Airport capacity and inefficiency in slot allocation

Abstract

This paper studies the time slot allocation of flight departures when travelers have a preference for departing on peak times and the number of available peak-time slots is constrained by airport capacities. We show that, compared to public airports, private airports may restrain their supply of peak slots strictly below their capacity levels when they serve airlines that compete to the same destinations. Such an inefficiency takes place in airports that have low per-passenger charges and are not too busy. It does not occur in the absence of competition in destination markets.