Assignment of Arrival Slots

Industry participants agree that, when inclement weather forces the FAA to reassign airport landing slots, incentives and property rights should be respected. We show that the FAA’s Compression Algorithm is incentive compatible, but fails to guarantee a form of property rights. This is significant since these conditions were the motivation for introducing Compression a decade ago. We give an alternative mechanism that does satisfy these conditions. It has the flavor of Top-trading Cycle variants of Abdulkadiroğlu and Sönmez (1999) and Papai (2000) for related but distinct models. Finally, both mechanisms may fail another condition: the incentive to vacate unusable landing slots. When inclement weather strikes an airport, the airport’s landing schedule must be reconfigured. First, the allowed arrival rate of flights is reduced, creating a shortage of resources (arrival slots). Even after these slots are reallocated, subsequent flight cancelations and delays, made by airlines themselves, free up some of these slots, resulting in a situation of excess resources (newly vacated landing slots). The efficient reallocation of these excess resources requires airlines to report certain information to a centralized planner (e.g. the Federal Aviation Administration (FAA) in the U.S.), who uses it to arrive at a final reassignment of flights to landing slots. This environment yields a financially significant matching problem that has been studied from an operations and transportation perspective, but has been less studied from the perspective of formal mechanism design.1 ∗Kellogg School of Management, MEDS Department, Northwestern University. Email: [email protected]. †Kellogg School of Management, MEDS Department, Northwestern University. Email: [email protected]. The total cost of delays (wasted fuel, passengers’ time, etc.) is measured in billions of dollars per year (e.g. Robyn (2007) or the report by Senator C. Schumer (2008)). While