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Effect of slot trading on route-level competition: Evidence from experience in the UK

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  • Fukui, Hideki

Abstract

This paper examines the effect of airport slot trading on route-level competition using data on slot trades in the UK. The estimation results suggest that the slot trades among partner carriers contributed to slightly increased competition measured in terms of the number of competitors per route, whereas the slot trades between rival carriers had a negative effect on the number of competitors at the route level. The results suggest that carriers seem to have used the slots obtained from their rivals not to compete with each other but to strengthen their dominance on their existing routes. This behavior is considered to be derived from the bilateral nature of slot trading, which facilitates mutual forbearance among competitors. To cope with the potential anticompetitive effect of mutual forbearance, it would be worthwhile to explore slot-trading schemes that make it harder for carriers to take advantage of multimarket contact as well as alternative methods of primary slot allocation.

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  • Fukui, Hideki, 2014. "Effect of slot trading on route-level competition: Evidence from experience in the UK," Transportation Research Part A: Policy and Practice, Elsevier, vol. 69(C), pages 124-141.
    • Handle: RePEc:eee:transa:v:69:y:2014:i:c:p:124-141
    DOI: 10.1016/j.tra.2014.08.012
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    Cited by:

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    3. Fu, Xiaowen & Lei, Zheng & Liu, Shaoxuan & Wang, Kun & Yan, Jia, 2020. "On-time performance policy in the Chinese aviation market - An innovation or disruption?," Transport Policy, Elsevier, vol. 95(C), pages 14-23.
    4. 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.
    5. Kenneth Button, 2020. "Studying the empirical implications of the liberalization of airport markets," Competition and Regulation in Network Industries, , vol. 21(3), pages 223-243, September.
    6. Fukui, Hideki, 2019. "How do slot restrictions affect airfares? New evidence from the US airline industry," Economics of Transportation, Elsevier, vol. 17(C), pages 51-71.
    7. 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.
    8. Ivanov, Nikola & Netjasov, Fedja & Jovanović, Radosav & Starita, Stefano & Strauss, Arne, 2017. "Air Traffic Flow Management slot allocation to minimize propagated delay and improve airport slot adherence," Transportation Research Part A: Policy and Practice, Elsevier, vol. 95(C), pages 183-197.
    9. Miranda, Victor A.P. & Oliveira, Alessandro V.M., 2018. "Airport slots and the internalization of congestion by airlines: An empirical model of integrated flight disruption management in Brazil," Transportation Research Part A: Policy and Practice, Elsevier, vol. 116(C), pages 201-219.
    10. Ribeiro, Nuno Antunes & Jacquillat, Alexandre & Antunes, António Pais & Odoni, Amedeo, 2019. "Improving slot allocation at Level 3 airports," Transportation Research Part A: Policy and Practice, Elsevier, vol. 127(C), pages 32-54.
    11. 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.
    12. Fukui, Hideki & Miyoshi, Chikage, 2024. "Estimating tactical surface metering management’s effect on aircraft fuel savings at airport," Research in Transportation Economics, Elsevier, vol. 103(C).

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