Airline passengers are less sensitive to baggage-fee increases than to other kinds of price hikes, which suggests that carriers may be able to increase revenues by substituting bag fees for higher fares, say Martin Dresner of the University of Maryland and Davide Scotti of the University of Bergamo in Italy. In a study of 1,000 airline routes, passenger volume decreased 3.3% for every dollar increase in base fares, but just 0.01% for the same increase in baggage fees. Passengers may be more tolerant of hikes in fees that are considered optional, the researchers say.
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