Value of travel time savings and willingness to pay for regional aviation

Rico Merkert and Matthew Beck

Transportation Research Part A: Policy and Practice, 2017, vol. 96, issue C, 29-42

Abstract: Despite their immense importance to regional and remote communities, regional air services are often commercially not viable and need public support. That support, and hence the existence of such lifeline services, is often questioned by stakeholders and policy makers. While the value of these services is high to the passengers and businesses that are located in regional, rural and remote areas, there is only anecdotal and no robust evidence available on the value of such services to people who live in metropolitan areas. This paper applies mixed logit choice models to a large sample of the Sydney metropolitan area to establish, for a first time, empirical evidence on the value of travel time savings (VTTS) and the willingness to pay for regional air services. While car is the most preferred option for regional travel (chosen most), we find a median willingness to pay of $99 per hour for leisure travel via plane and $153 per hour for business travel. Additional analysis on VTTS for different modes across leisure versus business travel is also conducted, providing for a more detailed understanding of each traveller type and willingness to pay differences between the various groups. The findings are of substantial value to regional airlines, airports, regulators, funding bodies and policy makers as they show that regional aviation is not only invaluable to the regions but also of high value to residents and business travellers residing in metropolitan areas.

Keywords: Regional aviation; Choice analysis; Willingness to pay; Value of travel time savings (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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DOI: 10.1016/j.tra.2016.11.022

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