IDEAS home Printed from https://ideas.repec.org/a/eee/jaitra/v11y2005i6p400-407.html
   My bibliography  Save this article

Recovering costs through price and service differentiation: Accounting for exogenous information on attribute processing strategies in airline choice

Author

Listed:
  • Rose, John M.
  • Hensher, David A.
  • Greene, William H.

Abstract

The entry of low cost airlines has thrown out a challenge to all airlines to find ways of attracting passengers, through a mix of fare discounting, greater frequency, improved flight times and no-frill's levels of on-board service. These competitive strategies have an impact on cost recovery. As airlines seek business in an increasingly heterogeneous passenger market, a greater understanding of what matters to potential passengers in choosing an airline grows in importance. Traditional studies of passenger airline choice assume that all attributes matter, but some to a lesser extent. What happens to the empirical evidence on willingness to pay when specific attributes are totally ignored by particular passengers? In this paper, we examine the impact of individual-specific attribute processing strategies (APS) on the inclusion/exclusion of attributes on the parameter estimates and behavioural outputs of models of airline service and fare level choice. Modelling practice assumes that whilst respondents may exhibit preference heterogeneity, they employ a homogenous APS with regards to how they process the presence/absence of attributes of stated choice (SC) experiments. We demonstrate how information collected exogenous of the SC experiment on whether respondents either ignored or considered each attribute of the SC task may be used in the estimation process, and how such information may be used to provide outputs that are attribute processing strategies segment specific.

