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The United States International Air Route Award Process: Shareholder Wealth Effects and Policy Implications

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  • Pruitt, Stephen W
  • Hoffer, George E
  • Tse, K S Maurice

Abstract

This study empirically investigates the market pricing dynamics of United States airline stocks in response to United States government allocations of exclusive, zero-priced international air route awards from the 1963 to 1993 time period. A $900 filing fee required by the Department of Transportation represents the only explicit monetary cost associated with the award of an international air route. This low fee suggests that the current award system subsidizes United States airlines by transferring valuable public property rights to private ownership and control for paltry explicit fees. The performed dollar abnormal tests suggest that the 82 analyzed international air routes have enriched airline shareholders by about $3.5 billion. Copyright 1997 by Kluwer Academic Publishers

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  • Pruitt, Stephen W & Hoffer, George E & Tse, K S Maurice, 1997. "The United States International Air Route Award Process: Shareholder Wealth Effects and Policy Implications," Journal of Regulatory Economics, Springer, vol. 12(2), pages 197-217, September.
    • Handle: RePEc:kap:regeco:v:12:y:1997:i:2:p:197-217
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    Cited by:

    1. Maurice Tse & Frederik Pretorius & K. Chau, 2011. "Market Sentiments, Winner’s Curse and Bidding Outcome in Land Auctions," The Journal of Real Estate Finance and Economics, Springer, vol. 42(3), pages 247-274, April.

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