Modelling air carrier choices with a Segment Specific Cross Nested Logit model

Modelling air carrier choices with a Segment Specific Cross Nested Logit model

Journal: Air Transport Management

Author: Tomasz Drabas, Cheng-Lung Wu

Published: 2013

Abstract

A number of customer segments may exist in any air travel market, differing in the willingness-to-pay, income, age, time of travel or airline preferences. Not accounting for this diversity may introduce a significant variance into any choice model. In this paper we present a Segment Specific Cross-Nested Logit with Brand Loyalty (SSCNL-BL) model that explicitly accounts for this heterogeneity. The model is estimated using data from a stated preference choice experiment conducted among Australians travelling to the United States. The resulting SSCNL-BL model performs better than the more complex Mixed Logit model without the additional computational burden.

Keywords: Cross-nested choice model; Market segmentation; Brand loyalty; Latent class models

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