Suggested Citation

  • Rose, John M. & Hensher, David A. & Greene, William H., 2005. "Recovering costs through price and service differentiation: Accounting for exogenous information on attribute processing strategies in airline choice," Journal of Air Transport Management, Elsevier, vol. 11(6), pages 400-407.
    • Handle: RePEc:eee:jaitra:v:11:y:2005:i:6:p:400-407
    DOI: 10.1016/j.jairtraman.2005.05.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969699705000487
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jairtraman.2005.05.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555, September.
    2. David A. Hensher, 2004. "Identifying the Influence of Stated Choice Design Dimensionality on Willingness to Pay for Travel Time Savings," Journal of Transport Economics and Policy, University of Bath, vol. 38(3), pages 425-446, September.
    3. Hensher, David A. & Stopher, Peter R. & Louviere, Jordan J., 2001. "An exploratory analysis of the effect of numbers of choice sets in designed choice experiments: an airline choice application," Journal of Air Transport Management, Elsevier, vol. 7(6), pages 373-379.
    4. Jovicic, Goran & Hansen, Christian Overgaard, 2003. "A passenger travel demand model for Copenhagen," Transportation Research Part A: Policy and Practice, Elsevier, vol. 37(4), pages 333-349, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wen, Chieh-Hua & Huang, Chia-Jung & Fu, Chiang, 2020. "Incorporating continuous representation of preferences for flight departure times into stated itinerary choice modeling," Transport Policy, Elsevier, vol. 98(C), pages 10-20.
    2. Rose, John M. & Beck, Matthew J. & Hensher, David A., 2015. "The joint estimation of respondent-reported certainty and acceptability with choice," Transportation Research Part A: Policy and Practice, Elsevier, vol. 71(C), pages 141-152.
    3. Collins, Andrew T. & Hess, Stephane & Rose, John M., 2013. "Choice modelling with search and sort data from an interactive choice experiment," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 56(C), pages 36-45.
    4. Díaz, Verónica & Montoya, Ricardo & Maldonado, Sebastián, 2023. "Preference estimation under bounded rationality: Identification of attribute non-attendance in stated-choice data using a support vector machines approach," European Journal of Operational Research, Elsevier, vol. 304(2), pages 797-812.
    5. William Henry Kaye-Blake & Walt L. Abell & Eva Zellman, 2009. "Respondents' ignoring of attribute information in a choice modelling survey," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(4), pages 547-564, October.
    6. Asratie, Teshager Mazengia & Berhanu, Wassie, 2020. "Farmers Economic Valuation of Agro-biodiversity in West Gojjam Zone, Amhara Region, Ethiopia: Choice Experiment Approach," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 29(01), April.
    7. Ismail, Noor Azina & Jenatabadi, Hashem Salarzadeh, 2014. "The influence of firm age on the relationships of airline performance, economic situation and internal operation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 67(C), pages 212-224.
    8. Marit E. Kragt, 2013. "Stated and Inferred Attribute Attendance Models: A Comparison with Environmental Choice Experiments," Journal of Agricultural Economics, Wiley Blackwell, vol. 64(3), pages 719-736, September.
    9. Saffarzadeh, Mahmoud & Mazaheri, Akram & Tari, Majid Zabihi & Seyedabrishami, Seyedehsan, 2016. "Analysis of Iranian passengers' behavior in choosing type of carrier in international air travel to East Asia," Journal of Air Transport Management, Elsevier, vol. 56(PB), pages 123-130.
    10. Joanna Hawlena & Anna Mazurek-Kusiak, 2020. "Determinants of Price Formation for Air Transport Services," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 445-455.
    11. Chen, I-Shuo, 2016. "A combined MCDM model based on DEMATEL and ANP for the selection of airline service quality improvement criteria: A study based on the Taiwanese airline industry," Journal of Air Transport Management, Elsevier, vol. 57(C), pages 7-18.
    12. Grigolon, Anna B. & Kemperman, Astrid D.A.M. & Timmermans, Harry J.P., 2012. "The influence of low-fare airlines on vacation choices of students: Results of a stated portfolio choice experiment," Tourism Management, Elsevier, vol. 33(5), pages 1174-1184.
    13. Andrew Collins & John Rose & Stephane Hess, 2012. "Interactive stated choice surveys: a study of air travel behaviour," Transportation, Springer, vol. 39(1), pages 55-79, January.
    14. Sandra Notaro & Maria De Salvo & Roberta Raffaelli, 2022. "Estimating Willingness to Pay for Alpine Pastures: A Discrete Choice Experiment Accounting for Attribute Non-Attendance," Sustainability, MDPI, vol. 14(7), pages 1-15, March.
    15. Zhang, Xumin & Khachatryan, Hayk & Gao, Zhifeng, 2020. "Using Mixed Logit Based Models to Control Attribute Nonattendance in Choice Experiments," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304547, Agricultural and Applied Economics Association.
    16. Balcombe, Kelvin & Fraser, Iain & Harris, Liam, 2009. "Consumer willingness to pay for in-flight service and comfort levels: A choice experiment," Journal of Air Transport Management, Elsevier, vol. 15(5), pages 221-226.
    17. Joanna Hawlena, 2020. "Effectiveness of Intersectoral Competition in Shaping the Transport Market," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 1), pages 323-334.
    18. Juan Carlos Martín & Concepción Román & Raquel Espino, 2007. "Willingness to Pay for Airline Service Quality," Transport Reviews, Taylor & Francis Journals, vol. 28(2), pages 199-217, July.
