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.
Highlights We introduce a novel Cross-Nested Logit based approach to model customer choices. Preferences and airline loyalty of segments of customers are explicitly modelled. We track customers choices and preferences throughout the booking horizon. The latent class variant of our model outperforms more complex Mixed Logit and Error Components models.
Modelling air carrier choices with a Segment Specific Cross Nested Logit model
Journal of Air Transport Management ; 32 ; 8-16
2013-01-01
9 pages
Article (Journal)
Electronic Resource
English
Modelling air carrier choices with a Segment Specific Cross Nested Logit model
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