Airport Landing Slots Are Scarce, Yet Not Priced

Friday afternoon, I’m scheduled to come home from a couple of fun and successful days of work in Washington. Because there’s a lot going on at home, I wanted to get home early so I could do some work around the house and still enjoy an evening with the Knowledge Spouse.

So I’m on a flight scheduled to leave DCA at 4:07 and arrive at ORD at 5:21, getting me to my delightful abode by 6:30 at the latest. Cool.

Turns out, too many other planes are full of too many other people with similar thoughts, and because the allocation of takeoff and landing slots is so abominably managed and allocated, especially going into O’Hare, here’s what we had to do:

1. board the plane as if we were going to take off at 4:07 as scheduled

2. taxi out to the head of the runway and park off to the side so we could take off at a moment’s notice if and when air traffic control “released” us

3. sit for 1 hour and 45 minutes before we got “released”; at least the pilot let us get up, get water, turn on computers and phones, etc. Unfortunately, I didn’t foresee this eventuality, so I ventured on this journey with neither a knitting project, nor a fun book, nor my Pride and Prejudice DVD. You know what that means: I bought a stack of fashion magazines right before boarding! And read them much more thoroughly than usual. BTW, there will be lots of feminine pink shoes this spring, if you’re so inclined … and worn with a-line or trumpet-shaped skirts. Very 40s retro, which I’m finding is a good look for someone like me who has broad and muscular shoulders for my size. Anyway …

So we landed about 10 minutes later than the time that I had hoped to be walking in the door, getting greeted by the Knowledge Spouse and the Knowledge Puss. I got off pretty easy, but what about all of those folks who connect through O’Hare to faraway lands in the West, like Tucson and Salt Lake City, where they missed the last flight of the night and had to stay over? It’s costly for the consumers, it’s costly for the airlines, and it’s inexcusable in light of the technological and experiential advances that have taken place since the establishment of the air traffic control and landing slot allocation system (I wouldn’t dignify it by calling it a mechanism, because I don’t think it’s sufficiently high quality to deserve the term) over four decades ago.

We’ve had a respite for the past two years because of the post-9/11 and recession-related decreases in air travel, but economic growth is working its magic and revealing to us yet again a glaring flaw in resource prioritization, allocation, and management. This time it’s airport takeoff/landing slot pairs.

Slots are not currently priced by anything except the valuable time of the crews and customers who are subjected to increasingly inconvenient delays because of the political unwillingness to rock the boat, knock down the wretched, inefficient system that exists, and build a better one, salvaging what value there is in the existing “business” model. I put “business” in quotes because one of the worst problems is that air traffic control and landing slots are not run as a business. If they were, here’s what it might look like:

*Treat the time slot as a property right to a scarce resource, for which airlines must pay. This would enable pricing of 5 PM, 6 PM, etc. time slots to reflect their true value to customers and, through them, to the airline.

*If those time slots are really that valuable, then customers would be willing to pay more for flights that land in those hours. Otherwise, they’ll shift to earlier or later flights. This is the most effective mechanism (and yes, it deserves the word) for reducing congestion and prioritizing the use of a scarce resource.

*Auction off those time slots dynamically, so that time slot prices could reflect the actual value of using the time slot on that day. Implement combinatorial auctions for takeoff/landing slots, as laid out in Rassenti, Bulfin & Smith Bell Journal of Economics Autumn 1982 and much follow-up work. Technology, operations research, and experience all exist to make the cost of such a system MUCH less than it was even a decade ago, let alone in 1982 when Rassenti et. al. proposed this allocation mechanism.

*If the certainty of a particular time slot is worth enough, let the airlines contract for the permanent property right to that slot. Make it an alienable property that they can trade away, so they can capture the full value of changes in demand. It could also reduce the transaction costs that accompany the time slot spot market. In other words, allow both forward contracting and spot contracting for time slots.

*Make little planes and big planes participate in the same auction. One of the most egregious uses of the nice, long runways at O’Hare during peak periods is seeing streams of Cessnas in between 737s. If the CEO’s private plane’s journey is that valuable at that time, make the company pay for the time slot.

That way we’d all get home on time and be able to enjoy an evening with the spouse and cat, and if we do it in a valuable time slot and pay more for it, at least it reflects the true value of the scarce resource and prioritizes the use of the resource accordingly.


5 thoughts on “Airport Landing Slots Are Scarce, Yet Not Priced

  1. This is a wonderful idea, and not exactly rocket science!

    I wonder why the anti-expansion people haven’t suggested this as a way to alieve delays without buldozing Des Plains and Elk Grove Village.

  2. Lynne:

    I’ve often complained about airlines being able to schedule 20 landings in a time period that can only handle 10.

    Another facet of the landing-slot issue: airlines can use them as a barrier to entry. IIRC, there was a fairly big to-do between British Airways and Virgin over slots at Heathrow. Some people advocated an auction market for landing slots, but this didn’t fly (sorry the pun) in regulation-loving Britain.

  3. I read a book by James Fallows called Fre Flight a couple of years ago and he pointed out that 90% of the traffic in the country goes to 50 airports. There are like another 400 or so that are equipped for large jets. Pricing for time slots could make for a more efficient utilization in that sense as well.

    Great book, BTW. I can’t wait until we can fly point-to-point in Eclipse 500 jets and land at small airports. I made so many trips out of Midway — must have been 50 — it would have been a blessing to just drive to Elgin to grab a plane. Particularly for a trip to Omaha where it took longer to drive to Midway than to fly to Omaha.

  4. There might be a snafu in assigning gates to flights. If takeoff times were allowed to “float” dependent on demand, I could envision a situation where two or more planes would stack waiting for their previously assigned gate.

    The lottery would have to be far enough “out” so that schedules and gate assignments were not in constant flux….business travelers are used to coping with such problems….casual vacation travelers with family are not.

    Except for the possibility of confusing the gate allocation process, I think it is workable. There are probably a computerized workarounds for
    the gate hangup also.

  5. Mercer, you could auction the gates, too. That way, an airline could buy the gate and time slot together (woe betide the airline that buys too few gates!), and private pilots would just buy the time slot (they don’t use the gates in any case).

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