This report, led by NERA Economic Consulting and carried out in conjunction with the Faculty of Law at the University of Leiden and Consultair Associates, summarizes the potential impact of using “market mechanisms” (i.e., trading, prices, or auctions) to allocate take-off and landing slots at congested European Union (EU) airports.

The current EU slot allocation system gives airlines “grandfather rights” to the take-off and landing slots they currently use. This allows airlines to hold on to valuable slots, provided they are used at least 80 percent of the time. The application of market mechanisms would make airlines face a cost that accurately reflected the scarcity of slots. A more efficient allocation of slots, and a more efficient use of airport capacity, would result.

For five options, featuring different combinations of secondary trading, higher slot prices and auctions, the study:

• Estimates the potential change in the mix of traffic using each airport, the improvement in slot utilization, and the resulting increase in passenger numbers;
• Assesses the likely impact on competition between airlines, on the environment, and on services to regional airports; and
• Analyzes likely implementation costs, legal implications, and compatibility with existing slot scheduling and allocation procedures.