A heuristic for incorporating ancillaries into air choice models with personalization (Part 1: estimating preferences using hedonic regression)

Michal Sznajder, Richard Ratliff () and Cuneyd Kaya
Additional contact information
Michal Sznajder: Sabre Research
Richard Ratliff: Sabre Research
Cuneyd Kaya: Sabre Research

Journal of Revenue and Pricing Management, 2023, vol. 22, issue 2, No 3, 122-139

Abstract: Abstract In recent years, airlines have begun selling “branded fares” which are bundles of a travel “right-to-fly” plus assorted amenities (e.g., first bag included, extra legroom, priority boarding, extra loyalty miles, etc.). Branded fares allow airlines to further differentiate their products and have proven popular with customers. However, the explanatory features considered in previous air choice models in use at Sabre were limited to price and itinerary schedule attributes only; they did not consider the value-added utility of the new amenities included in airline branded fares. This paper is the first of a two-part series about incorporating ancillaries into air choice models. In Part 1, the authors describe a hedonic regression (HR) heuristic to measure the additional customer value-added utility from bundling ancillary amenities into airline branded fares. We found the estimated market pricing from HR models to be useful in determining travelers’ valuation and preferences across different categories of popular air ancillaries. Furthermore, we will show how to extend this approach to include personalization by customer segment.

Keywords: Ancillaries; Branded fares; Hedonic regression; Machine learning; Personalization (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1057/s41272-022-00399-2 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:jorapm:v:22:y:2023:i:2:d:10.1057_s41272-022-00399-2

Ordering information: This journal article can be ordered from
https://www.palgrave.com/gp/journal/41272

DOI: 10.1057/s41272-022-00399-2

Access Statistics for this article

Journal of Revenue and Pricing Management is currently edited by Ian Yeoman

More articles in Journal of Revenue and Pricing Management from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().