Slot trade is an important tool to address airport congestion and encourage airlines to expand their route networks, thereby benefitting passengers. While the benefits of this market mechanism have been emphasized, its operation is constrained by several factors. The most serious problem is the manipulative or strategic behaviors adopted by some airlines. If such behaviors are not controlled, they will limit the market entry and service expansion of other airlines. This paper analyzes whether the monetary compensation trading model can effectively regulate such strategic behaviors and promote the effective utilization of airport capacity. fomototo login
In the current slot allocation mechanism, airlines cannot purchase or lease slots directly from other carriers. Instead, they can only transfer their unused slots to other airlines for a specific period of time by applying for exemption from the slot relief policy. Due to the limitation of runway length and air traffic management procedures at some airports, it is difficult to increase the number of slots available for use. It is therefore essential to improve the liquidity of slots in order to maximize utilization efficiency. This can be achieved through secondary trading, which allows airlines to buy and sell their unused slots on the open market.
However, it is important to consider the implications of allowing monetary compensation in slot trade. As an important commodity in the imperfectly competitive airline transportation market, the price of a slot will reflect not only its demand and supply but also the managerial decisions made by its owners. It is therefore necessary to set the price of a slot within a reasonable range to avoid excessive prices and maintain efficient allocation.
Since the emergence of the COVID-19 pandemic, the willingness of airlines to participate in slot trading has decreased. This may be due to the fear that their profitability will decline significantly as a result of reduced passenger traffic. However, the willingness of airlines to participate in slot trade will recover as soon as the pandemic has passed. It is suggested that the monetary compensation trading mechanism can help to revive the enthusiasm of airlines for this market, as it will allow them to increase their profits and avoid losing out on their investments.
The paper develops a novel model of the market for airport landing and takeoff slots in which airlines purchase and sell slots by applying the monetary compensation trading principle. The results show that the proposed method can reduce transaction costs and encourage airlines to expand their routes by purchasing and selling slots in the open market. It can also mitigate the effects of strategic behavior and market power, and thus improve the utilization of airport capacity. The paper tests the model using empirical data from four major airports in the United States. The authors gratefully acknowledge the support of the Aviation Center for Research and Development (ACRD). The authors are also indebted to Professors Changhai Wang and Zhu Xin at University of Hong Kong for their invaluable comments.