Trading airport time slots: Market design with complex constraints

Martin Bichler, Richard Littmann and Stefan Waldherr

Transportation Research Part B: Methodological, 2021, vol. 145, issue C, 118-133

Abstract: Due to the lasting growth in air traffic, many international airports have reached their capacity limits. Access to major airports is granted through the assignment of airport time slots. Current practices of allocating these time slots via grandfathering are widely regarded as inefficient by experts. New market mechanisms need to take into account synergistic valuations of airlines for departure and arrival time slots, as well as financial constraints of the participating airlines for the many time slots available. Unfortunately, computing core-stable outcomes in such environments is Σ2p-hard. Such problems are typically considered intractable. We introduce bilevel integer optimization models for airport time slot trading and compute core-stable outcomes, i.e. allocations and prices such that no coalition can beneficially deviate. Interestingly, despite the computational hardness of the underlying problem numerical experiments show that instances of practically relevant size can be solved in due time. The proposed market design provides a solution that addresses the specific constraints of airport time slot markets, a precondition for adoption in the field.

Keywords: Airport time slot allocation; Bilevel programming; Competitive equilibria (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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DOI: 10.1016/j.trb.2021.01.003

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