Preferences for alternative travel arrangements in case of major flight delays: Evidence from choice experiments with prospect theory

Flight delays have always been a source of dissatisfaction for passengers whose travel arrangements are interrupted. This study identifies passengers' preferences for arrangement mechanisms in flight delay situations. A choice experiment is designed considering a set of attributes, including the duration of the delay, monetary compensation, free snacks and beverages, cabin class upgrade, free airport lounge access, and free hotel accommodation. An integrated model is developed using the discrete choice model, combined with the cumulative prospect theory to identify significant attributes. Questionnaires were collected from Taiwanese air travelers flying full-service carriers at the Taiwan Taoyuan International Airport. The results show that, if a major flight delay occurs and the airline would like passengers to maintain the booked flight, it needs to maintain a good long-term relationship with them by offering exclusive arrangements, such as free meals and, more importantly, free lounge access and hotel accommodation for long-distance travel. If the booked flight cannot resume operation on time, the airline could assist high-priority passengers take the next flight offered by the same airline or transfer their flight to another airline. Offering price discounts to typical passengers who are willing to fly business class and a free upgrade to a higher class for frequent flyers are effective schemes as well.