Airline Choice Research Articles

Determinants of airline choice-making: The Nigerian perspective

This study is on choice decision-making of the Nigerian domestic air transport industry. It is aimed at determining the factors that influences air travellers’ choice of airlines to fly within Nigeria. In doing this, data was collected from air travellers using questionnaires following Likert scale of ranking. This enabled us to obtain the socio-economic characteristics and the airline attributes that helped influenced the air travellers in making their choice of airlines at the selected airports. The data collected were analysed using correlation matrix to check for multi-collinearity problems among the socioeconomic characteristics of air travellers and airline attributes. It was discovered that there exist no multi-collinearity problem. Furthermore, a stepwise regression analysis was carried out to determine the factors/attributes that were significantly influencing air travellers in airline choice decision making. To further verify the result of the regression analysis, a discrete choice-modelling analysis was done using NLOGIT. The both results showed that sex, age, marital status, income, comfort, on-board services, frequency, crew behaviour, fare and power of monopoly were significant variables and therefore influence the choice of airline by air travellers. Recommendations amongst others include airlines should use target marketing to attract more patronage from the different age groups, improve comfort and on-board services, increase frequency on major routes, charge competitive fares and apply the power of monopoly by either serving undeveloped routes or make their products distinct from others in the market and airlines should avail their air travellers more opportunities of purchasing tickets before getting to the airport.

Travel Planning: Searching for and Booking Airline Seats on the Internet

Abstract This article is based on a survey of 374 airline passengers sampled at an airport. We examine how travelers search for and then buy airline seats, determine which distribution channel dominates, calculate what percentages of online searches convert to actual bookings on the same website, and report why people switch. We also examine which travelers book, and then rebook airline seats, and why. We then measure the differences in how travelers view several Internet and website issues, the differences between Internet users and nonusers, between business and pleasure travelers, and between men and women. We update the most important reasons for airline choice, in an era when online bookings predominate. Finally, we report our findings (some counterintuitive) and their implications for airlines and third-party websites (online travel agents).

Factors Influencing Consumer Preferences While Choosing between Budget Airlines

According to experts, the airline industry lost foothold ever since it got into a price war and relinquished its monopolistic position. And yet, it was in this scenario that budget airlines emerged. Budget airlines are an innovative business model which competes chiefly on price. They jostle with each other to provide the lowest fares by keeping their operating costs to the bare minimum. There are many ways by which airlines cut costs. Some of them are fast turnaround times leading to maximum utilization of the aircraft, using a single type of aircraft for easy maintenance, using secondary airports which have reduced landing fees, online booking of tickets saving on ticket printing costs and agent commissions, less personnel per flight, use of budget terminals which have lower costs and have least frills which allows faster boarding and deplaning, doing away with or charging for frills such as seat covers, pillows, food, entertainment, newspapers, magazines, baggage and even drinking water. Budget airlines have been an instant hit ever since Southwest airlines introduced the concept in 1973. Currently, budget airlines are thriving. A bigger part of the revenues of budget airlines are coming from ancillary sources. This also helps them keep the ticket fare competitive. They own a third of the market share in the airline industry. They have forced high end carriers such as British Airways and Qantas to ‘dress down’ and become leaner in order to stay in the market. With the entry of a number of new players in the market especially in Singapore and with rising fuel costs, budget airlines would not be able to compete on price alone for long. They have to find ways to differentiate themselves in order to stay ahead. This research intends to find out the predominant factors other than price which a consumer considers while choosing between budget airlines. Some of the factors which are being considered are Scheduling, Punctuality, Baggage capacity, Customer Service, Ease of booking tickets, Rescheduling and refund policy, Quality of food available in-flight, In-flight entertainment, Premium services such as priority boarding, seating, Ground handling services, Seating and general in-flight cleanliness etc. However, the research is not limited to these factors alone. Both primary and secondary research has been carried out. The secondary research mainly concentrates on the business model of budget airlines particularly those of the 6 budget airline based or operating out of Singapore. The airlines are Air Asia, Jetstar, Tiger Airways, Cebu Pacific, Lion Air and Air India Express. Primary research consists of questionnaire survey. The sample consists of 60 respondents. Statistical techniques have been applied to the primary data and corroborated with secondary data to gauge the important factors that influence customer’s choice of budget airline, the most preferred and the least preferred airline in Singapore and the strong points and areas of improvement of each of these airlines.

