Willingness to pay for airline services attributes: evidence from a stated preferences choice game

Abstract

We analyze consumer preferences for airline service attributes between Ponta Delgada and Lisbon: the most important air corridor between the Azores and Mainland Portugal. Owing to stringent regulations, which fall under the European Union Public Service Obligations (PSOs) domain, there are no revealed preferences data suitable to study consumer preferences. Hence, we conduct a stated preferences choice game and estimate a microeconometric model à la McFadden. Our results are statistically significant and imply willingness to pay measures economically high for attributes such as punctuality warranties and comfort. Willingness to pay for additional daily flights is quite low. This result is important to how should the policy maker liberalize this sector.