A supervised market mechanism for efficient airport slot allocation

We provide a general procedure to deal with the airport slot allocation problem, which applies the principles underlying the Administered Incentive Pricing model for regulation of radio spectrum in electronic communications markets. In particular, we propose an incentive pricing mechanism that generates an efficient slot allocation, where prices are built on a measure of the best use of each slot in serving end users. Incentive prices are set by considering the structure of the air transport network (and thus interdependencies among slots at different airports) in a given region, and the effect on both quantity and quality of passenger air transport in the region. Therefore, incentive prices should better align private and social decisions over the use of slots compared with pure market mechanisms (auctions and trading).