Stated-choice analysis of willingness to pay for low cost carrier services

We examine Taiwan-China air travel, using a stated-choice modeling to look at passengers’ decisions between nonstop flights and indirect flights with traditional full service carriers and nonstop flights with low cost carriers; and passengers’ willingness-to-pay for the low cost carrier service. We find that fare, luggage restrictions, and destination airports are significant attributes that may influence the choice of airline. Further, the choice behaviors of business travelers and non-business travelers are significantly different; the latter having a greater willingness to pay more for luggage service and daytime arrival, and in particular to use a secondary airport.

Factors Influencing the Choice of Domestic Airlines in Chandigarh-An Empirical Study

The Indian aviation industry is one of the fastest growing aviation industries in the world with private airlines accounting for more than 75 per cent of the domestic aviation market (as of 2006). The industry is growing at a compound annual growth rate (CAGR) of 18 per cent. The country has 454 airports and airstrips, of which 16 are designated as international airports. All this has resulted into increasing the intensity of competition amongst air carriers in India. Delivering high quality service to passengers is important so that airlines can survive and strengthen their competitiveness. Service quality conditions influence an airline's competitive advantage and with this comes market share and ultimately profitability (Morash and Ozment, 1994). Airlines have responded to the competitive pressures in many ways, one of which has been service quality. It extends to in-fight service, reservation, ticketing, airport service, reliability, employee service, fight availability, passenger satisfaction, pricing (value), and airline image. This paper empirically examines the factors which influence the choice of airline in Chandigarh tri city.

Analysis of determinants of airline choice: profiling the LCC passenger

This article analyses the socioeconomic characteristics and trip attributes that influence or correlate with airline choice using a database of 20 000 passengers. One of the conclusions that should be highlighted is the lack of significance of socioeconomic variables except when the passenger is non-Spanish and the frequency with which one travels. And yet there are many trip attributes that condition the choice. Of these the following can be highlighted: the destination, the purpose, the need to transfer to another flight, the duration of the trip, the passenger's choice of accommodation or whether the trip is made on a weekend or not.

Key drivers of airline loyalty

This study investigates drivers of airline loyalty. It contributes to the body of knowledge in the area by investigating loyalty for a number of a priori market segments identified by airline management and by using a method which accounts for the multi-step nature of the airline choice process. The study is based on responses from 687 passengers. Results indicate that, at aggregate level, frequent flyer membership, price, the status of being a national carrier and the reputation of the airline as perceived by friends are the variables which best discriminate between travellers loyal to the airline and those who are not. Differences in drivers of airline loyalty for a number of segments were identified. For example, loyalty programs play a key role for business travellers whereas airline loyalty of leisure travellers is difficult to trace back to single factors. For none of the calculated models satisfaction emerged as a key driver of airline loyalty.

Integrating Fuzzy Integral with Multinomial Logit model to Evaluate the Effects of Service quality on Traveling Airline Choice

Integrating Fuzzy Integral with Multinomial Logit model to Evaluate the Effects of Service quality on Traveling Airline Choice

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 and pricing 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 addition, firms price more aggressively when in financial distress consistent with them trying to increase short-term market share and revenues. In contrast, in bankruptcy product quality increases relative to financial distress.

Airline emission charges: Effects on airfares, service quality, and aircraft design

This paper explores the effect of airline emissions charges on airfares, airline service quality, aircraft design features, and network structure, using a detailed and realistic theoretical model of competing duopoly airlines. These impacts are derived by analyzing the effects of an increase in the effective price of fuel, which is the path by which emissions charges will alter airline choices. The results show that emission charges will raise fares, reduce flight frequency, increase load factors, and raise aircraft fuel efficiency, while having no effect on aircraft size. Given that these adjustments occur in response to the treatment of an emissions externality that is currently unaddressed, they represent efficient changes that move society closer to a social optimum.

