Mixed logit analysis of trade-off effects between international airline fares and fences: a revenue management perspective

Abstract

As transportation is essential for tourism development, effectively utilizing its perishable resources has become an important issue. This study aims to analyse the relationship between airline fares and using conditions from the perspective of millennial tourists and taking the Taipei–Tokyo market as an example. The study attempts to show a revenue management practice in the manipulation of homogeneous seat service and give millennial tourists a better understanding of their preferences for ticket choices. We categorize availability of flight, advance booking, ticket validity, and changing conditions as main attributes and develop a stated-preference questionnaire with multiple hypothetical scenarios for respondents to select in the experiment. We effectively collect 390 valid samples for a mixed logit analysis and the results show that all applied attributes are statistically significant. Ticket validity is revealed to be the most important fence with the largest willingness-to-pay value and followed by availability of flight, advanced booking, and changing conditions.

Keywords:

• pricing scheme
• fence and restriction
• millennial tourist
• mixed logit
• revenue management

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

The author would like to show gratitude to the Ministry of Science and Technology in Taiwan for the financial support [contract number MOST 103-2410-H-507-005].