The impact of oil prices shocks in the valuation of stock prices of aviation companies

This study investigates the impact of oil price changes on the market value of the aviation industry. We analyze a sample of 121 airlines and 30 airports listed worldwide between 2000Q1 and 2023Q4 and find that overall, oil price changes deteriorate the market value of the aviation industry. However, the marginal effect of oil price changes is more negative for airlines than for airports. When we disentangle oil price changes into demand shocks and supply shocks, we find that airlines benefit more from demand shocks, whereas airports are more resilient to supply shocks. Our results suggest that oil price changes contribute to a shift in value within the aviation industry, from airlines to airports, and that demand shock and supply shock exert a different impact between airlines and airports.