Willingness to pay for airlines' premium economy class: The perspective of passengers. (March 2017)

• Record Type: Journal Article
• Authors: Kuo, Chung-Wei; Jou, Rong-Chang
• Is Part Of: Journal of air transport management. Volume 59(2017)
• Page Start: 134
• Page End: 142
• Publication Date: 2017-03
• Subjects: Premium economy class -- Willingness to pay -- Spike model; Airlines -- Management -- Periodicals; Aeronautics, Commercial -- Management -- Periodicals; 387.7068
• DOI: 10.1016/j.jairtraman.2016.12.005
• Languages: English
• ISSNs: 0969-6997

Abstract

Abstract: This study investigates how much extra air travellers are willing to pay to upgrade to premium economy class by using a suitable econometric model. Since a large portion of travellers' willingness to pay for premium economy class is zero, the spike model is applied to overcome the issues that may occur when traditional statistical models are used. Three flight distances, short, medium, and long hauls were separately estimated to investigate the effects of flight distance on willingness to pay. Travellers' willingness to pay to upgrade from economy class to premium economy class round-trip was US$138, 1 US$309, and US$545 for short-, medium-, and long-haul, respectively. The research results should be a helpful reference for the civil aviation industry in strategic pricing planning. Highlights: The spike model was used in this study to investigate travellers' willingness to pay for premium economy class. Short-haul, round-trip, economy-class travellers' willingness to pay to upgrade to premium economy class was US$ 138. Medium-haul was US$ 309 and long-haul was US$ 545. The research results should be a helpful reference for the civil aviation industry in strategic pricing planning.