Allocating airport slots : a combinatorial auction mechanism

Nicolas Gruyer and Nathalie Lenoir discuss the current allocation of slots on congested European airport. In their eyes the system of grandfather rights constitutes an obstacle to the effective liberalisation of air transportation undertaken in Europe. In this article they propose to use a market mechanism, based on temporary utilisation licences. In order to allocate those licences, the proposed system is based on a combinatorial auction mechanism where a percentage of licences would be reallocated each season. A secondary market would also be set up in order to reallocate slots during a season. Since combinatorial auctions involve a complex optimisation procedure, we describe how it can be made to work in the case of auctions.