drivers of passengers' airline choice. The results of this study may be a valuable tool for policy-makers in the airline industry.

Airline choice by passengers from Taiwan and China: A case study of outgoing passengers from Kaohsiung International Airport

Understanding what factors passengers consider when selecting an airline is critical, as airlines can utilize this information in market segmentation and marketing strategies. However, few studies have explored how passenger demographics and the nationality/type of carrier (full service or low-cost; regional or international) affect the choice factors of passengers when selecting airlines. The main objective of this study was to explore the airline choice factors considered by passengers, compare the choices of passengers with different demographics, and analyze which factors are emphasized by passengers from Taiwan and China when selecting airlines. We conducted a questionnaire survey of outgoing passengers at Kaohsiung International Airport in relation to 22 factors underlying their choice of airline. Using factor analysis, we identified the five factors: ground services, convenience, in-flight services, price, and travel availability. We then utilized cluster analysis to identify four groups, each concerned with price, comfort, convenience, and ground services, respectively. Nationality, age, income, flying frequency, and purpose of travel lead to differences in deciding which factors were considered by cross-strait passengers. Passengers of different nationalities concerned with different factors when selecting airlines. Our findings can add to the completeness of existing research as well as provide airlines with reference in developing marketing strategies for different customer groups.

Traveler perceptions and airline choice: A multivariate probit approach

We investigate the factors that affect passenger decisions regarding airline choice. Three Multivariate Probit (MP) models are developed to analyze data for a sample of 853 respondents. This methodology allows for modeling the simultaneous, yet separate, consideration of airline choice determinants. Fare, safety and reliability, and friendly-and-helpful staff during flight are the most important determinants of airline choice. In-flight entertainment and frequent flyer program are considered to be less important. Results clearly depict differences in the significance of these factors among passengers with different socio-demographic and trip characteristics.

Latent air travel preferences: Understanding the role of frequent flyer programs on itinerary choice

Many studies have used air itinerary choice data to identify preferences and tradeoffs of various flight service attributes, such as travel time, number of connections, and fare. Little has been done, however, to estimate the effect Frequent Flyer Programs (FFPs) have on itinerary choice. The goal of this paper is to quantify the impact of FFP membership on itinerary choice and identify discrete patterns of unobserved preference heterogeneity. For this purpose, we apply two modeling techniques using a set of stated preference data collected on 830 individuals. A Multinomial Logit Model (MNL) is first estimated and Willingness-To-Pay (WTP) values are calculated for the choice of flying an airline with which the individual has FFP membership compared with another airline where the individual has no FFP membership. These WTP estimates vary across different trip purposes and levels of FFP status. Our results indicate that FFP membership plays a strong role in airline choice, particularly for individuals with elite membership. We then capture random heterogeneity through the use of latent class models, using sociodemographic variables as class-membership covariates. The latent class model results indicate three groups of individuals with very different sets of preferences, particularly for FFP membership. The discrete segmentation indicates one class with very low WTP, one class with average WTP, and one class with extremely large WTP values. These results provide evidence that latent class models capture preference heterogeneity much better than the MNL model for air itinerary choice, particularly when considering the effects of FFP membership.

Benchmarking the service quality of airlines in the United States: an exploratory analysis

