Extra cost for airlines’ premium economy class: the perspective of passengers

摘要

The primary aim of this study is to understand how much extra air travellers are willing to pay to upgrade to premium economy class. The spike model was used in this study to investigate travellers’ willingness to pay for premium economy class. Results from the data collected indicated that many survey participants were not willing to pay any extra (i.e., willingness to pay (WTP) equalled zero). Approximately 44.8% of short-haul economy-class, 31.3% of medium-haul economy-class, and 29.9% of long-haul economy-class travellers, respectively were not willing to pay extra to upgrade to premium economy class. Therefore, this study used the spike model to solve the problem of too many travellers with zero willingness to pay. Three flight distances, short, medium, and long hauls were separately estimated to investigate the effects of flight distance on WTP.. Short-haul, round-trip, economy-class travellers’ willingness to pay to upgrade to premium economy class was 4,032 New Taiwan Dollars (NTD), increasing to 5,591 NTD when other variables were included. Medium-haul, round-trip, economy-class travellers’ willingness to pay was 9,635 NTD, increasing to 9,813 NTD when other variables were included. Long-haul, round-trip, economy-class travellers’ willingness to pay was 14,659 NTD, increasing to 17,333 NTD when other variables were included. The research results should be a helpful reference for the civil aviation industry in strategic pricing planning.