Understanding low-cost airline users' expenditure patterns and volume

Abstract

The expansion of low-cost airlines (LCAs) has led to a reduction of flight costs and has enabled tourists to redistribute their trip budget and spend a higher proportion at the destination. Analyses of absolute trip spending by parts (such as transportation) and of trip budget share (for example, the proportion of transportation within the total trip budget) serve different objectives. The first type of analysis refers to how much tourists spend and the second to how they spend. The aims of this article are, first, to provide a new methodological tool to combine the analysis of budget share and absolute expenditure and, second, to analyse the determinants of absolute expenditure on transportation and the relative importance of transportation expenditure compared to other trip budget components. The main findings are that traveller characteristics affecting high absolute transportation expenditure are different from those affecting a high share of transportation in the trip budget. This has implications for LCA pricing strategies ; The authors are pleased to acknowledge the support of the Spanish Institute of Tourism (Instituto de Turismo de España) in providing them with the raw data. The authors are entirely responsible for any lack of accuracy or reliability in the data analysis. All authors wish to thank Neelu Seetaram and Juan José Egozcue for their comments on previous versions of the article and to acknowledge the support of the Catalan Autonomous Government Consolidated Research Group Grant 2014SGR551 for funding their research group 'Compositional and Spatial Data Analysis (COSDA)'; the Spanish Health Ministry grant CB06/02/1002 for funding the research group "CIBER of Epidemiology and Public Health (CIBERESP)"; the Spanish Economy and Competitiveness Ministry grants MTM2015-65016-C2-1-R and EDU2015-68610-R, respectively, for funding the projects "COmpositional Data Analysis and RElated meThOdS (CODA-RETOS)" and "Assessing Individual and Team Entrepreneurial Potential"; and the University of Girona grants MPCUdG2016/069 and MPCUdG2016/098