Comparison of decentralized slot and pricing policies when airports are substitutes for non-local passengers

Airport congestion and delays occur when a given infrastructure is heavily utilized. Delays can be controlled by allocating a limited number of permits to users (slot policies) or by increasing the user price (pricing policies). This study analyzes policy choices made by regions with congested airports and compares equilibrium outcomes. The main contribution is to analyze two scenarios in which non-locals consider congested airports as substitutes. The first concentrates on non-local origin–destination passengers, e.g., on leisure trips. The second concentrates on non-local transfer passengers flying, e.g., long distances. The local welfares of airport regions are distinguished from (i) the aggregate welfare of regions with congested airports, and (ii) the aggregate welfare across all regions including the origin regions of non-local passengers. The main policy insight is that the assessments of equilibrium outcomes and prices differ heavily depending on whether they are assessed from (i) the congested airports’ viewpoint, or (ii) the viewpoint of all regions, which creates conflicts of interest between airport groups.