Slot auction in an airport network with demand uncertainty

Dian Sheng, Zhi Chun Li, Yi bin Xiao, Xiaowen Fu

Research output: Journal article publicationJournal articleAcademic researchpeer-review

19 Citations (Scopus)

Abstract

This paper investigates the effectiveness of airport slot auction by developing a two-stage model, which distributes slots among competing airlines using an ascending-bid multi-unit auction. Airlines assign different values to slots at peak and off-peak periods, and each carrier has its private (subjective) forecast of future demand. Conditional on the slots available to them, airlines compete in frequency, fare, and aircraft size over a congested airport network. The market outcome under such a scheme is benchmarked to those under an ex ante allocation and an ex post allocation by a social planner. Comparison results suggest that the auction-based scheme is inferior to the other two schemes when there is little fluctuation in demand, whereas the auction-based system is more effective when there is substantial demand uncertainty. Auctioning some grandfathered slots can improve social welfare but the marginal effect may diminish quickly.

Original languageEnglish
Pages (from-to)79-100
Number of pages22
JournalTransportation Research Part E: Logistics and Transportation Review
Volume82
DOIs
Publication statusPublished - 1 Oct 2015
Externally publishedYes

Keywords

  • Airport demand management
  • Airport slot allocation
  • Demand uncertainty
  • Peak and off-peak periods
  • Slot auction

ASJC Scopus subject areas

  • Business and International Management
  • Civil and Structural Engineering
  • Transportation

Cite this