24th Annual Student Research Conference
Determinants of Airfare: The Checked Bag Fee
John W. Schneider
Dr. Terry Olson, Faculty Mentor
In this study I attempt to create a model describing the determinants of national airfare. Uniquely, my model includes a measure for checked bag fees for the first checked bag. The airline industry has moved to almost universal use of a fee for the first checked bag since 2007, and this move may or may not be holding back airfare increases that would have otherwise occurred without the compartmentalization of costs represented by the fees. The model proves to be an excellent predictor of nationally aggregated airfares. I find that fees have not held costs down at a statistically significant level, but that there is some suggestion that more data will confirm a negative relationship, which is almost consistently established in this study. This study being the first to include a variable for checked bag fees, a stronger or more definitive relationship may be teased out in the future.
Keywords: Airline, Compartmentalization, Airfare, Pricing
Topic(s):Economics
Presentation Type: Oral Paper
Session: 30-1
Location: MG 2090
Time: 1:15