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Economic effects of re-allocating airports slots: a vertical differentiation approach

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  • Barbot, Cristina

Abstract

The promotion of competition policies in air transport faces several obstacles, one being the absence of mobility of airports’ slots. The European Commission has been preparing legislation on this issue as a springboard to a more efficient use of scarce airport capacity. This paper analyses possible outcomes of such a policy, using a model that captures the main features of the airport market before and after the re-allocation of slots. Results show that the achievement of more efficiency depends on the criteria used for its assessment. In particular, welfare falls after the process of re-allocation. An empirical test of airlines’ pricing strategies is presented, and confirms one of the model's results, i.e. that airlines differentiate more prices between peak load and off peak hours in a more competitive environment.

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  • Barbot, Cristina, 2004. "Economic effects of re-allocating airports slots: a vertical differentiation approach," Journal of Air Transport Management, Elsevier, vol. 10(5), pages 333-343.
    • Handle: RePEc:eee:jaitra:v:10:y:2004:i:5:p:333-343
    DOI: 10.1016/j.jairtraman.2004.05.003
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    Cited by:

    1. Sheng, Dian & Li, Zhi-Chun & Xiao, Yi-bin & Fu, Xiaowen, 2015. "Slot auction in an airport network with demand uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 82(C), pages 79-100.
    2. Basso, Leonardo & Zhang, Anming, 2006. "Peak-Load Pricing In A Vertical Setting: The Case Of Airports And Airlines," 47th Annual Transportation Research Forum, New York, New York, March 23-25, 2006 208029, Transportation Research Forum.
    3. Brito, Duarte & Ribeiro, Ricardo & Vasconcelos, Helder, 2020. "Overlapping ownership, endogenous quality, and welfare," Economics Letters, Elsevier, vol. 190(C).
    4. Button, Kenneth & Neiva, Rui, 2013. "Single European Sky and the functional airspace blocks: Will they improve economic efficiency?," Journal of Air Transport Management, Elsevier, vol. 33(C), pages 73-80.
    5. João P. Pita & Cynthia Barnhart & António P. Antunes, 2013. "Integrated Flight Scheduling and Fleet Assignment Under Airport Congestion," Transportation Science, INFORMS, vol. 47(4), pages 477-492, November.
    6. Guiomard, Cathal, 2018. "Airport slots: Can regulation be coordinated with competition? Evidence from Dublin airport," Transportation Research Part A: Policy and Practice, Elsevier, vol. 114(PA), pages 127-138.
    7. Sieg, Gernot, 2010. "Grandfather rights in the market for airport slots," Transportation Research Part B: Methodological, Elsevier, vol. 44(1), pages 29-37, January.
    8. Pierre M. Picard & Alessandro Tampieri & Xi Wan, 2022. "Are Deregulated Airports More Efficient?," Working Papers - Economics wp2022_18.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    9. Valido, Jorge & Socorro, M. Pilar & Medda, Francesca, 2020. "Airport capacity and entry deterrence: Low cost versus full service airlines," Economics of Transportation, Elsevier, vol. 22(C).
    10. Alves, Vera & Forte, Rosa, 2015. "A Cournot model for analysing the effects of an open skies agreement," Journal of Air Transport Management, Elsevier, vol. 42(C), pages 125-134.
    11. Sheng, Dian & Li, Zhi-Chun & Fu, Xiaowen, 2019. "Modeling the effects of airline slot hoarding behavior under the grandfather rights with use-it-or-lose-it rule," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 122(C), pages 48-61.
    12. Picard, P.M. & Tampieri, A. & Wan, Xi, 2019. "Airport capacity and inefficiency in slot allocation," International Journal of Industrial Organization, Elsevier, vol. 62(C), pages 330-357.
    13. Aasheesh Dixit & Patanjal Kumar & Suresh Jakhar, 2021. "Airport-Airline Coordination with Economic, Environmental and Social Considerations," Papers 2110.11694, arXiv.org.
    14. Till Kösters & Marlena Meier & Gernot Sieg, 2023. "Effects of the use-it-or-lose-it rule on airline strategy and climate," Working Papers 36, Institute of Transport Economics, University of Muenster.
    15. Valdes, Victor & Gillen, David, 2018. "The consumer welfare effects of slot concentration and reallocation: A study of Mexico City International Airport," Transportation Research Part A: Policy and Practice, Elsevier, vol. 114(PA), pages 256-269.

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