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Tom Whalen, Dennis Carlton, Ken Heyer, Oliver Richard
Tom Whalen, Dennis Carlton, Ken Heyer, Oliver Richard: A solution for airport delays
- In brief, we advocate a market-based approach to the allocation of scarce takeoff and landing rights at airports where the demand for those rights at a zero price exceeds the ability of the airport to handle that many takeoffs and landings during some time period. … Our preferred method to allocate scarce airport capacity is to auction slots for landings and takeoffs by time of day and to convey upon their purchasers well-defined property rights. Unlike access pricing, which may require the airport authority to continuously adjust prices, slot auctions require only that the airport authority set at the outset the total number of takeoffs and landings the airport can accommodate in each time period under normal weather conditions. This approach plays to the strengths of airport authorities and the FAA, who have far greater expertise in determining an airport’s capacity than they do at setting prices. The slots should then be auctioned off through a market-based bidding process where each airline decides how much it would be willing to pay for each slot. The prices obtained for slots would reflect the degree of scarcity of capacity. The price could be close to zero at times of the day when capacity is great relative to demand. Price will be highest during periods when demand is at its greatest. Property rights would be awarded to the highest bidders, as long as acquisitions do not anti-competitively enhance market power. Prohibiting airlines from scheduling flights at times