3 Citations (Scopus)

Abstract

Making use of event-study methodology, we assess how a new route announcement affects an airline's stock market value. In addition, it verifies that route strategy and entry strategy contribute to the direction and magnitude of the stock market reaction. With respect to route strategy, both opening a new domestic route and announcing multiple new routes achieve the greater financial gain. There are first mover advantages, whereby early entrants gain more than later entrants. Additionally, a price-discounting strategy contributes to market value. Airlines carrying out specific expansion activities (e.g., aircraft purchases or crew recruiting) have a high the potential for high profits. However, airlines do not benefit from developing alliances to acquire new routes.

Original languageEnglish
Pages (from-to)252-256
Number of pages5
JournalJournal of Air Transport Management
Volume14
Issue number5
DOIs
Publication statusPublished - 2008 Sep 1

Fingerprint

stock market
valuation
market
aircraft
market reaction
methodology
Profitability
Aircraft
purchase
profit
Airlines
Announcement
Market valuation
event
Financial markets
Market value
price

All Science Journal Classification (ASJC) codes

  • Transportation
  • Strategy and Management
  • Management, Monitoring, Policy and Law
  • Law

Cite this

Tsai, Dung-Chun ; Chang, Shao-Chi ; Chen, Wei Wei ; Tran, Chau lan. / The market valuation of new route announcements. In: Journal of Air Transport Management. 2008 ; Vol. 14, No. 5. pp. 252-256.
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The market valuation of new route announcements. / Tsai, Dung-Chun; Chang, Shao-Chi; Chen, Wei Wei; Tran, Chau lan.

In: Journal of Air Transport Management, Vol. 14, No. 5, 01.09.2008, p. 252-256.

Research output: Contribution to journalArticle

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