The ability of commercial airlines to fly their aircraft means little without a space in which they land. In some congested U.S. airports the times and places for landing are known as “landing rights” and the airlines have awarded at four of the nation’s busiest airports since 1969. For the first decade of this slot system, with little controversy orders were made by the airline industry committee. Airline deregulation, however, the demand for slots in the 1980 and vastly increased p … Read more »

The ability of commercial airlines to fly their aircraft means little without a space in which they land. In some congested U.S. airports the times and places for landing are known as “landing rights” and the airlines have awarded at four of the nation’s busiest airports since 1969. For the first decade of this slot system, with little controversy orders were made by the airline industry committee. Airline deregulation, however, the demand for slots grew in the 1980s and greatly increased pressure on the committees, the apportionment of the slots. An idea emerged to resolve competing demands: the FAA could create a market for land rights and thus the demand set the price and the ration of the resource. This case tells the story of Secretary of Transportation Elizabeth Dole discussions about whether to create a landing slot market. It describes options ranging from auction to “grandfathered” so that airlines that investment decisions based on corporate pile of slots had to avoid interruptions. The case raises questions about the appropriateness of a market for the allocation of resources, which concerns other than sheer efficiency are important. It also shows the difficulties in the design of policies that allow for the transition from one system to another. It has also been used in an intermediate step microeconomics curriculum to market operations illustrate topics. This is the epilogue to the case HKS818. HKS case number 781.1.
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from
Joseph Kalt,
Vlad Jenkins,
Jose Gomez-Ibanez,
John Meyer
2 pages.
Release Date: 1 January 1987. Prod #: HKS819-PDF-ENG
The Department of Transportation and airport landing slots: Epilogue HBR case solution