Determining Factors of Air Passengers' Choice of Transfer Airports in the Southeast Asia – North America Market : Managerial and Policy Implications

This study investigates the factors affecting air passengers' choice of transfer airport in the market between Southeast Asia (SE Asia) and North America (NA). It estimates demand parameters and sheds lights on the business strategies for an airport operator including identifying effective routes to better compete for transfer passengers. Specifically, a discrete choice model is applied to estimate air travelers' utility function from choosing different transfer airports in an origin-destination (OD) market. Our data consists of 78 routes in the SE Asia - NA airline market. Instrument variables (IVs) are used to control for potential endogeneity of airfare, while we treat airport characteristics including minimum connection time (MCT), service, size, and detour degree as exogenous. The main empirical findings are the following: 1) Transfer passengers' airport choice is determined by an airport's characteristics including MCT and service quality, in addition to those traditional factors such as airfares and travel time. 2) Based on estimated utility function parameters, we also quantify transfer passengers' willingness-to-pay for several transfer airport's characteristics. 3) With our estimation results, a case study is conducted for Incheon International Airport to identify candidate routes that have the greatest potential for the airport to increase the number of transfer passengers