Purpose– The purpose of this paper is to help airlines gain a better understanding of passengers’ service concerns, identify opportunities for continuous service improvement, and then develop service benchmarking standards that can be a yardstick for the airline’s competitiveness.Design/methodology/approach– This paper develops a set of target performance standards that helps airlines monitor their service delivery process, identify relative weaknesses, and take corrective actions for continuous service improvements using exploratory data analysis and competitive gap analysis.Findings– This study reveals that a service attribute considered most important to the airline customers’ impressions of service quality are air safety. This result reflects a growing concern over potential terrorism against airlines in the wake of the September 11 incident. The authors also found that proper baggage handling, competitive airfare, and on-time arrival/departure were next most important service attributes, whereas frequent flier and code-sharing programs were least important. Furthermore, the authors discovered that airline passengers’ perceived service quality influenced their choice of airlines. That is to say, airline service quality can be an important gauge of airline market share and revenue.Research limitations/implications– The current study is limited to the evaluation of comparative service quality of airlines in the USA. Thus, this study cannot be generalized to the airline passengers’ perceived service quality in other countries or different cultural settings. Also, this paper focuses on the performance aspect of benchmarking rather than the strategic aspect of benchmarking.Practical implications– With rising costs of fuel, labor, maintenance, and security, many airlines are at a crossroads where they have to decide between succumbing to restructuring pressures in a form of mergers/acquisitions and reinventing their service offerings. One viable means of reinventing airline service offerings is to learn more about what airline passengers truly value and appreciate in terms of service offerings and then figure out what it takes to win the hearts of customers and then how the airline can differentiate its service offering from those of its competitors. With this in mind, this paper develops viable service improvement strategies for the airline that can enhance its competitiveness in the struggling airline industry.Originality/value– This paper is one of a few attempts to identify a list of service attributes most important to airline service quality based on the actual survey of airline passengers, and then develop a benchmark standard of airlines in the USA from a customer (passenger) perspective.

The competitive landscape of air transport in Europe

Competition between airlines and airports increased significantly since the deregulation of the intra-European air transport market in 1997. The passenger has a wider choice in terms of routings and departure airports than twenty-five years ago and pays a lower price. In this paper we investigate in which parts of Europe airline and airport competition are most intense and how the competitive landscape has changed since the liberalisation of the intra-European market.Competition levels are modelled for all air transport markets available to consumers in each western-European municipality using a Multinomial Logit (MNL) model. This allows us to determine how competitive the air transport product available to consumers in each of those municipalities truly is and how competition levels have changed. As opposed to most other competition studies we take all viable direct and indirect flight alternatives into account, as well as competing alternatives from nearby (adjacent) airports. This makes it the most extensive analysis of competition in the European aviation industry performed to date.As expected the results show that airline competition, allowing for grouping of the airlines belonging to the same alliance together, has in general increased since the liberalisation of the intra-European market. This can mainly be ascribed to the rise of the low cost business model. The spatial analysis however shows an uneven outcome. Changes in airline competition are most pronounced in areas that were previously not well served, such as the more remote regions in the United Kingdom, Spain and Italy. In Germany airline competition is lagging behind due to the strong dominance of the STAR alliance. In large parts of Scandinavia, but also in parts of France and Spain, airline competition is considerably less. These areas are often served only by a handful of airports and/or airlines, limiting airline choice and therefore competition.

Exploring the green image of airlines: Passenger perceptions and airline choice

During the last few years there has been an increasing trend for companies to market their products or services as green or environmentally friendly as part of their corporate social responsibility. Few studies have analyzed the effects of this recent focus on the environment and its impact on airline passengers. Therefore, we examine passengers' general attitudes towards the green image of different airlines, perceived differences in eco-friendliness among these airlines, and effects on airline choice during booking. We also investigate how passengers' recent experiences with an airline affect perceived eco-friendliness of that airline. In addition we compare passenger ratings of airline eco-friendliness to those published by independent 3rd parties. Our findings show that the green image of airlines does influence airline choice during booking. We observed a passenger willingness to pay extra for a green image, however, not as much as their willingness to pay extra for amenities, such as additional legroom.

Airline Choices for the Future: from Alliances to Mergers

The Air France-KLM merger, followed suit by the Lufthansa-Swiss merger announcement, has changed the landscape of air transport and set the foundation stone towards air transport consolidation. Once considered a remote eventuality, crossborder mergers and the potential they represent have become a concrete possible source of competitive advantage in the search of efficiencies and synergies in a highly competitive and volatile air transport arena. The present paper attempts to assess how the members of the three strategic alliances (Star Alliance, oneworld and SkyTeam) perceive alliance evolution and merger prospects under the impact of these developments. Through a questionnaire survey, the paper analyzes how airlines themselves view mergers, what benefits mergers can offer as well as the obstacles they might encounter and in which areas these benefits and/or problems could arise. It further asked participants to assess how fast consolidation will move, what role alliances will play in the emerging restructured air transport industry and how alliances and mergers will interact. As it is the very first survey to focus on and analyze cross-border mergers from the industry’s point of view, its findings are of great interest not only to the industry itself but to governments, competition authorities, academics and to all those directly or indirectly involved in and/or influenced by developments in air transport.

