Baggage Fees and Airline Performance: A Case Study of Initial Investor Misperception

Gerhard J. Barone, Kevin Henrickson () and Annie Voy ()

Journal of the Transportation Research Forum, 2011, vol. 51, issue 01

Abstract: In response to increasing fuel costs, airlines began introducing baggage fees as a new source of revenue, fees which have since been increased. In this study, an event study methodology is used to examine the impact of these announcements on airline stock prices. The results indicate that the initial announcements led to negative abnormal returns for the announcing firm and other competing airlines, as they were interpreted as a sign of industry weakness. However, the results also show that subsequent increases in baggage fees, which had been shown to positively impact the airline’s financial performance, are associated with positive abnormal returns.

Keywords: Public; Economics (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:ndjtrf:207303

DOI: 10.22004/ag.econ.207303

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