THE UNITED-STATES INTERNATIONAL AIR ROUTE AWARD PROCESS - SHAREHOLDERWEALTH EFFECTS AND POLICY IMPLICATIONS

This study empirically investigates the market pricing dynamics of Uni ted States airline stocks in response to United States government allo cations of exclusive, zero-priced international air route awards from the 1963 to 1993 time period. A $900 filing fee required by the Depart ment of Transportation represents the only explicit monetary cost asso ciated with the award of an international air route. This low fee sugg ests that the current award system subsidizes United States airlines b y transferring valuable public property rights to private ownership an d control for paltry explicit fees. The performed dollar abnormal test s suggest that the 82 analyzed international air routes have enriched airline shareholders by about $3.5 billion.