Efficient and Equitable Airport Slot Allocation

This paper studies slot allocation at congested airports in Europe. First, I discuss the inefficiencies of the current regulation, introduced as part of the liberalisation process of the air transport market. Then, I consider three marked based methods which are suitable to achieve a more efficient allocation of slots to airlines: congestion pricing, auctions and secondary trading. These methods are examined in terms of their ability to improve efficiency and in terms of their implications on the distribution of slots’ scarcity rents. Special attention is drawn to complementarities between slots. Finally, I propose to auction slots periodically, allowing secondary trading well before the first auction takes place. By selling slots before the first auction incumbents can be partially compensated for the subsequent withdrawal of their slots. [JEL Classification: D45; D61; L93; R41]