Schedule Preference and Pricing Decision for Short-haul Flights in Airlines

Abstract

This paper focuses on consumer preference between time and air fare for Korean customers for short haul flights. The main focus is on the preferences of customers based on what air fare they would pay depending on departure time of flights. The growing complexity of consumer choice in fare, time and service as a result of liberalization in the airline industry has driven a revaluation of the traditional market segment. The new competitive prices have thrown out a challenge to the airlines to find innovative ways for attracting passengers with a mix fare discount, greater frequency and level of service. This paper focus on consumer preference to buy one airline offer over another and what consumers really value? In short, how much does it affect consumer choice while preferring one airlines departure time and fare over another airline? Using conjoint analysis, we found that fare differentiation depending on the departure time may be effective to generate more revenues in airline markets.