How much airline customers are willing to pay: An analysis of price sensitivity in online distribution channels

This study is one of the first to examine factors that influence the decision to fly and itinerary choice for customers using online distribution channels. Stated preference data from individuals using an online search engine are used to estimate multinomial and nested logit models for US markets. These models incorporate a new formulation for capturing willingness to pay to travel by air and willingness to pay for air service improvements. New insights into the influence of deviations in individuals' preferred departure and arrival time on itinerary choice are also reported.