Date of Award

Spring 4-30-2024

Document Type

Thesis

Degree Name

Bachelor of Arts (BA)

Department

Economics

First Advisor

Smriti Tiwari

Abstract

In this thesis, we primarily study the years of 2017, 2020, and 2023 determining if there is a potential relationship between baggage fee charging airlines, non-baggage fee airlines and market level airfare prices in the U.S domestic commercial airline industry. We study these years to see how market fares have changed before, during and after the Covid-19 pandemic. Previous literature has studied the question of if baggage fees have a relationship with market level fares, but none investigate the data from 2020 and how market level fares have changed since then. The data used for this study came from the U.S Bureau of Transportation Statistics, and displayed information about the market level airfare prices crucial to this study. The econometric specification of this study held market level airfare prices as it’s dependent variable and if airlines charged baggage fees or not as it’s main independent variable. Other control variables were used within the econometric specification to see other potential relationships with market fares. The main tests used for this study were a linear regression for the econometric model and a specifying descriptive statistics table for all variables. The overall result of this study had found that there is a positive correlation between market level airfare prices and if airlines charge baggage fees. The other result found was that the Covid-19 pandemic did impact the market level fares as they were higher in 2017, lower in 2020, and highest in 2023. Indicating that the airline industry had fallen in 2020 and recovered in 2023.

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