    19. Doherty, Edel & Campbell, Danny & Hynes, Stephen & van Rensburg, Tom M., 2011. "The effect of using labelled alternatives in stated choice experiments: an exploration focusing on farmland walking trails in Ireland," 85th Annual Conference, April 18-20, 2011, Warwick University, Coventry, UK 108792, Agricultural Economics Society.
    20. Doherty, Edel & Campbell, Danny & Hynes, Stephen & van Rensburg, Thomas, 2012. "Labelling effects in discrete choice experiments," Working Papers 148831, National University of Ireland, Galway, Socio-Economic Marine Research Unit.
    21. Akamavi, Raphaël K. & Mohamed, Elsayed & Pellmann, Katharina & Xu, Yue, 2015. "Key determinants of passenger loyalty in the low-cost airline business," Tourism Management, Elsevier, vol. 46(C), pages 528-545.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Scarpa, Riccardo & Rose, John M., 2008. "Design efficiency for non-market valuation with choice modelling: how to measure it, what to report and why," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(3), pages 1-30.
    2. Bliemer, Michiel C.J. & Rose, John M., 2011. "Experimental design influences on stated choice outputs: An empirical study in air travel choice," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(1), pages 63-79, January.
    3. Wen, Chieh-Hua & Huang, Chia-Jung & Fu, Chiang, 2020. "Incorporating continuous representation of preferences for flight departure times into stated itinerary choice modeling," Transport Policy, Elsevier, vol. 98(C), pages 10-20.
    4. Cho, Woohyun & Windle, Robert J. & Dresner, Martin E., 2017. "The impact of operational exposure and value-of-time on customer choice: Evidence from the airline industry," Transportation Research Part A: Policy and Practice, Elsevier, vol. 103(C), pages 455-471.
    5. Forbes-Brown, Shelicia & Mcheels, Eric & Hobbs, Jill, 2015. "Signalling Origin: Consumer Willngness to Pay for Dairy Products with the "100% Canadian Milk" Label," 2015 Conference, August 9-14, 2015, Milan, Italy 211636, International Association of Agricultural Economists.
    6. Nakamura, Akihiro, 2015. "Mobile and fixed broadband access services substitution in Japan considering new broadband features," Telecommunications Policy, Elsevier, vol. 39(2), pages 140-154.
    7. Fraser, Iain & Balcombe, Kelvin & Williams, Louis & McSorley, Eugene, 2021. "Preference stability in discrete choice experiments. Some evidence using eye-tracking," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 94(C).
    8. Carlsson, Fredrik & Martinsson, Peter, 2008. "Does it matter when a power outage occurs? -- A choice experiment study on the willingness to pay to avoid power outages," Energy Economics, Elsevier, vol. 30(3), pages 1232-1245, May.
    9. Anders Dugstad & Kristine Grimsrud & Gorm Kipperberg & Henrik Lindhjem & Ståle Navrud, 2020. "Scope elasticity and economic significance in discrete choice experiments," Discussion Papers 942, Statistics Norway, Research Department.
    10. Rose, John M. & Bliemer, Michiel C.J. & Hensher, David A. & Collins, Andrew T., 2008. "Designing efficient stated choice experiments in the presence of reference alternatives," Transportation Research Part B: Methodological, Elsevier, vol. 42(4), pages 395-406, May.
    11. Jørgensen, Sisse Liv & Termansen, Mette & Pascual, Unai, 2020. "Natural insurance as condition for market insurance: Climate change adaptation in agriculture," Ecological Economics, Elsevier, vol. 169(C).
    12. David A. Hensher, 2006. "How do respondents process stated choice experiments? Attribute consideration under varying information load," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(6), pages 861-878, September.
    13. Espino, Raquel & de Dios Ortúzar, Juan & Román, Concepción, 2007. "Understanding suburban travel demand: Flexible modelling with revealed and stated choice data," Transportation Research Part A: Policy and Practice, Elsevier, vol. 41(10), pages 899-912, December.
    14. De Ayala Bilbao, Amaya & Hoyos Ramos, David & Mariel Chladkova, Petr, 2012. "Landscape valuation through discrete choice experiments: Current practice and future research reflections," BILTOKI 1134-8984, Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística).
    15. Jürgen Meyerhoff & Malte Oehlmann & Priska Weller, 2015. "The Influence of Design Dimensions on Stated Choices in an Environmental Context," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(3), pages 385-407, July.
    16. Ek, Kristina & Persson, Lars, 2014. "Wind farms — Where and how to place them? A choice experiment approach to measure consumer preferences for characteristics of wind farm establishments in Sweden," Ecological Economics, Elsevier, vol. 105(C), pages 193-203.
    17. Mau, Paulus & Eyzaguirre, Jimena & Jaccard, Mark & Collins-Dodd, Colleen & Tiedemann, Kenneth, 2008. "The 'neighbor effect': Simulating dynamics in consumer preferences for new vehicle technologies," Ecological Economics, Elsevier, vol. 68(1-2), pages 504-516, December.
    18. Nakamura, A., 2011. "Estimating switching costs after introducing Fixed-Mobile Convergence in Japan," Information Economics and Policy, Elsevier, vol. 23(1), pages 59-71, March.
    19. Mickael Bech & Trine Kjaer & Jørgen Lauridsen, 2011. "Does the number of choice sets matter? Results from a web survey applying a discrete choice experiment," Health Economics, John Wiley & Sons, Ltd., vol. 20(3), pages 273-286, March.
    20. Oehlmann, Malte & Weller, Priska & Meyerhoff, Jürgen, 2014. "Complexity-induced Status Quo Effects in Discrete Choice Experiments for Environmental Valutation," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100616, Verein für Socialpolitik / German Economic Association.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jaitra:v:11:y:2005:i:6:p:400-407. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/journal-of-air-transport-management/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.