Investigating airline customers’ premium coach seat purchases and implications for optimal pricing strategies

Stacey Mumbower, Laurie A. Garrow and Jeffrey P. Newman

Transportation Research Part A: Policy and Practice, 2015, vol. 73, issue C, 53-69

Abstract: We investigate factors that influence airline customers’ purchases of premium coach seats using a database of online prices and seat map displays collected from JetBlue’s website. Results show that multiple factors influence purchasing behavior; these factors include the amount of the seat fee, how far in advance the ticket is purchased, the number of passengers traveling together, and load factors (as revealed through seat map displays). We find that customers are between 2 and 3.3 times more likely to purchase premium coach seats (with extra legroom and early boarding privileges) when there are no regular coach window or aisle seats that can be reserved for free. In addition, we find that customers who purchase tickets closer to the departure date are less price-sensitive and are willing to pay higher seat fees. We use these model results to show that JetBlue’s seat fees are currently underpriced in many markets; an optimal static fee would increase revenues by 8% whereas optimal time-dependent fees would increase revenues by 10.2%. In addition, if JetBlue were to leave their seat fees unchanged and instead reserve certain rows of seats for premier customers, they could potentially increase revenues by 12.8%.

Keywords: Airline revenue; Seat fees; Product debundling (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (11)

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DOI: 10.1016/j.tra.2014.12.008

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