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Willingness to Pay for Airline Service Quality

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  • Juan Carlos Martín
  • Concepción Román
  • Raquel Espino

Abstract

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.

Suggested Citation

  • 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.
    • Handle: RePEc:taf:transr:v:28:y:2007:i:2:p:199-217
    DOI: 10.1080/01441640701577007
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    References listed on IDEAS

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    1. Alamdari, Fariba, 1999. "Airline in-flight entertainment: the passengers’ perspective," Journal of Air Transport Management, Elsevier, vol. 5(4), pages 203-209.
    2. Evangelho, Fabio & Huse, Cristian & Linhares, Alexandre, 2005. "Market entry of a low cost airline and impacts on the Brazilian business travelers," Journal of Air Transport Management, Elsevier, vol. 11(2), pages 99-105.
    3. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555, September.
    4. Mason, Keith J., 2001. "Marketing low-cost airline services to business travellers," Journal of Air Transport Management, Elsevier, vol. 7(2), pages 103-109.
    5. McFadden, Daniel, 1974. "The measurement of urban travel demand," Journal of Public Economics, Elsevier, vol. 3(4), pages 303-328, November.
    6. 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.
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    Cited by:

    1. Zhao, Guihong & Cui, Yue & Cheng, Shaoyu, 2021. "Dynamic pricing of ancillary services based on passenger choice behavior," Journal of Air Transport Management, Elsevier, vol. 94(C).
    2. Cordera, Rubén & Luigi dell’Olio, & Sipone, Silvia & Moura, José Luis, 2024. "Modeling airport choice for a multi-airport area using a random parameter logit model," Research in Transportation Economics, Elsevier, vol. 104(C).

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