Consumer Population Curve Essay

Flight consumer population consist of the passengers that do not have fear of flying and the passengers affected by fear of flying. Therefore, two utility functions are defined. The passenger utility function not affected by fear of flying U is determined by: a) consumer income Y, b) airfare for chosen route p, c) opportunity cost of time spend on the flight u, d) frequency delay cost, e) stochastic delay cost and f) passenger loyalty/travel benefit A. The mathematical formulation of the passenger utility function is given by: . (1)
Where t represents the time that passenger spend on the nonstop flight defined as a ratio of route length l and the average aircraft speed v. The average aircraft speed v is assumed to be constant and equal for all flights.
Besides price, quality is …show more content…
In existing literature, the authors assume that airlines are flying with all seats occupied, which results in a high probability that the passenger will not find a seat on the desired flight. This can be interpreted as a lower quality of service, and this is why in practice most airlines tend to fly with aircraft that are not full 100%. To convert frequency and stochastic delay into a cost, it is assumed that each hour of deviation of the actual departure times from the desired departure time induces a certain cost δ for a passenger and that any refusal of passengers to the nearest flight due to the load factor induces a certain cost β. Additional interpretation of parameters δ and β could be that they represent the passenger value of the offered frequency. Due to the fact that both delays depend on frequency on the route and that frequency further depends on demand, the connection between passenger delay and demand is derived. This implies that if demand rises, the passenger delay will decrease, because higher demand will induce more