IDEAS home Printed from https://ideas.repec.org/p/irv/wpaper/050622.html
   My bibliography  Save this paper

Air Travel Choices in Multi-Airport Markets

Author

Listed:
  • Jun Ishii

    (Department of Economics, University of California-Irvine)

  • Sunyoung Jun

    (Department of Economics, University of California-Irvine)

  • Kurt Van Dender

    (Department of Economics, University of California-Irvine)

Abstract

We estimate a conditional logit model to measure the impact of airport and airline supply characteristics on the air travel choices of passengers 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. Marginal effects and counterfactual scenarios suggest that changes access in times affect travel choices more than changes in travel delays, and that the preferred airport differs by passenger 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.

Suggested Citation

  • Jun Ishii & Sunyoung Jun & Kurt Van Dender, 2006. "Air Travel Choices in Multi-Airport Markets," Working Papers 050622, University of California-Irvine, Department of Economics.
    • Handle: RePEc:irv:wpaper:050622
    as

    Download full text from publisher

    File URL: https://www.economics.uci.edu/files/docs/workingpapers/2005-06/Ishii-22.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Austan Goolsbee & Chad Syverson, 2008. "How Do Incumbents Respond to the Threat of Entry? Evidence from the Major Airlines," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(4), pages 1611-1633.
    2. Eric Pels & Peter Nijkamp & Piet Rietveld, 2001. "Airport and Airline Choice in a Multiple Airport Region: An Empirical Analysis for the San Francisco Bay Area," Regional Studies, Taylor & Francis Journals, vol. 35(1), pages 1-9.
    3. Basar, Gözen & Bhat, Chandra, 2004. "A parameterized consideration set model for airport choice: an application to the San Francisco Bay Area," Transportation Research Part B: Methodological, Elsevier, vol. 38(10), pages 889-904, December.
    4. Severin Borenstein, 1989. "Hubs and High Fares: Dominance and Market Power in the U.S. Airline Industry," RAND Journal of Economics, The RAND Corporation, vol. 20(3), pages 344-365, Autumn.
    5. Berry, Steven T, 1992. "Estimation of a Model of Entry in the Airline Industry," Econometrica, Econometric Society, vol. 60(4), pages 889-917, July.
    6. Hess, Stephane & Adler, Thomas & Polak, John W., 2007. "Modelling airport and airline choice behaviour with the use of stated preference survey data," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 43(3), pages 221-233, May.
    7. Stephane Hess & John W. Polak, 2006. "Airport, airline and access mode choice in the San Francisco Bay area," Papers in Regional Science, Wiley Blackwell, vol. 85(4), pages 543-567, November.
    8. Brueckner, Jan K & Spiller, Pablo T, 1994. "Economies of Traffic Density in the Deregulated Airline Industry," Journal of Law and Economics, University of Chicago Press, vol. 37(2), pages 379-415, October.
    9. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387.
    10. Berry, Steven T, 1990. "Airport Presence as Product Differentiation," American Economic Review, American Economic Association, vol. 80(2), pages 394-399, May.
    11. Pels, Eric & Nijkamp, Peter & Rietveld, Piet, 2003. "Access to and competition between airports: a case study for the San Francisco Bay area," Transportation Research Part A: Policy and Practice, Elsevier, vol. 37(1), pages 71-83, January.
    12. Van Dender, Kurt, 2007. "Determinants of fares and operating revenues at US airports," Journal of Urban Economics, Elsevier, vol. 62(2), pages 317-336, September.
    13. Wooldridge, Jeffrey M., 2001. "Asymptotic Properties Of Weighted M-Estimators For Standard Stratified Samples," Econometric Theory, Cambridge University Press, vol. 17(2), pages 451-470, April.
    14. Michael Mazzeo, 2003. "Competition and Service Quality in the U.S. Airline Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 22(4), pages 275-296, June.
    15. Steven A. Morrison & Clifford Winston, 1989. "Enhancing the Performance of the Deregulated Air Transportation System," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1989 Micr), pages 61-123.
    16. Christopher Mayer & Todd Sinai, 2003. "Network Effects, Congestion Externalities, and Air Traffic Delays: Or Why Not All Delays Are Evil," American Economic Review, American Economic Association, vol. 93(4), pages 1194-1215, September.
    17. Hess, Stephane & Polak, John W., 2005. "Mixed logit modelling of airport choice in multi-airport regions," Journal of Air Transport Management, Elsevier, vol. 11(2), pages 59-68.
    18. Evans, William N & Kessides, Ioannis N, 1993. "Localized Market Power in the U.S. Airline Industry," The Review of Economics and Statistics, MIT Press, vol. 75(1), pages 66-75, February.
    19. Steven A. Morrison, 2001. "Actual, Adjacent, and Potential Competition Estimating the Full Effect of Southwest Airlines," Journal of Transport Economics and Policy, University of Bath, vol. 35(2), pages 239-256, May.
    20. David Starkie, 2008. "The Airport Industry in a Competitive Environment: A United Kingdom Perspective," OECD/ITF Joint Transport Research Centre Discussion Papers 2008/15, OECD Publishing.
    21. Manski, Charles F & Lerman, Steven R, 1977. "The Estimation of Choice Probabilities from Choice Based Samples," Econometrica, Econometric Society, vol. 45(8), pages 1977-1988, November.
    Full references (including those not matched with items on IDEAS)

