Auctions as a vehicle to reduce airport delays and achieve value capture

Congestion at airports imposes large costs on airlines and their passengers. A key reason for congestion is that an airline schedules its flights without regard to the costs imposed on other airlines and their passengers. As a result, during some time intervals, airlines schedule more flights to and from an airport than that airport can accommodate and flights are delayed. This paper explores how a specific market-based proposal by the Federal Aviation Administration (FAA), which includes the use of auctions to determine the right to arrive or depart in a specific time interval at airports in the New York City area, might be used as part of a strategy to mitigate delays and congestion. By explaining the underlying economic theory and key arguments with minimal technical jargon, the paper allows those with little formal training in economics to understand the fundamental issues associated with the FAA's controversial proposal. Moreover, the basics of the proposed auction process, known as a combinatorial auction, and value capture are also explained.Airlines ; Airports

Market-Based Alternatives for Managing Congestion at New York’s LaGuardia Airport

We summarize the results of a project that was motivated by the expiration of the “High Density Rule,” which defined the slot controls employed at New York’s LaGuardia Airport for more than 30 years. The scope of the project included the analysis of several administrative measures, congestion pricing options and slot auctions. The research output includes a congestion pricing procedure and also the specification of a slot auction mechanism. The research results are based in part on two strategic simulations. These were multi-day events that included the participation of airport operators, most notably the Port Authority of New York and New Jersey, FAA and DOT executives, airline representatives and other members of the air transportation community. The first simulation placed participants in a stressful, high congestion future scenario and then allowed participants to react and problem solve under various administrative measures and congestion pricing options. The second simulation was a mock slot auction in which participants bid on LGA arrival and departure slots for fictitious airlines.Auctions, airport slot auctions, combinatorial auctions

Proposal For A Market-Based Solution to Airport Delays

With the clamor rising over airport delays and with both the Congress and the Administration considering remedies, this paper advocates the use of market mechanisms, specifically slot auctions, to promote efficient usage of airport capacity, reduce airport delays, and, more generally, promote competition.

Regulating privatized infrastructures and airport services

For a World Bank Institute course on transport privatization, the authors cover basic issues associated with the regulation of privatized airport infrastructure and services: 1) Economic characteristics of airport. Three types of activities are carried out in airports: essential operational services (aeronautical and non-aeronautical), handling services (aeronautical and non-aeronautical), and commercial activities. Demand for basic airport services is directly influenced by trip purpose. The two types of airline customers (business and leisure travelers) need different levels of flexibility and tend to travel at different times. Analyzing airport capacity (practical and saturation) under peak demand is essential to airport success. Among other important issues: runway cost, level and volume of service, pollution, congestion, and air traffic control. 2) Recent trends in the airport industry. The movement toward privatization may involve public ownership and private operation, including joint ventures; partial or majority divestiture; management contracts; and BOT (build-operate-transfer) schemes and variants, including BOOT (build-own-operate-transfer) schemes and LDO (lease-develop-operate) schemes. Or it may involve private ownership and operation. 3) Price regulation. Topics covered include traditional pricing policies'price regulation through an RPI-X formula; charges for congestion, noise, and other externalities; investment plans; and design of the regulatory system. 4) Regulation of quality in the industry. Topics covered: regulation of services to passengers (as measured by targets for check-in queues, immigration queues, baggage reclaim queues, concourse crowding, shopping, parking, and so on); fault repair times; average levels of passenger boarding and disembarkation and baggage delivery; safety; and investment obligation. 5) Performance indicators in the industry. Topics covered: strategic indicators and other financial indicators (including revenues), as well as indicators of cost, productivity, and quality of service.Transport and Trade Logistics,Public Sector Economics&Finance,Banks&Banking Reform,Environmental Economics&Policies,Decentralization,Roads&Highways,Airports and Air Services,Public Sector Economics&Finance,Banks&Banking Reform,Transport and Trade Logistics

A strategic prioritization approach to airline scheduling during disruptions

textAir disruption scenarios due to inclement weather or air traffic congestion can result in significant imbalances in the demands and capacities of the affected airports. The Federal Aviation Administration (FAA) resolves these imbalances by implementing the Ground Delay Programs (GDP). In a GDP, the FAA first assigns new arrival slots to the airlines using the Ration By Schedule (RBS) approach, which is an allocation procedure that assigns slots to incoming flights based on a First-Scheduled, First-Served (FSFS) criterion. The FAA uses these new arrival slots to determine the expected delays and accommodates them as ground delays at departure airports. The notion of FSFS that forms the basis of RBS, is considered to be an industry standard of fairness. One of the major shortcomings of the RBS approach is that it does not distinguish flights based on factors like aircraft size, number of passengers, future aircraft schedules, etc. This results in an inefficient utilization of the airport capacities. To address this concern, Fearing and Kash proposed a two-stage, non-monetary strategic prioritization game in which airlines could participate and bid for priorities at different airports by taking into account their internal costs. This approach has several advantages over different market-based mechanisms like slot auctions, congestion pricing and slot exchanges. In this thesis, therefore, we develop their approach further both mathematically as well as empirically. Specifically, we prove that a pure strategy Nash equilibrium exists in the second stage of the game for the general multiple airlines and multiple airports case. In addition, by imposing the diagonal strict concavity conditions on the airlines' payoffs, we show that this pure strategy Nash equilibrium is unique for the two-airlines case. Our experimental simulations on historical data further show that this approach can achieve significant congestion cost benefits in comparison to the current RBS procedure.Operations Research and Industrial Engineerin