Latent class models of international air carrier choice

This paper uses a market segmentation approach to identify airline passengers’ potential segments and preferences toward international air carriers. The modeling approaches consist of the stated preference method and the latent class model. The stated choice experiments were designed based on service attributes in the international airline choice context. Empirical data was collected from airline passengers who have flown from Taipei to Tokyo or from Taipei to Hong Kong. The latent class model accommodating preference heterogeneity outperforms the multinomial logit model as indication of a better approach to analyze airline choice behavior. The latent class model with individual socioeconomic and trip characteristics in segment membership functions also improved model fit relative to the corresponding latent class model without individual characteristics. The values of willingness to pay for service attribute improvements vary across international air routes and segments. Passengers are willing to pay more for better service quality. In order to develop effective marketing and operational strategies for the international air travel market, this study highlights the importance of exploring airline choice behaviors by routes and segments.

A note on the determinants of airline choice: The case of Air Asia and Malaysia Airlines

Logit analysis is employed on primary data from departing air passengers at the Penang International Airport, Malaysia to examine the determinants of airline choice between incumbent Malaysia Airlines and low-cost Air Asia. With the exception of educational level and ethnicity, other socio-demographic characteristics do not play a statistically significant role in determining airline choice. Instead, behavioral factors such as concerns over schedules and fares, routes, booking methods and purpose of journey are found to be predictors of airline carrier choice.

Airline Emission Charges: Effects on Airfares, Service Quality, and Aircraft Design

This paper investigates the effect of airline emissions charges on airline service quality, airfares, aircraft design features, and network structure, using a realistic and detailed theoretical model of competing duopoly airlines. These impacts are derived by analyzing the effects of an increase in the effective price of fuel, which is the path by which emissions charges will alter airline choices. The results show that emission charges will raise fares, reduce flight frequency, increase load factors, and raise aircraft fuel efficiency, while having no effect on aircraft size. Given that these adjustments occur in response to the treatment of an emissions externality that is currently unaddressed, they represent efficient changes that move society closer to a social optimum.

Air travel choices in multi-airport markets

We study how air travel consumers departing from a multi-airport region trade-off across airport and airline supply characteristics. We empirically investigate this trade-off by estimating a weighted conditional logit model of airport–airline choice, using survey data on travels departing from one of three San Francisco Bay Area airports and arriving at one of four airports in greater Los Angeles in October 1995. Non-price characteristics like airport access time, airport delay, flight frequency, the availability of particular airport–airline combinations, and early arrival times are found to strongly affect choice probabilities. We calculate marginal effects and counterfactual scenarios to compare the values of these characteristics among each other and across traveler type. In order to examine the robustness of the conditional logit model, we estimate a mixed logit model, and find that the results are similar. We attribute the similarity to our strictly defined travel market and to our distinction between leisure and business travelers, thus controlling for two important sources of consumer heterogeneity. We consider the implications of our empirical findings on vertical integration between airlines and airports, on the effectiveness of “airport dominance,” and on the competitive effect of entry by low cost carriers.

Evaluating Service Marketing in Airline Industry and Its Influence on Student Passengers' Purchasing Behavior Using Taipei–London Route as an Example

This article reports an empirical study into airline consumer purchase behavior on a major global route between the United Kingdom (UK) and Taipei. It focuses on the factors influencing airline choice for a sample of 60 Taiwanese students based at UK Universities and traveling on five airlines: British Airways, Cathay Pacific Airways, China Airlines, EVA Airways, and Royal Dutch Airways. Several stages of data gathering were undertaken and a well‐established analytical framework for services marketing was used to identify gaps between the desired and received service. The main findings suggest that service quality, including in‐flight entertainment, cabin crew attitude, and seating comfort, can be as important as, or more important than, price in student purchase decisions for long‐haul flights. Other important factors in carrier choice included student discounts, baggage allowances, and airline safety record.

The asymmetric effects of service quality on passengers' choice of carriers for international air travel

AbstractThe asymmetric effects of service quality on international travelers' airline choice behavior were investigated in this paper. The linear structural equation modeling system was first applied to quantify passengers' perceptions of service quality provided by airlines, which were then used as the input variables of the asymmetric response model developed to capture international travelers' airline decision. Their asymmetric responses to various service quality of airlines were assumed to be either gains or losses with respect to their reference points. The results showed that the asymmetric response model performs better than the traditional logit models that capture only symmetrical effects.

