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

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 4397

Classification and Topics

• Classification: Wirtschaft ; Industry Studies: Transportation and Utilities: General
• Subject: unbundling ; airlines ; bag fees

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Brueckner, Jan K. ; Lee, Darin N. ; Picard, Pierre M. ; Singer, Ethan
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/84142
• Last update: 10.03.2025, 11:44 AM CET