Product Unbundling in the Travel Industry: The Economics of Airline Bag Fees

Jan Brueckner, Darin N. Lee, Pierre Picard and Ethan Singer

No 4397, CESifo Working Paper Series from CESifo

Abstract: This paper provides theory and evidence on airline bag fees, offering insights into a real-world case of product unbundling. The theory predicts that an airline’s fares should fall when it introduces a bag fee, but that the full trip price (the bag fee plus the new fare) could either rise or fall. The empirical evidence presented in the paper provides strong confirmation of this prediction. The data also suggest that the average fare falls by less than the bag fee itself, so that the full price of a trip rises for passengers who choose to check bags.

Keywords: unbundling; airlines; bag fees (search for similar items in EconPapers)
JEL-codes: L90 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Journal Article: Product Unbundling in the Travel Industry: The Economics of Airline Bag Fees (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_4397

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