Measuring the effect of aviation safety risk reduction on flight choice in young travellers

More information about safety is becoming more generally available to travellers, but the extent to which passengers use safety information to make decisions about which airlines to take is relatively unknown. This study attempts to examine the extent to which safety information plays a role in travellers’ flight choices. Using the stated choice methodology, we modelled how the choice of a flight option is related to factors, including price, schedule, safety, travel time and airline inflight service quality. The study found that, in the context of a young adult college student population, price and safety information emerge as the most important factors influencing airline choices. Interestingly, the study found that most of the potential travellers surveyed, when asked about the factors they consider when making flight choices, do not nominate safety. However, when specific safety-risk information is introduced in the stated choice conditions, respondents considered this factor in making their choices between flight alternatives. This paper contributes towards a more complete understanding of how passengers use safety information and notes how this can be analytically translated into commercial implications for the aviation industry.

Flying Australia–Europe via China: A qualitative analysis of the factors affecting travelers' choice of Chinese carriers using online comments data

Recently, Chinese carriers entered the Australia–Europe route, a market currently served by several established airlines. The paper aims to explore and identify the contextual factors affecting the choice of China-based carriers for long-haul travel. The paper's innovation is in the way it uses the online comments made by readers of an aviation news article. In doing so, the paper highlights the advantages and limitations of such a data source and the full range of positive and negative perceptions about Chinese airlines as recorded by potential and actual travelers. This study highlights that in order to understand flight choice, it is worthwhile to consider the conventional itinerary choice factors in the context of the socio-cultural and historical influences. For researchers, the paper provides some evidence that air travelers apply compensatory decision rule in making airline choices. This supports the validity of the assumption of random-utility based choice models used in the study of air travel behavior.

Passenger airline choice behavior for domestic short-haul travel in South Korea

When the Seoul-Busan line of South Korea's high-speed rail system, dubbed the Korea Train Express (KTX), entered service in November 2010, it was expected that this line would compete with air transport services for short-haul domestic journeys. Therefore this is a study about passengers' choice behavior when traveling short-haul domestic routes in South Korea. It utilizes MNL and NL logit models with selected variables, and the data required for the analyses were gathered through Stated Preference (SP) Techniques. The main SP survey was conducted for three weeks at departure lounges in Incheon International Airport in May 2012. The results reveal that fare, access time and journey time are significantly important with respect to passenger choice. The results further indicate that business travelers are more willing to pay than non-business travelers to reduce access and journey time. It is also noteworthy that reducing access time is more important than reducing journey time for short-haul domestic travelers. The conclusion is that it is significantly important for airline planners or local authorities that want to increase their local market share to invest in relatively fast access modes.

Service Quality, Perceived Value and Customer Satisfaction as Determinant of Airline Choice in Nigeria

The success of airlines depends majorly on the ability to identify customers‟ wants and needs, and factor it in the quality service that would meet customers‟ satisfaction. Thus, there is need for continuous research so as to assist all the players survive in the changing business environment.This paper examines service quality, perceived value and customer satisfaction as the determinant of choice of airline by air travellers in Nigeria. Survey method was employed using primary data obtained through the use of questionnaires. 220 questionnaires were administered by the researcher through purposive sampling to air travellers at MM2 in Lagos which 200 were returned and properly filled. The questionnaires were analysed using descriptive statistics, correlation and regression with the support of SPSS 17. The study revealed that the income/social status, poor states of roads as well as the insecurity accounts for the sudden rise in air transport travellers and that service quality, perceive value influences their satisfaction level on the choice of airline. Therefore, airline companies in Nigeria should increase the quality of service since many users of the air transport requires it and make sure passengers fare paid should commensurate the service delivered so as to enhance travellers patronage.