An investigation of TNAV equipped aircraft in a simulated en route metering environment

This document presents the results of an effort to estimate how often a TNAV (Time Navigation) equipped aircraft could be given a TNAV clearance in the En Route Metering (ERM) system as a function of the percentage of arriving traffic which is TNAV equipped. A fast-time simulation of Denver Stapleton international arrival traffic in the Denver Air Route Traffic Control Center route structure, including en route metering operations, was used to develop data on estimated conflicts, clearance communications and fuel usage for traffic mixes of 25, 50, 75 and 100% TNAV equipped. This study supports an overall effort by NASA to assess the benefits and required technology for using TNAV-equipped aircraft in the ERM environment

Benefit Assessment of the Precision Departure Release Capability Concept

A Precision Departure Release Capability concept is being evaluated by both the National Aeronautics and Space Administration and the Federal Aviation Administration as part of a larger goal of improving throughput, efficiency and capacity in integrated departure, arrival and surface operations. The concept is believed to have the potential of increasing flight efficiency and throughput by avoiding missing assigned slots and minimizing speed increase or path stretch to recover the slot. The main thrust of the paper is determining the impact of early and late departures from the departure runway when an aircraft has a slot assigned either at a meter fix or at the arrival airport. Results reported in the paper are for two scenarios. The first scenario considers flights out of Dallas/Fort Worth destined for Hartsfield-Jackson International Airport in Atlanta flying through the Meridian meter-fix in the Memphis Center with miles-in-trail constraints. The second scenario considers flights destined to George Bush Intercontinental/Houston Airport with specified airport arrival rate constraint. Results show that delay reduction can be achieved by allowing reasonable speed changes in scheduling. It was determined that the traffic volume between Dallas/Fort Worth and Atlanta via the Meridian fix is low and the departures times are spread enough that large departure schedule uncertainty can be tolerated. Flights can depart early or late within 90 minutes without accruing much more delay due to miles-in-trail constraint at the Meridian fix. In the Houston scenario, 808 arrivals from 174 airports were considered. Results show that delay experienced by the 16 Dallas/Fort Worth departures is higher if initial schedules of the remaining 792 flights are kept unaltered while they are rescheduled. Analysis shows that the probability of getting the initially assigned slot back after perturbation and rescheduling decreases with increasing standard deviation of the departure delay distributions. Results show that most Houston arrivals can be expected to be on time based on the assumed zero-mean Normal departure delay distributions achievable by Precision Departure Release Capability. In the current system, airport-departure delay, which is the sum of gate-departure delay and taxi-out delay, is observed at the airports. This delay acts as a bias, which can be reduced by Precision Departure Release Capability

On the Factors that Affect Airline Flight Frequency and Aircraft Size

This paper assesses the determinants of aircraft size and frequency of flights on airline routes by considering market demographics, airport characteristics, airline characteristics and route characteristics. The paper shows that frequency and aircraft size increase with population, income, and runway length. An increase in the proportion of managerial workers in the labor force or the proportion of population below the age of 25 results in greater frequency with the use of small planes. Slot constrained airports and an increase in the number of nearby airports lead to lower flight frequency with the use of smaller planes. Hubs and low cost carriers are associated with larger plane sizes and higher frequency, while regional airline ownership leads to higher frequency and the use of smaller planes. An increase in distance between the endpoints leads to lower frequency with the use of larger planes. As airport delay rises, airlines reduce frequency and use smaller planes, though when airport cancellations rise, flight frequency increases with the use of larger planes. This finding suggests airlines utilize frequency and aircraft size to hedge against flight cancellations.Airline; Frequency; Aircraft size; Markets

Characterization of Tactical Departure Scheduling in the National Airspace System

This paper discusses and analyzes current day utilization and performance of the tactical departure scheduling process in the National Airspace System (NAS) to understand the benefits in improving this process. The analysis used operational air traffic data from over 1,082,000 flights during the month of January, 2011. Specific metrics included the frequency of tactical departure scheduling, site specific variances in the technology's utilization, departure time prediction compliance used in the tactical scheduling process and the performance with which the current system can predict the airborne slot that aircraft are being scheduled into from the airport surface. Operational data analysis described in this paper indicates significant room for improvement exists in the current system primarily in the area of reduced departure time prediction uncertainty. Results indicate that a significant number of tactically scheduled aircraft did not meet their scheduled departure slot due to departure time uncertainty. In addition to missed slots, the operational data analysis identified increased controller workload associated with tactical departures which were subject to traffic management manual re-scheduling or controller swaps. An analysis of achievable levels of departure time prediction accuracy as obtained by a new integrated surface and tactical scheduling tool is provided to assess the benefit it may provide as a solution to the identified shortfalls. A list of NAS facilities which are likely to receive the greatest benefit from the integrated surface and tactical scheduling technology are provided