Consumer choice behaviour and strategies of air transportation service providers

Abstract

The Institute for Transport Planning and Systems (IVT) is a research institute affiliated to the ETH Zurich and is specialized in, amongst others, transportation demand forecasting. The IVT expressed its interest to apply its knowledge in the field of aviation, following a general trend in the scientific community, thereby extending and expanding its knowledge of traveler choice behavior in general and air traveler behavior specifically. From an actor and network analysis, it is derived that numerous actors influence air traveler decision-making across a range of choice stages. It is chosen to highlight the itinerary choice stage in a case study, as only two actors are directly involved, namely airlines and travel portals. Furthermore, it is possible to address prevailing issues in the discrete choice community and the aviation industry. The focus of the case study is on understanding the relative valuation of non-monetary and monetary characteristics of an itinerary based on revealed preference data and investigating the role of different choice sets. A discrete choice modeling approach is followed. The research presented in the case study makes use of a number of datasets: a dataset that contains tickets bookings through computer reservation systems (CRS) for November 2006, a dataset with fares observed in the period September 2006 – November 2006 for flights departing in November 2006 on 70 origin-destination pairs and the Official Airline guide (OAG). They have been combined to form a comprehensive dataset for the analysis of itinerary choice. From the case study it is concluded that the contribution to utility of fare is large: in a direct itinerary fare yields the largest contribution to utility, together with departure time. In an average non-chosen itinerary, the largest contribution to utility is given by a transfer. In general it is concluded that the IVT can contribute significantly to current issues in the aviation industry. The fact that actual behavior in the case study is analyzed can prove both important for convincing both practitioners and researchers of the findings.