Abstract

This paper explores the welfare impacts of introducing a market-based mechanism for the allocation of scarce airport take-off and landing slots. Instead of the usual revealed preference approach that recovers values from optimal bids, slot values are obtained as the incremental profit that an airline can generate by operating a flight in that slot. A flight-level structural model of demand and supply of airline tickets is developed that accounts for consumer departure time preferences, scheduling efficiencies, and aircraft-specific costs. Counterfactual simulations assess the welfare impacts of auctioning slots on an airport-by-airport basis, as well as the role of departure hub economies of scale, quantity caps, and slot packages. 

If you are not a member of the CBE research group but would like to attend the seminar, please send an email to the seminar organizers Mateusz Mysliwski or Øyvind Thommasen.