Abstract
Using the revealed choices of airline passengers assessed from survey data, we investigate the impact of baggage fees (or baggage fee waivers (BFW)) on airline choice. We find that when segmenting passengers, the BFW is a significant inducement for passengers who potentially have a greater need to check bags; that is, passengers traveling on long flights, for long distances, or for leisure purposes. Further, we find that the greatest impact of implementing the baggage fee is in changing the behavior of passengers at the fee-charging carriers (significantly reducing the proportion of passengers that check bags) rather than in inducing passengers to switch to the BFW carriers from the fee-charging carriers.
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