02 September 2010
Put airport slots up for auction
BMI cannot be blamed for flying empty aeroplanes to keep their take-off and landing slots at Heathrow. The management of the company owes a duty to their shareholders and the antiquated way in which take-off and landing slots are allocated forces them into this position. The system of allocation of landing and take-off slots needs to be reformed. Ownership needs to be clarified. When ownership is clarified a transparent system of trading and valuation of airport slots will develop naturally.
The current opaque ownership rules suit too many interested parties who pretend to be concerned about the environment. Neither the government (at national and EU level) nor the big airlines are prepared to sort out an efficient solution to this problem. The best solution would probably be for the airport authorities to own the slots in the first place. They could then sell or lease them to airlines. In turn, the airlines could sell or lease slots to other airlines if the market price of the slot did not justify the airline continuiung to use it. If an airline wanted to make short-term economies it could lease a slot on a short- term basis to a competitor without worrying about whether it would lose the rights to use the slot in future years. Alternatively, it could simply decide not to use it if it were not economic to fly
Take-off and landing slots are a scarce resource. Scarce resources are used efficiently when their ownership is properly defined and trading between private parties is allowed.
For further information on this issue see A market in Airport Slots edited by Keith Boyfield (the full text of this publication can be downloaded) and Aviation Markets by David Starkie, both published by the IEA.
Philip Booth
Institute of Economic Affairs, 2 Lord North Street, Westminster, London, SW1P 3LB | tel: 020 7799 8900 | fax: 020 7799 2137 | email: iea@iea.org.uk
Registered In England 755502, Charity No CC/235 351, Limited by Guarantee
site by politicos design: campaigning online with political & mp websites
