BAGGAGE FEES AND THEIR EFFECTS ON AIR TRANSPORT DEMAND: AN EMPIRICAL STUDY ON TRANSPORT MODE SUBSTITUTION EFFECT¶
Abstract¶
DUE TO THE FIERCE COMPETITION BETWEEN AIRLINES IN THE AIR TRANSPORT INDUSTRY, MANY OF THEM ARE TURNING TO THE UNBUNDLING STRATEGY AS A WAY TO INCREASE THEIR COMPETITIVENESS. UNBUNDLING IN THE AIRLINE INDUSTRY IS THE ACT OF DIVIDING THE FUNDAMENTAL TRANSPORTATION SERVICE FROM ANCILLARY SERVICES, SUCH AS CHECKED BAGGAGE. IN THIS WAY, AIRLINES CAN KEEP THEIR AIRFARES IN CHECK TO ATTRACT PRICE-SENSITIVE PASSENGERS WHO MAY NOT MAKE USE OF ANCILLARY SERVICES. WHILE THIS STRATEGY PROVED TO BE SUCCESSFUL FOR AIRLINES, AS IT ALSO REPRESENTS A NEW REVENUE SOURCE FOR THEM, STUDIES SHOW THAT PASSENGERS ARE UNHAPPY WITH THIS TREND IN THE AIRLINE INDUSTRY. IN THIS CONTEXT, THIS PAPER AIMS TO EXAMINE THE EFFECTS OF BAGGAGE FEE IMPLEMENTATION ON PASSENGER DEMAND BY ANALYZING THE CASE OF THE BRAZILIAN AIRLINE INDUSTRY, WHICH IMPLEMENTED THAT POLICY IN 2017. WE USE A FIXED-EFFECT REGRESSION MODEL TO ANALYZE DATA FROM 2016-2018 TO INVESTIGATE IF AND HOW THE BAGGAGE FEE POLICY HAS AFFECTED THE DEMAND FOR DOMESTIC FLIGHTS IN BRAZIL. OUR RESULTS SHOW THAT THE BAGGAGE FEE IMPLEMENTATION IN THE BRAZILIAN AIRLINE INDUSTRY CAUSED A SHORT-TERM DECREASE IN OVERALL PASSENGER DEMAND. MOREOVER, OUR RESULTS ALSO INDICATE THAT NEITHER LEISURE NOR BUSINESS PASSENGERS ARE EXPLICITLY AFFECTED BY THIS POLICY. THAT IS, THE DECREASE IN THE NUMBER OF PASSENGERS WAS GENERALIZED, AND CANNOT BE ATTRIBUTED ONLY TO THE LEISURE OR BUSINESS SEGMENT OF PASSENGERS. FINALLY, OUR RESULTS SUGGEST THAT PASSENGERS WHO HAVE PREVIOUSLY TRAVELED BETWEEN CITY PAIRS BY CAR ARE MORE LIKELY TO STOP FLYING BECAUSE OF BAGGAGE FEES, THUS PROVIDING EVIDENCE OF A SUBSTITUTION EFFECT IN THE TRANSPORT SECTOR.
Download¶
Citing¶
@inproceedings{SIT189,
author = {BRUNO FELIPE DE OLIVEIRA; GIOVANNA MICELI RONZANI BORILLE; ALESSANDRO VINÍCIUS MARQUES DE OLIVEIRA},
title = {BAGGAGE FEES AND THEIR EFFECTS ON AIR TRANSPORT DEMAND: AN EMPIRICAL STUDY ON TRANSPORT MODE SUBSTITUTION EFFECT},
booktitle = {Proceedings of the 2022 Air Transportation Symposium},
series = {SITRAER 2022},
year = {2022},
pages = {184-194},
publisher = {SBTA - Brazilian Air Transportation Research Society},
address = {São José dos Campos, Brazil,}
}
License¶
The contents of this article can be used given that the authors are cited. The reproduction of the whole article in any medium is forbidden, unless authorized by the authors.