Over the past twenty years, airports and airlines have been privatised in many countries. However, many of the fundamental functions of airports remain outside the market process. In particular, the allocation of take-off and landing slots is largely determined by custom and practice and by regulation. The pricing of such slots does not follow economically rational principles.
The current, arbitrary system of allocating airport slots can hinder competition and prevent slots being used by airlines that value them most. Because slots at the most congested airports such as Heathrow and Gatwick are not properly priced, there may also be pressure for expansion at those airports when expansion cannot be justified by economic fundamentals.
The authors of this study suggest how a market in airport slots can be developed to address these problems. They are careful to take account of competition issues and other special features of the industry in developing their proposals. Nevertheless, the authors agree on the need to assign property rights to airport slots and allow slots to be traded. Only then can there be a more rational allocation of scarce airport take-off and landing slots.
2003, Readings, 978 0 255 36505 5, 109pp, HC