STATED CHOICE ANALYSIS OF WILLINGNESS TO PAY FOR LOW COST CARRIER SERVICES

Taiwan to China has been the major air transportation corridor for many years. However, scheduled nonstop flight services were unavailable before 2008 due to the political conflict. Passengers traveling from Taiwan to China had to take indirect flights transferring at Hong Kong, Macau or South Korea. After 2008, the cross-strait political tension has been lowered and the demand for nonstop air transportation services between Taiwan and China has been prospering rapidly. This creates a potential market for the low costs carrier services. This study implements a stated choice modeling approach to analyze: (1) passengers' choice among indirect flights and nonstop flights by the traditional full service carriers and nonstop flights by the low cost carriers; and (2) passengers' willingness to pay for the low cost carrier service attributes. The attributes for the stated choice design include fare, luggage restriction, flight frequency, arrival time and destination airport. 285 passengers traveling from Taipei to Beijing during the period between February, 12 and April 27, 2011 at Tao-Yuan International Airport, Taiwan were randomly selected to complete the survey. The survey results show that fare, luggage restriction, and destination airport are significant attributes that can influence the passengers' choices of airlines. The results also indicate that the choice behavior between business travelers and non-business travelers are significantly different. Non-business travelers tend to trade-off less service attributes with fare than business travelers.