Willingness to Pay for Airline Service Quality

This paper looks at estimated valuations of some service‐quality attributes in an airline choice context using stated preferences methods. The analysis is based on information obtained in the most important route connecting the Canary Islands with the Iberian Peninsula: Gran Canaria–Madrid, and tries to contribute to the body of knowledge in this area, given the relatively few studies of the monetary valuations of air travel regarding level‐of‐service attributes. A feature of this analysis is the examination of variations in values according to different characteristics of the service, such as price, penalties for changes in the ticket, legroom, food, etc.; the currently experienced level of the attribute, and various socio‐economic factors that affect the characteristics of the trip and passengers. In addition, the important issue of added value regarding different attributes is addressed, obtaining the willingness‐to‐pay for different improvements of service quality. A further analysis is made about how taste heterogeneity (market segments) affects these values. Results from the stated preference experiment and the market value of some comparable service are also compared. Finally, the paper brings together evidence from other studies and compares them with the findings obtained herein.

Analyzing Mobility in Peripheral Regions of the European Union: The Case of Canarias-Madeira-Azores

We analyze the principal factors that determine mobility in a context of airline choice in the main domestic routes connecting the archipelagos of Azores, Madeira and the Canary Islands with the mainland and among them. With that purpose we conducted several stated preference (SP) experiments facing individuals with the choice between two virtual airlines which differed in terms of a group of service attributes that include price, frequency, comfort and compensation for delay among others. We found different multinomial logit specifications that allowed us to estimate the relative importance of each attribute in the decision-making process. We conclude that the price, the flight frequency, the quality (or availability) of food, the penalty imposed for making changes in the ticket, receiving some compensation in case of delay as well as having more leg room in the plane seat are among the most important factors that represent the global service. We also obtained the willingness to pay for improvements in the level of service. We found very interesting the dual interpretation of the vehicle considered to compensate travelers in case of delay. Finally, our results shed evidence of the existence of systematic taste variation explained in terms of some socioeconomic characteristics interacting with service attributes.

Consumer Choice of Airlines in Malaysia

Competition, coupled with air travelers' worries following the 9/11 incident has made winning customers to one's side tougher in the airline industry. It thus becomes important to know what factors determine the choice of airlines by air passengers. This paper examines these factors in the context of a developing country, Malaysia. Perspectives of airlines, travel agents, and consumers were sought through a questionnaire survey. Results show that safety record of the airlines is an overriding factor mentioned by the airlines surveyed. Consumers and agents, however, rated this factor of third/fourth importance, putting it behind discounted fares, and large number of cities served by an airline. All the three groups of market participants tend to be in harmony in rating ICT (Information Communications Technology) as the least important choice factor. Finally, consumers also mentioned other factors never alluded to by either the airlines or the travel agents. Managerial implications of these findings for airlines operating in Malaysia and similar developing countries are discussed.

Analyzing the effect of preference heterogeneity on willingness to pay for improving service quality in an airline choice context

In this paper, we examine different model specifications to detect the presence of preference heterogeneity in an airline choice context. We analyze the most important route connecting the Canary Islands archipelago with the Iberian Peninsula. For this purpose, we conduct a stated preference (SP) experiment to analyze individual’s preference for the main attributes defining the service offered by the airlines. We find consistent specifications for multinomial logit and mixed logit models. In the first multinomial logit model, all the modelling variables enter in the utility function in linear form. The second multinomial logit model accounts for systematic taste variation including some interactions of socio-economics variables with level-of-service attributes, and the third one, considers interaction effects between cost and penalty and cost and frequency. We also consider taste variations in the preferences of passengers using mixed logit models. In these cases, we find that most of the parameters are random. To analyze the effect of preference homogeneity/heterogeneity assumptions, we obtain the willingness to pay for improving the service quality attributes under each scenario. Our results suggest that the benefit measures at the individual level are really sensitive to preference heterogeneity assumptions. We eventually obtain that the willingness to pay using mixed logit models are lower than those obtained from multinomial logit specifications. That means that preference heterogeneity needs to be considered in order to properly estimate the willingness to pay measures for service quality changes because if taste heterogeneity is important and neglected, the willingness to pay measures can be highly overestimated.