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This paper investigates how airline pricing strategies and revenues have evolved over time for unbundled flight products, using the eight largest U.S. airlines. Findings indicate that ticket exchange fees are being eliminated by network and low-cost carriers. On the other hand, baggage and seat reservation fees have grown more complex, with some carriers moving towards dynamic pricing. Ancillary revenues from unbundled flight products represent an increasing portion of airlines' total operating revenues, especially for ultra low-cost carriers. We estimate that the product unbundling trend has decreased revenues to the U.S. Airport and Airway Trust Fund by 4.0%–4.6% due to untaxed baggage and seat reservation fees alone. We also discuss government policies on ancillary revenue disclosure and pricing transparency, and the global COVID-19 pandemic's impact on ancillaries. [ABSTRACT FROM AUTHOR]

Although differential pricing strategies in the tourism industries have raised fairness issues so far, price fairness studies from a consumer perspective are still lacking as opposed to pricing research based on the managerial approach. Thus, this study developed a scale to measure price fairness in line with the procedures recommended by the literature, and tested if the proposed items and dimensionality of the construct best fit the empirical data. Consequently, it was found that price fairness embraces two dimensions of cognitive and affective fairness. The valid and reliable measurement of price fairness may have far reaching theoretical and managerial implications. [ABSTRACT FROM PUBLISHER]

In recent years, US airlines have unbundled ancillary fees from base air fares. As a result, the carriers have implemented a variety of fees on a range of optional services. Among these, checked baggage fees now represent a significant source of airline revenues. This paper assesses the impact of baggage fees on passenger demand and airline fares. We study a sample of US domestic routes over the period 2007–2010 where passengers have a choice between carriers that charge fees for checked baggage and Southwest Airlines, which allows passengers one or two “free” checked bags. A system of simultaneous equations is estimated. Our results show that, on an average route, a $1 increase in baggage fee leads to a loss of 0.7 passengers and is associated with a $0.11 reduction in fare levels. Interestingly, an equivalent increase of $1 in fares results in a much greater decline in passengers (eight times greater). Therefore, our results support the idea that substituting additional baggage fees for higher fares may be a beneficial strategy for carriers in terms of generating revenues and maintaining market share. [ABSTRACT FROM AUTHOR]

Charging airline fees has recently been a controversial issue in terms of price fairness. Nonetheless, few researchers have studied price fairness in the tourism literature. This study aimed to examine the antecedents and consequences of tourists’ perceived price fairness of ancillary revenues. From an attributional perspective, a conceptual model was expected to complement shortcomings of the traditional dual entitlement principle. Data were collected from U.S. domestic airline passengers through an online survey (n = 524) and analyzed using structural equation modeling (SEM). Results suggest that price comparison and cognitive attribution influence price fairness, which, in turn, leads to emotional response and behavioral intentions. Results provide potentially important directions for the development of a theoretical framework of price fairness in a tourism context. It is further expected that the findings of this study provide managerial guidance for the utilization of marketing strategy for airline management. [ABSTRACT FROM PUBLISHER]