Air passengers’ willingness to pay for ancillary services on long-haul flights

Chiambaretto, Paul

doi:10.1016/j.tre.2021.102234

Cited by 19 publications

(27 citation statements)

References 89 publications

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“…The results showed that passengers valued unbundled products more. Chiambaretto et al [5] researched the willingness to choose ancillary services for air passengers on long-haul airlines. Five ancillary services, i.e., checked baggage, in-flight meal, seat selection, priority boarding, and onboard Wi-Fi, were analysed and revealed that leisure passengers were more likely to pay for extra services.…”

Section: Airline Ancillary Servicementioning

confidence: 99%

“…With the development of airline business, ancillary services [1][2][3][4][5][6][7] that satisfy passengers' personal requirement are becoming increasingly important for airlines. Ancillary revenue has already played a vital role in airline profit and greatly increases the amount of extra financial revenue for airlines.…”

Section: Introductionmentioning

confidence: 99%

“…Seat selection [2,5,20,21] is one of the most common ancillary services chosen by passengers. This service refers to passengers choosing their preferred seats and paying for them willingly.…”

Section: Introductionmentioning

confidence: 99%

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Prediction of Willingness to Pay for Airline Seat Selection Based on Improved Ensemble Learning

Wang¹,

Han²,

Chen³

et al. 2022

Aerospace

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Airlines have launched various ancillary services to meet their passengers’ requirements and to increase their revenue. Ancillary revenue from seat selection is an important source of revenue for airlines and is a common type of advertisement. However, advertisements are generally delivered to all customers, including a significant proportion of people who do not wish to pay for seat selection. Random advertisements may thus decrease the amount of profit generated since users will tire of useless advertising, leading to a decrease in user stickiness. To solve this problem, we propose a Bagging in Certain Ratio Light Gradient Boosting Machine (BCR-LightGBM) to predict the willingness of passengers to pay to choose their seats. The experimental results show that the proposed model outperforms all 12 comparison models in terms of the area under the receiver operating characteristic curve (ROC-AUC) and F1-score. Furthermore, we studied two typical samples to demonstrate the decision-making phase of a decision tree in BCR-LightGBM and applied the Shapley additive explanation (SHAP) model to analyse the important influencing factors to further enhance the interpretability. We conclude that the customer’s values, the ticket fare, and the length of the trip are three factors that airlines should consider in their seat selection service.

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Section: Airline Ancillary Servicementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Prediction of Willingness to Pay for Airline Seat Selection Based on Improved Ensemble Learning

Wang¹,

Han²,

Chen³

et al. 2022

Aerospace

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“…Opportunities also exist for airlines to increase revenues by optimally pricing products based on customers’ willingness to pay. Customers have been shown to differ in their willingness to pay for ancillary products depending on flight and customer characteristics (Espino et al 2008 ; Warnock-Smith et al 2017 ; Song and Lee 2020 ; Chiambaretto 2021 ). For example, customers who check bags for a fee are less sensitive to price, itinerary time and number of connections than other customers (Nicolae et al 2016 ).…”

Section: Literature Reviewmentioning

confidence: 99%

Highly debated but still unbundled: The evolution of U.S. airline ancillary products and pricing strategies

Mumbower

Hotle

Garrow

2022

J Revenue Pricing Manag

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This paper investigates how airline pricing strategies and revenues have evolved over time for unbundled flight products, using the eight largest U.S. airlines. Findings indicate that ticket exchange fees are being eliminated by network and low-cost carriers. On the other hand, baggage and seat reservation fees have grown more complex, with some carriers moving towards dynamic pricing. Ancillary revenues from unbundled flight products represent an increasing portion of airlines’ total operating revenues, especially for ultra low-cost carriers. We estimate that the product unbundling trend has decreased revenues to the U.S. Airport and Airway Trust Fund by 4.0%–4.6% due to untaxed baggage and seat reservation fees alone. We also discuss government policies on ancillary revenue disclosure and pricing transparency, and the global COVID-19 pandemic’s impact on ancillaries.

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“…Studies on WTP either relate to consumers' response to perceived quality attributes or their actual response after experiencing intrinsic quality attributes of the product. A study by Chiambaretto [46] uses the conjoint analysis to explore WTP for in-flight services, and their findings show that leisure travelers are willing to pay an additional amount of EUR 26.6 to purchase flights with relatively more variety of food, while the in-flight Wi-Fi has negative significance, indicating that leisure travelers pay less attention to this attribute. A study by Kang and Nicholls [47] found that 44.3% of the consumers are willing to pay an additional amount of USD100 to choose eco-friendly hotels, while only 17% of the consumers are not willing to pay an extra amount for hotels with green facilities, indicating that consumers generally attach great importance to environmental issues.…”

Section: Introductionmentioning

confidence: 99%

Choice Experiment Method for Sustainable Tourism in Theme Parks

2021

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Previous relevant studies on theme parks lack an exploration of various tourism attributes, e.g., recreational facilities, themes, wait times, fast pass drawings, and pricing, etc., all of which inspired the research motivation of this study. First, the Choice Experiment (CE) method explores tourists’ preferences for theme park attributes. Second, the Conditional Logit (CL) and Random Parameter Logit (RPL) models explore the differences in tourists’ willingness to pay (WTP) for various attributes from the perspective of their socioeconomic background. We used purposive sampling to survey questionnaire answers face-to-face in Taiwan, and a total of 680 questionnaires were issued, of which, 549 copies are valid, with an effective recovery rate of 80.7%. The research findings suggest the following: (1) The most valued theme park attributes for consumers are the recreational facilities, followed by theme characteristics, and fast pass drawing. (2) Regarding the respondents’ WTP for various attributes, they are willing to pay the highest price for thrilling recreational facilities, then for unlimited fast pass services, and cartoon character themes. (3) Respondents believe that if thrilling recreational facilities and fast pass drawing are available at the same time, then the overall effectiveness will be improved. (4) Respondents relatively have no purchase intention for fast pass drawing. It is hoped that the research findings can provide theme park operators reference basis for making plans and decisions.

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Air passengers’ willingness to pay for ancillary services on long-haul flights

Cited by 19 publications

References 89 publications

Prediction of Willingness to Pay for Airline Seat Selection Based on Improved Ensemble Learning

Prediction of Willingness to Pay for Airline Seat Selection Based on Improved Ensemble Learning

Highly debated but still unbundled: The evolution of U.S. airline ancillary products and pricing strategies

Choice Experiment Method for Sustainable Tourism in Theme Parks

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