Abstract

This study examines the effects of airline baggage fees as a method for diverting high cost passengers to rival airlines that do not charge such fees. We show that the latter in turn must raise their fares, thereby weakening their competitive constraint on carriers with fees and permitting the latter actually to raise their fares. Our empirical evidence focuses on routes where legacy carriers with baggage fees compete with Southwest, which has never had such fees. Consistent with the above implications of the model, we find nontrivial cost and price increases for Southwest and corresponding nontrivial fare increases by legacy carriers on routes on which they overlap with Southwest. These results provide support for the theory of "raising rivals’ costs", this in airlines, but common in other settings where unbundled pricing shifts customers between firms.

摘要

这项研究研究了航空公司行李费的影响，以此作为将高成本乘客转移到不收取此类费用的竞争对手的方法。我们表明，后者反过来必须提高票价，从而削弱其对收费承运人的竞争约束，并允许后者实际上提高票价。我们的经验证据集中在那些有行李费的传统承运人与西南航空公司竞争的航线上，西南航空公司从未收取过此类费用。与模型的上述含义一致，我们发现西南航空公司的非平凡成本和价格上涨以及传统承运人在与西南航空公司重叠的路线上相应的非平凡票价上涨。这些结果为航空公司“提高竞争对手的成本”理论提供了支持，