Willingness to pay for airline service quality

Abstract

We analyze the principal factors that determine mobility in a context of airline choice in the main domestic routes connecting the archipelagos of Azores, Madeira and the Canary Islands with the mainland and among them. With that purpose we conducted several stated preference (SP) experiments facing individuals with the choice between two virtual airlines which differed in terms of a group of service attributes that include price, frequency, comfort and compensation for delay among others. We found different multinomial logit specifications that allowed us to estimate the relative importance of each attribute in the decision-making process. We conclude that the price, the flight frequency, the quality (or availability) of food, the penalty imposed for making changes in the ticket, receiving some compensation in case of delay as well as having more leg room in the plane seat are among the most important factors that represent the global service. We also obtained the willingness to pay for improvements in the level of service. We found very interesting the dual interpretation of the vehicle considered to compensate travelers in case of delay. Finally, our results shed evidence of the existence of systematic taste variation explained in terms of some socioeconomic characteristics interacting with service attributes.