Baggage Fees Research Articles

Baggage Fees and Airline Stock Performance: A Case Study of Initial Investor Misperception

In response to increasing fuel costs, airlines began introducing baggage fees as a new source of revenue, fees which have since been increased. In this study, an event study methodology is used to examine the impact of these announcements on airline stock prices. The results indicate that the initial announcements led to negative abnormal returns for the announcing firm and other competing airlines, as they were interpreted as a sign of industry weakness. However, the results also show that subsequent increases in baggage fees, which had been shown to positively impact the airline’s financial performance, are associated with positive abnormal returns.

Older Adult Falls at a Metropolitan Airport: 2009–2010

IntroductionWe investigated falls at a metropolitan airport to determine fall incidence, identify potential causes of these falls, and suggest opportunities for mitigation. MethodsWe used deidentified incident reports of all falls requiring EMS response that occurred at the airport during 2009 and 2010. ResultsOn average, one fall occurred every 2.3days. Ninety-six percent (96%) of falls occurred in terminals. Of all falls, 44% occurred on escalators, making escalators the most common location. Seventy-two percent (72%) of fallers were females; 43% were ≥65years; 92% of all falls resulted in a documented injury; 37% of falls resulted in transport to hospital emergency departments. Escalator fall risks include carrying bags (due to changes in baggage fees), using cells phones, not using handrails, and compromised strength and balance. Conclusions and ImpactDiverting at-risk passengers to elevators could significantly reduce the overall falls. Interventions targeting escalator falls have the greatest promise for reducing falls at this airport.

Benet L Z and Galeazzi R L: Noncompartmental Determination of the Steady-State Volume of Distribution, J Pharm Sci 68, 1071–1074, 1979—the Backstory

In 1967, as a young assistant professor at Washington State University, I received a call from Dr. Arnold Marcus, then the chair of the Industrial Pharmaceutical Technology Section of the Academy of Pharmaceutical Sciences, who asked if I would serve as a faculty member in the academy’s January 1968 Arden House Conference on Pharmacokinetics. I answered, “Arnold, I don’t know any pharmacokinetics. I never took a course in pharmacokinetics and the little reading that I’ve done in the pharmacokinetics literature is just cursory.” Arnold replied that he was looking for someone with a good mathematical background to critique the approaches then being proposed in the field of pharmacokinetics and to lead the discussion during the last session of the course summarizing the positives and negatives of the approaches being employed, while attempting to hypothesize the future directions of the field. I accepted Arnold’s offer and in late January 1968 traveled from Pullman, Washington to Harriman, New York with a suitcase full of Journal of Pharmaceutical Sciences issues containing pharmacokinetic papers. Obviously this was prior to copy machines and baggage fees. I felt that I learned more about pharmacokinetics than any of the attendees at the conference, and my general impression at that time was that the discipline as practiced was much too complicated mathematically (unnecessarily) to have a major impact on drug therapy. In general the pharmacokinetic parameters in use at that time appeared to have no relationship with useful physiological and pathological processes that would allow a clinician to know how to adjust dosing under the various conditions that a patient would experience.

Would the Social Planner Let Bags Fly Free?

Motivated by airline baggage fees, we consider a service provider offering a main service (e.g., transporting a person) and an ancillary service (e.g., transporting a checked bag) that an individual customer may or may not need. We ask whether the firm should bundle the two services and post a single price or unbundle them and price the ancillary service separately. We consider two motivations for unbundling the services. The first focuses on altering consumer behavior to lower the firm’s costs. We assume that providing the ancillary service is costly but consumers can exert effort in order to reduce the rate at which the ancillary service is needed. We show that the firm unbundles and sets the fee for the ancillary service at the same level the social planner would. Profit maximization thus results in social efficiency. The second rationale for unbundling is segmentation. We assume that there are two segments that differ in the rate at which they use the ancillary service. The optimal contracts impose higher ancillary service fees on those less likely to use the service. In the airline setting, this would imply that business travelers would face higher baggage fees than leisure travelers. We conclude that the way in which airlines have implemented baggage fees is more consistent with attempts to control consumer behavior than segment customers.