When airline carriers are able to impose a significant fare

[Guest]

When airline carriers are able to impose a significant fare increase without deterring many price-sensitive passengers, it is an encouraging sign for the health of the airline industry.

When airline carriers are able to impose a significant fare increase without deterring many price-sensitive passengers
When airline carriers are able to impose a significant fare increase without deterring many passengers who are price-sensitive
When airline carriers may raise fares significantly without it acting as a deterrent to many price-sensitive passengers
When airline carriers may raise fares significantly without it deterring many price-sensitive passengers
When airline carriers are able to impose a significant fare increase without it deterring many price-sensitive passengers

The answer is bold-faced. A. Manhattan GMAT #2
My question is could it refer back to an entire phrase or any pronoun for that matter. I am confused as to what it refers to in this sentence. Your clarification is greatly appreciated...

[JonathanSchneider]

I'm skeptical about the "it" there as well. I suppose it could be refering to the word "increase." I'd greatly prefer a rewrite where the "it" can refer back to "the ability."