Market Mechanisms for Near-Real-Time Landing and Takeoff Slot Allocation

John Musacchio (PI) , Pat Mantey (Co-PI)

Supported by UC Santa Cruz / NASA University Affiliated Research Center


Abstract/Summary: We propose to develop market based mechanisms for allocating landing and takeoff slots in near real time. Weather can greatly affect the landing capacity of a number of major airports, which can lead to severe delays. By using a market mechanism to reallocate slots, the flights that have the greatest need for arriving on or near their scheduled time can be prioritized, as operators of such flights would be willing to bid more. (We use the word "slot" in the sense of a landing/takeoff opportunity given current conditions, rather than in the traditional sense of a long-term right to have a scheduled arrival/departure at a particular time.)  For instance flights with larger aircraft or flights with a large number of connecting passengers suffer more economic losses per unit of time delay. This concept contributes to the vision of Green Aviation for a number of reasons. Since larger aircraft ought to see their delays reduced significantly in days with adverse weather, the proposed scheme has the potential to reduce fuel consumption. Furthermore, by ensuring that runways are used much more efficiently, fewer new runways will need to be built. For instance adding a new runway to SFO would require filling a large area of San Francisco bay, which would likely be environmentally damaging. Finally, airlines that have to pay for each aircraft landed will have an incentive to switch to larger aircraft, which have a lower per-passenger fuel consumption.


Background: Slot controls have existed in the United States since the late 1960s in order to relieve congestion in certain congested airports like New YorkÕs LaGuardia (LGA) airport. However, the slots were not originally allocated based on market based mechanisms. Currently the FAA is planning to phase in a new scheme at LaGuardia to force some number of slots to go on the market every year and also to encourage larger aircraft by demanding a minimum average aircraft size from each airline [1, 2]. Slot controls are also used in European airports, and the responsible government agencies are planning to encourage more market turnover of these slots [3, 4]. While these examples of slot controls have achieved some degree of success in managing congestion, they have not been entirely successful. For instance LGA has some of the worst delays in the United States, despite its slot controls. Part of the problem is that basic slot control schemes do not adapt to changes in airport operational capacity due to weather. Real-time or near real-time market mechanisms have the potential to offer this added adaptability, but such schemes are not currently used today. The research community has also studied the problem of managing airport congestion with pricing and market mechanisms [5, 6, 7, 8, 9, 10]. Our work will complement the existing literature. Our initial investigation will focus on a novel idea using a bidding language based on temporal utility functions in the context of a Vickery-Clarke-Grove (VCG) mechanism. The scheme allows aircraft operators to express their utility for each of a series of slots with a single bid. VCG type mechanisms work by solving an optimization problem and our choice for the form of the temporal utility function makes the solution easy to compute, even with a large number of bids. Our mechanism works in an "on-line" way so that as aircraft enter and depart the auction, the slots can be optimally reallocated with minimal computation.



Further study the properties of our proposed mechanism from a game-theory/mechanism design perspective. For instance: What are the exact computational requirements? The mechanism may elicit truthful bids from individual bidders; what happens when an airline is bidding for a large number of aircraft? The scheme would generate revenues; could these revenues be a replacement for existing landing fees?

Evaluate time-scale of market, and possible implementation. The scheme should allocate slots with a short-enough time scale to adapt to changes in capacity due to weather. For landings, a reallocation of slots would require re-sequencing aircraft as they arrive. This would be difficult or impossible with a very short lead-time, but could it perhaps be done with a lead-time of a few hours by using ground holds and changes en-route speeds. For takeoffs the re-sequencing problem is probably easier. These are issues we expect to understand better by the end of the project.

Evaluate the environmental effect of the proposed scheme. What is the potential savings in fuel and resulting reduction CO2 emissions? After considering how the proposed scheme would incentivize airlines to use larger aircraft and avoid peak times, how much more passenger traffic could airports like SFO handle without having to build new, environmentally damaging runways?

Preliminary Study As a way of quantifying the potential passenger delay savings of such a scheme, we considered the delay of aircraft arriving to SFO according to the published schedule in Summer 2006, with only runway operating. Under the assumption that only 1 aircraft could land every 2 minutes, we considered the number of passengers "waiting in the air"  if either: i) the aircraft landed in a First Come First Served (FCFS) manner (according to the published schedule, or ii) the largest aircraft in queue lands first (BPFS). Policy (ii) approximates what might happen with a market mechanism. The results show that the passenger hours of delay can be cut in more than half.





 [1] D. Bond, "A New Day at LGA; The FAA's demand-management plans for LaGuardia call for bigger aircraft, market-based slot turnover," Aviation Week and Space Technology, Sept. 4, 2006.

[2] M. Wald, "Airlines at LaGuardia Fight Bush Administration Proposal to Auction Off Landing Rights," The New York Times, Feb, 18, 2007.

[3] Turner, "EC near to solution on slot trading," Flight International, Mar., 7, 2006.

[4] D. Knibb, "Slot Shake-up," Airline Business, June 27, 2006.

[5] M. E. Levine, "Landing Fees and the Airport Congestion Problem," Journal of Law and Economics, vol. 12, no. 1. Apr.1969, pp. 79-108.

[6] S. Morrison, "The equity and efficiency of runway pricing," Journal of Public Economics, vol 34, no. 1, Oct. 1987, pp. 45-60.

[7] T. Johnson and I. Savage, "Departure Delays, the pricing of congestion, and expansion proposals at Chicago O'Hare Airport," Journal of Air Transport Management, vol. 12, no. 4, July 2006, pp. 182-190.

[8] J. Daniel, K. T. Harback, "(When) Do hub airlines internalize their self-imposed congestion delays?," Journal of Urban Economics, In Press.

[9] S. R. Mehndiratta and M. Kiefer, "Impact of slot controls with a market-based allocation mechanism at San Francisco International Airport," Transportation Research Part A: Policy and Practice, vol. 37, no. 7, Aug 2003, pp 555-578.

[10] M. Ball, G. Donohue, and K. Hoffman, "Auctions for the Safe, Efficient and Equitable Allocation of Airspace System Resources," Chapter in: Combinatorial Auctions, MIT Press, 2005, pp. 507-538.