The pricing responses of non-bag fee airlines to the use of bag fees in the US air travel market

Li Zou, Chunyan Yu, Dawna Rhoades and Blaise Waguespack

Journal of Air Transport Management, 2017, vol. 65, issue C, 209-219

Abstract: Using a panel data for Southwest and JetBlue in the 1st quarter of 2009, 2011, and 2013, we develop an empirical study and find evidence suggesting that the amount of bag fee charged by bag fee airlines, including those direct rivals at the route level and indirect rivals competing from adjacent airports, has a positive and significant effect on the airfare of non-bag fee airlines and such a positive association is smaller on vacation-oriented routes, but greater on routes with higher per capita income at endpoint cities. Moreover, the results are found that on the routes where Southwest is the only non-bag fee airline, the amount of bag fee charged by other airlines has a positive and significant effect on the traffic volume of Southwest. This traffic increasing effect, however, may be offset by the higher airfare of Southwest in response to other airlines’ imposition of bag fees.

Keywords: Bag fees; Product unbundling; Airline pricing (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S096969971730282X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jaitra:v:65:y:2017:i:c:p:209-219

DOI: 10.1016/j.jairtraman.2017.06.015

Access Statistics for this article

Journal of Air Transport Management is currently edited by Anne Graham

More articles in Journal of Air Transport Management from Elsevier
Bibliographic data for series maintained by Catherine Liu ().