Slot auction in an airport network with demand uncertainty

Dian Sheng, Zhi-Chun Li, Yi-bin Xiao and Xiaowen Fu

Transportation Research Part E: Logistics and Transportation Review, 2015, vol. 82, issue C, 79-100

Abstract: This paper investigates the effectiveness of airport slot auction by developing a two-stage model, which distributes slots among competing airlines using an ascending-bid multi-unit auction. Airlines assign different values to slots at peak and off-peak periods, and each carrier has its private (subjective) forecast of future demand. Conditional on the slots available to them, airlines compete in frequency, fare, and aircraft size over a congested airport network. The market outcome under such a scheme is benchmarked to those under an ex ante allocation and an ex post allocation by a social planner. Comparison results suggest that the auction-based scheme is inferior to the other two schemes when there is little fluctuation in demand, whereas the auction-based system is more effective when there is substantial demand uncertainty. Auctioning some grandfathered slots can improve social welfare but the marginal effect may diminish quickly.

Keywords: Airport slot allocation; Slot auction; Peak and off-peak periods; Demand uncertainty; Airport demand management (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (22)

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DOI: 10.1016/j.tre.2015.07.010

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