Risk Aversion to Short Connections in Airline Itinerary Choice

Abstract

Network airlines traditionally attempt to minimize passenger connecting times at hub airports, assuming that passengers prefer minimum scheduled elapsed times for their trips. However, minimizing connecting times creates schedule peaks at hub airports. These peaks are extremely cost-intensive in terms of additional personnel, resources, runway capacity, and schedule recovery. Consequently, passenger connecting times should be minimized only if the anticipated revenue gain of minimizing passenger connecting times is larger than the increase in operating cost (i.e., if this policy increases overall operating profit). The extent to which a change in elapsed time affects passenger itinerary choice–-and thus an airline's market share–-is analyzed. An existing airline itinerary choice survey is extended to test the assumption that passenger demand is affected by the length of connecting times. Previous studies have not explicitly focused on the connecting time at hubs in their models. The hypothesis is that passengers might incur lower utilities from shorter connecting time versus longer connecting times based on the potential discomfort of a hasty connection and the misconnection risk associated with short connecting times. A stated preference experiment is performed, and socioeconomic data are collected to estimate a choice model. Multinomial logit model results support this hypothesis and refute the traditional network airline assumption.