An empirical analysis of airport slot trading in the United States

The purpose of this paper is to examine whether the manipulative or strategic behaviors of slot-holding carriers have resulted in restricted market entry and service expansion by other carriers, especially rival carriers, at the four US airports that have secondary slot markets. Airport congestion and flight delays at many major airports have become a serious problem. It has been suggested that a secondary slot market is one of the most practical options for addressing airport congestion, which would increase the possibility of competitive entry and efficient use of scarce resources. A secondary slot market would work in the same manner as a congestion toll system or an auction system, provided that carriers' manipulative or strategic behaviors do not have serious effects on slot trading. However, the empirical effects of slot markets have not been investigated systematically. This paper examines empirically whether carriers' manipulative or strategic behaviors have impeded effective functioning of slot markets. Slot transfer data from four US airports between 1994 and 1999 were examined using regression analysis. Results of the analysis are mixed, suggesting that the most effective way of congestion management depends on conditions unique to each airport, and that subsequent interventions should reflect those conditions.