On the flight choice behaviour of business purpose passengers in the Australian domestic market

Abstract

Airline passenger segmentation is traditionally classified into the categories of Business, Leisure and VFR (visiting friends and relatives). Most academic studies to date have only focused on the differences between business and leisure passengers without further exploring potential segments among business passengers. Hence, this research aims to enhance our understanding of the flight choice behaviour of business passengers, and in particular, exploring the potential differences between those who work in small and medium enterprises (SMEs, with 200 or less staff) and those in non-SMEs (more than 200 staff).

Descriptive analysis from revealed preference (RP) data and discrete choice models from stated preference (SP) choice surveys are used to ascertain attributes that are significant to choice behaviour. Descriptive analyses show that more business passengers work in the SME category. However, SME passengers tend to fly less, are more price-sensitive, and derive less satisfaction in flying with full-service carriers if they have previously flown with low-cost carriers. Discrete choice model results show that fewer flight service attributes are significant on flights between Sydney, Melbourne and Brisbane due to shorter flight duration. However, more attributes related to ticket flexibility are found significant for one-day trips. On flights between Perth and the east coast, willingness to pay calculates a range of $25 to $62 for one piece of checked baggage, and $30 to $46 for an extra legroom seat. Attributes related to flight comfort have a larger significance on inbound flights (i.e., return flights from Perth to the east coast). Self-funded passengers are more price-sensitive when purchasing flights. Furthermore, we observed in choice experiment that attribute non-attendance (ANA) is above 55% for all tested attributes, with the exception of fare; not all attributes are perceived equally by business passengers.

Flight product attributes are considered separately from ticket flexibility attributes by business passengers. Therefore, airlines may consider unbundling its products for them. New SP surveys can be deployed to test future flight products. The traditional segmentation method of passengers based on Business, Leisure and VFR trip purposes should be thoroughly reviewed, with the categorisation of business passengers expanded based on the findings of this research.