Governing Dissension of Flight Delays: From the Perspective of Incomplete Contracts

Air transport contract is necessarily incomplete and the unclearly defined and residual rights often lead to rent-seeking conflicts among contracting parties. Defining airlines' responsibilities on the basis of flight delays' genesis encounters a severe information asymmetry problem which causes passengers to take drastic actions to protect their contingent rights. It is optimum to entitle the airlines to the flight delay's residual rights in the form of law which will eliminate the dissension of flight delays at less transaction costs. The mechanisms of market competition and administrative management can effectively restrict airlines to abuse the residual rights and urge them to diligently overcome the flight delay problems.