Over the past years, consumer society has seen a major shift towards a more “collaborative economy” and is now immensely characterized by an era of sharing. Take successful apps such as CouchSurfing, HomeExchange, Airbnb, and Uber, for example.
Sharing is not merely another form of buying and selling; rather, it is “a powerful movement in which people are getting goods and services from each other”.
Yet, this type of sharing economy (SE), with its immense potential to create and connect, also comes at a price. As such, there has been a major increase in research examining the effects of SE in the field of tourism, including Sarlay and Neuhofer’s (2020) study on how a SE company, such as JetSmarter, can potentially disrupt traditional aviation. In the following post, a brief introduction to the latter, which focuses on the research question “what is commercial air traveler’s willingness to pay (WTP) a premium for luxury air travel within the SE?”, will be presented. Continue reading below to find out more!
Forecast for the aviation sector: rough landings ahead
The sharing economy continues to leave its mark and has impacted almost every sector of society, including business, government, and the tourism and travel industry. Moreover, thanks to consumers’ increasing use of social media and Web 2.0, it has become easier than ever to use online platforms as a gateway for new and interesting tourism experiences. In this way,
SE offers a marketplace that promotes economic activity between buyers and sellers of resources of excess quantities, such as making bedrooms or cars available to others.
While accommodation (e.g. Airbnb), transport (e.g. Uber), and in-destination activities (e.g. Eatwith) have received much attention in respect to the SE, the aviation sector has been largely swept aside regardless of the fact that platforms emerging within the travel industry are expected to cause a major disruption.
One company, JetSmarter, often referred to as the “the Uber of skies”, offers consumers the possibility of sharing private jets instead of flying on commercial flights and, for now, mainly attracts frequent flyers who primarily travel in business or first class. As such, this trend provides consumers with easier access to a unique luxury experience alongside flexible scheduling arrangements and a way to save time. In fact, consumers are even willing to pay premium prices since
one of the main reasons to go private nowadays is “not the luxury, [but] the time saving”.
JetSmarter’s long term goal is to continue “democratizing” the private jet industry and lower prices to a level where flying private becomes affordable to not just a select few. This is problematic for traditional flying; and in response, commercial airlines, such as Delta Airlines, Lufthansa, and Qatar Airlines, amongst others, have also started to launch their own private jet services. Yet, are consumers willing to pay for shared, private jet travel, and, if so, what is the maximum amount of money they are willing to spend for this service?
Consumers’ interest in flying private and WTP
In order to test travelers’ willingness to pay (WTP), a self-completion survey, consisting of 35 questions, was distributed at the Vienna International Airport in Austria. After cleaning the data, a total of 260 entries were recorded. This quantitative study explored information on commercial air travelers’ preferences and behaviors as well as their interest in flying private. The results revealed that more than 69 percent of the respondents find flying on a private plane to be “very interesting” or “interesting”. Furthermore, the topic of “trading up”, indicating the persuasion of a customer to spend a higher amount of money on a good by improving its features, its quality, or simply its associated benefits, was of tremendous interest. When it comes to travelers’ WTP, differences between North American and European customers as well as business and leisure travelers could be observed. All in all, the study revealed that
consumers are willing to pay a higher price for a service that offers saving time, flexibility to fly at convenient times, avoidance of waiting in line, ease of baggage handling, and access to smaller airports.
For travel and tourism, this means that there is much more potential for the SE and (private) aviation industry for such a group of consumers. As new trends and developments lead to further democratization of private air travel, practitioners and businesses should be on the lookout for any changes in the market and be aware of future adjustments due to this disruption in aviation services. Additionally, future research using various methods (e.g. multiple regression modeling, etc.) and focusing on consumers’ WTP for premium SE services within a wider experience economy context should be considered.
For more details regarding this study and its results, check out the full text here:
To cite this article:
Sarlay, S. and Neuhofer, B. (2020) Sharing economy disrupting aviation: Travelers’ willingness to pay. Tourism Review. https://doi.org/10.1108/tr-09-2019-0375
Image source: https://unsplash.com/photos/rf6ywHVkrlY