Student’s vacation travel: A reference dependent model of airline fares preferences

Student’s vacation travel: A reference dependent model of airline
fares preferences

Journal: Air Transport Management

Author: Anna B. Grigolon, Astrid D.A.M. Kemperman, Harry J.P. Timmermans

Published: 2012

Abstract

This article reports the results of student vacation travel choice analysis using a reference dependent model of airline fare preferences. Findings suggests, as expected, that the preferences/utility decreases with increasing levels of cost. The evaluation of the airfare, however, becomes significantly more critical in the regime were low-fare airlines are more expensive than the regular airlines, meaning that price sensitivity for low-fare airlines is higher in this case. Part-worth utility functions for airfare as part of a more general portfolio model of vacation decisions of students suggest that indeed a reference dependent model captures such regimes in utility space.

Keywords: Reference dependent model; Low-fare airlines; Portfolio choice

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