Do social norms regarding carbon offsetting affect individual preferences towards this policy? Results from a stated choice experiment

This study investigates the idea that people’s willingness to offset flight-related carbon emissions is a function of the collective participation rate, which can be regarded as a social norm, towards carbon offsetting. Additionally, we reveal people’s preferences toward two other environmental policies; a baggage allowance and airline eco-efficiency index. A discrete choice experiment is designed and administrated among a sample of air travelers. The results indicate that carbon offsetting generates utility, with people gaining more utility when the collective participation rate is high. Additionally, it was found that the baggage allowance and the eco-efficiency index strongly influenced respondents’ airline choices. People also became more sensitivity towards a baggage allowance and the eco-efficiency label, when the collective offsetting rate was high.

Frequent-flier programs as a determinant in the selection of preferred airlines by corporations

Frequent-flier programs (FFPs) are used by airlines to generate loyalty and attract new customers. Research has shown that these programs significantly affect travelers’ choice of airlines. In the managed travel environment where corporations select preferred airlines based on various determinants, it remains unclear whether these programs play a role in the selection process. A conceptual model of factors influencing corporate airline selection was formulated, positioning FFPs as one of the variables that may play a role. Exploratory factor analysis was done to test the conceptual model with the results showing that FFPs form part of business travelers’ needs. Based on the results the conceptual model could be adjusted to provide the main factors and their related variables that influence corporate travel managers in selecting preferred airlines. It became evident that, within the boundaries of the study, frequent-flier programs were, in relation to other variables, generally not considered as important in the selection of a preferred airline by corporations.

How Do Firm Financial Conditions Affect Product Quality and Pricing?

We analyze the interaction of firm product quality and pricing decisions with financial distress and bankruptcy in the airline industry. We consider an airline's choices of quality and price as dynamic decisions that trade off current cash flows for future revenue. We examine how airline mishandled baggage, on-time performance, and pricing are related to financial distress and bankruptcy, controlling for the endogeneity of financial distress and bankruptcy. We find that an airline's quality decisions are differentially affected by financial distress and bankruptcy. Product quality decreases when airlines are in financial distress, consistent with financial distress reducing a firm's incentive to invest in quality. In contrast, in bankruptcy product quality increases relative to financial distress. In addition, we find that firms price more aggressively when in financial distress consistent with firms trying to increase short-term market share and revenues. This paper was accepted by Wei Jiang, finance.

Management Insights

Management Insights

Frequent-Flier Programs as a Determinant in the Selection of Preferred Airlines by Corporations

Abstract Frequent-flier programs (FFPs) are used by airlines to generate loyalty and attract new customers. Research has shown that these programs significantly affect travelers' choice of airlines. In the managed travel environment where corporations select preferred airlines based on various determinants, it remains unclear whether these programs play a role in the selection process. A conceptual model of factors influencing corporate airline selection was formulated, positioning FFPs as one of the variables that may play a role. Exploratory factor analysis was done to test the conceptual model with the results showing that FFPs form part of business travelers' needs. Based on the results the conceptual model could be adjusted to provide the main factors and their related variables that influence corporate travel managers in selecting preferred airlines. It became evident that, within the boundaries of the study, frequent-flier programs were, in relation to other variables, generally not considered as important in the selection of a preferred airline by corporations.

Attribute exclusion strategies in airline choice: accounting for exogenous information on decision maker processing strategies in models of discrete choice

We examine the impact of individual-specific information processing strategies (IPSs) on the inclusion/exclusion of attributes on the parameter estimates and behavioural outputs of models of discrete choice. Current practice assumes that individuals employ a homogenous IPS with regards to how they process attributes of stated choice (SC) experiments. We show how information collected exogenous of the SC experiment on whether respondents either ignored or considered each attribute may be used in the estimation process, and how such information provides outputs that are IPS segment specific. We contend that accounting the inclusion/exclusion of attributes will result in behaviourally richer population parameter estimates.

Time Styles and Waiting in Crowded Service Environments

ABSTRACT This study examines the moderating impact of consumers' time styles on their emotional reactions and evaluations of waiting time in crowded and non-crowded environments. A quasi-experimental design was used to test our hypotheses. Our results indicate that waiting in a crowded environment results in negative emotions. In addition, people who scored high on economic time style reported significantly less satisfaction with their choice of airlines when they waited in crowded conditions. These results extend the literature on crowding and waiting time, and add to our understanding of consumer emotions in service environments.