Student’s vacation travel: A reference dependent model of airline fares preferences

This article reports the results of student vacation travel choice analysis using a reference dependent model of airline fare preferences. Findings suggests, as expected, that the preferences/utility decreases with increasing levels of cost. The evaluation of the airfare, however, becomes significantly more critical in the regime were low-fare airlines are more expensive than the regular airlines, meaning that price sensitivity for low-fare airlines is higher in this case. Part-worth utility functions for airfare as part of a more general portfolio model of vacation decisions of students suggest that indeed a reference dependent model captures such regimes in utility space.

► We examine the portfolio of attributes that affect vacation decisions of students.
► Reference dependent model was useful in the context of student’s travel behaviour.
► Focus on travel mode choice, specifically on low-fare versus regular airlines.
► If low-fare airline is not longer the cheaper, airfare evaluation becomes critical.
► Preference is for low-fare airlines, followed by regular airlines, car and train/bus.