    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. Brueckner, Jan K. & Lee, Darin & Singer, Ethan S., 2013. "Airline competition and domestic US airfares: A comprehensivereappraisal," Economics of Transportation, Elsevier, vol. 2(1), pages 1-17.
    2. Fuellhart, Kurt & O’Connor, Kevin & Woltemade, Christopher, 2013. "Route-level passenger variation within three multi-airport regions in the USA," Journal of Transport Geography, Elsevier, vol. 31(C), pages 171-180.
    3. Gil, Ricard & Kim, Myongjin, 2021. "Does competition increase quality? Evidence from the US airline industry," International Journal of Industrial Organization, Elsevier, vol. 77(C).
    4. Marcucci, Edoardo & Gatta, Valerio, 2011. "Regional airport choice: Consumer behaviour and policy implications," Journal of Transport Geography, Elsevier, vol. 19(1), pages 70-84.
    5. Gayle, Philip G. & Wu, Chi-Yin, 2013. "A re-examination of incumbents’ response to the threat of entry: Evidence from the airline industry," Economics of Transportation, Elsevier, vol. 2(4), pages 119-130.
    6. Oliveira, Marcus V.R. & Oliveira, Alessandro V.M., 2018. "What drives effective competition in the airline industry? An empirical model of city-pair market concentration," Transport Policy, Elsevier, vol. 63(C), pages 165-175.
    7. Hess, Stephane, 2007. "Posterior analysis of random taste coefficients in air travel behaviour modelling," Journal of Air Transport Management, Elsevier, vol. 13(4), pages 203-212.
    8. Jan Brueckner & Darin Lee & Ethan Singer, 2014. "City-Pairs Versus Airport-Pairs: A Market-Definition Methodology for the Airline Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(1), pages 1-25, February.
    9. Bet, Germán, 2021. "Product specification under a threat of entry: Evidence from Airlines’ departure times," International Journal of Industrial Organization, Elsevier, vol. 75(C).
    10. Claudio Agostini, 2005. "El Mercado de Transporte Aéreo: Lecciones para Chile de una Revisión de la Literatura," ILADES-UAH Working Papers inv163, Universidad Alberto Hurtado/School of Economics and Business.
    11. Cho, Woohyun & Windle, Robert J. & Dresner, Martin E., 2015. "The impact of low-cost carriers on airport choice in the US: A case study of the Washington–Baltimore region," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 81(C), pages 141-157.
    12. Yanhao Wei, 2018. "Airline networks, traffic densities, and value of links," Quantitative Marketing and Economics (QME), Springer, vol. 16(3), pages 341-370, September.
    13. Yahua Zhang & David Round, 2009. "Policy Implications of the Effects of Concentration and Multimarket Contact in China’s Airline Market," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 34(4), pages 307-326, June.
    14. Fu, Xiaowen & Jin, Huan & Liu, Shaoxuan & Oum, Tae H. & Yan, Jia, 2019. "Exploring network effects of point-to-point networks: An investigation of the spatial patterns of Southwest Airlines’ network," Transport Policy, Elsevier, vol. 76(C), pages 36-45.
    15. Philip G. Gayle & Ying Lin, 2021. "Cost Pass‐Through In Commercial Aviation: Theory And Evidence," Economic Inquiry, Western Economic Association International, vol. 59(2), pages 803-828, April.
    16. de Luca, Stefano, 2012. "Modelling airport choice behaviour for direct flights, connecting flights and different travel plans," Journal of Transport Geography, Elsevier, vol. 22(C), pages 148-163.
    17. Escobari, Diego, 2017. "Airport, airline and departure time choice and substitution patterns: An empirical analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 103(C), pages 198-210.
    18. Zhang, Anming & Czerny, Achim I., 2012. "Airports and airlines economics and policy: An interpretive review of recent research," Economics of Transportation, Elsevier, vol. 1(1), pages 15-34.
    19. , 2023. "Price Competition and Endogenous Product Choice in Networks: Evidence from the US airline Industry," Working Papers 950, Queen Mary University of London, School of Economics and Finance.
    20. Bilotkach, Volodymyr & Lakew, Paulos Ashebir, 2014. "On sources of market power in the airline industry: Panel data evidence from the US airports," Transportation Research Part A: Policy and Practice, Elsevier, vol. 59(C), pages 288-305.

    More about this item

    Keywords

    Airports; Airlines; Air travel demand; Discrete choice;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:irv:wpaper:050622. 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: Melissa Valdez (email available below). General contact details of provider: https://edirc.repec.org/data/deucius.html .

    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.