Did airlines use to add the cost of baggage allowance to their fares? An econometric model of pricing in air transportation
DOI:
https://doi.org/10.14295/transportes.v29i1.2045Keywords:
Baggage allowance, Econometric model, Pricing, Air transportationAbstract
This work aimed to study ticket pricing in Brazilian air transportation market, with the goal of empirically testing the participation of baggage costs in the final price offered to the consumer. To isolate the effect under investigation in an econometric model, we analyzed a data panel with information of domestic routes in period prior to recent changes in Brazilian regulation. The two-way fixed effects estimator was the method chosen to model yield (average price per available seat kilometer) as a function of supply and demand, competition and cost variables. Free checked bag service was included as part of the last category. We concluded that this service was being charged implicitly in fares during analyzed time. We estimated a long-term reduction of up to 6% in ticket prices of domestic routes in Brazil.
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Copyright (c) 2021 Ana Carla Fernandes Costa, Alessandro Vinícius Marques de Oliveira
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