An auction-based airport slot reallocation scheme considering the grandfather rights of airlines

Abstract

The airport slot allocation problem is a critical issue for airlines’ flight operations. Especially, there have been concerns that the presence of grandfather rights under the International Air Transport Association guidelines may cause market inefficiencies in the current slot allocation procedure. This concern has been further emphasized after the recent pandemic circumstances. In this regard, this study presents a novel auction-based airport slot reallocation scheme considering the grandfather rights of airlines, in which participating airlines are required to submit bids for individual slots. The scheme includes allocation, payment, and compensation rules that aim to attain maximum social welfare by allowing the removal of grandfather rights and providing appropriate compensation. Although the proposed scheme neglects the interdependent effects between slots to reduce model complexity, we show that it achieves economic effectiveness while inducing voluntary participation and truthfulness of airlines. We also propose an implementation algorithm for the scheme and conduct numerical analysis based on real schedule-coordinated airport data of South Korea to validate the positive aspects of the proposed reallocation scheme.