Date of Award

1-1-2013

Document Type

Open Access Dissertation

Department

Moore School of Business

Sub-Department

Business Administration

First Advisor

Mark Ferguson

Abstract

In 2008, most U.S. airlines implemented checked baggage fee policies to generate additional revenue to help with their financial distress caused by abnormally high fuel prices. Since this time, the fees have provided a steady revenue stream and often are the difference between a profit and a loss. Recently, some literature in the operations management field has postulated that altering consumer behavior in a manner that is beneficial to both the firm and customers is an additional purpose of these fees. In Essay 1, we empirically investigate the airline perspective of this hypothesis by considering the operational impact of airline baggage fees as measured by the airlines' departure delays. We do so by using primarily data collected by the Bureau of Transportation Statistics for the time periods immediately before and after fees for one and two checked bags were imposed by most U.S. airlines in 2008, and using a Tobit regression model to assess the impact of the fees on departure time performance. According to the 2013 North America Airline Satisfaction Study by J.D. Power & Associates, the baggage fees are still a source of passenger dissatisfaction. In Essay 2, we empirically investigate the customer perspective of the above hypothesis by considering the benefits provided by the service of checking bags. Thus, we examine airline service attributes that affect customer choice itinerary, and how checking or not checking bags influence these relationships, by employing discrete choice models estimated on stated-preference survey data.

Rights

© 2013, Mariana Luminita Nicolae

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