Work

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

Year: 2015

Type: article

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 the first 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.

Source: Journal of Economics & Management Strategy

DOI: 10.1111/jems.12106

Authors: Jan K. Brueckner, Darin N. Lee, Pierre M. Picard, Ethan Singer

Institutions: University of California, Irvine, University of Luxembourg, University of Minnesota, Delta Air Lines (United States), University of Minnesota System

Language: English

Topic: Aviation Industry Analysis and Trends

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W1589701948

FWCI: 24.72

Cites: 28

Cited by: 58

Related to: 10