Airport slot allocation: performance of the current system and options for reform Towards a comprehensive performance framework 27 th November 2013 SESAR Innovation Days
Introduction: Problem statement Capacity at all major Airports in the world is limiting the amount of traffic Several ways of dealing with this problem: General i. Capacity enhancement programs Problem statement ii. Demand control strategies iii. Queuing delays • Slot control dominant approach in Europe (Reg. 95/93 and 793/2004) The European • Administrative slot control leads to inefficiencies and hinder competition Context • The EC recently recognized the need to revise the Slot Regulation • Set the basis for an analytical framework for assessment of different slot allocation mechanisms Aim of the paper • First step within WP-E project Airport slot allocation: performance of the current system and options for reform 2
Introduction: The ACCESS Project Application of Agent Based Computational Economics to Strategic Slot Allocation • Four partners • Launched in May 2013 www.access-sesar.eu • Duration: 30 months Platform Baseline Model formalisation Analysis development • Comparative assessment • Coding of the model- • Analysis of the current • Modelling of the retained of the different options based simulation airport slot allocation options • Recommendations platform system • Development of the • Suggest Roadmap for • Review market-based • Autonomous agents performance assessment implementation mechanisms used in framework • Different trading other sectors strategies • Identification of potential • Analytical improvements functionalities Current Project progress Airport slot allocation: performance of the current system and options for reform 3
The current system: Actors involved European Commission: proposes new regulations or amendments; European Parliament & European Council: adopts regulations; Regulators Member States: designate airports, appoint coordinator; • International Air Transport Association (IATA): publishes the Worldwide slot guidelines. Coordinated: airports where air carriers need a slot to be able to operate flights; Schedule facilitated: airports where there is a potential for congestion in certain time Airports windows and a schedules facilitator is appointed to facilitate operations. Coordinator: qualified natural or legal person whose neutrality should be unquestioned; Coordination Committee: to mediate, make proposals, guidelines, discuss Airport managing body; Coordinators Air traffic control authorities; Air carriers using the airport and their representative organisations; General aviation using the airport regularly. Commercial Aviation Network carriers; Low cost operators; Cargo operators; Airspace Users Regional carriers; Charter operators; General Aviation; Military is excluded from slot control. Airport slot allocation: performance of the current system and options for reform 4
The current system: slot allocation process Member Ensure Airport Appointment State Airport determination of Capacity of Slot Designation coordination Assessment Coordinator parameters Coordination parameters Operator Airport Determination of declared capacity Declared capacity Airport Coordinator Revision of slot exchanges Initial Allocation of Slots & Transfers by Airlines Revision of Allocation Allocation declared capacity Allocation Permission/denegation of of Slots to of Slots to Supervision & coordination of Historical exchange/transfer New Remaining & Monitoring Slots parameters Entrants Requests of Slot Update Slot Pool & Usage Scheduling Reallocation of slots End of Initial Participation in WSC Season’s Scheduling allocation Updated Request OK / available Slots season Pool not OK Initial Slot Exchanges & Returned New Airspace User Analysis of Request Transfers requests slots requests airports Submission Analysis Bilateral Slot declared Participation Analysis of allocated slots & Operation of Slot of Slot negotiations exchanges capacity & in WSC slot pool of Slots Requests allocation with Airlines & Transfers End of coordination Scheduling parameters Season IATA Organization of Worldwide Scheduling Conference Airport slot allocation: performance of the current system and options for reform 5
Perspectives for reform: Market-based approaches Objective Main options To reflect willingness to pay of the user • Withdrawal of grandfather rights Primary Need for combinatorial auctions; and auctioning of these slots; allocation of • Auctions of pool slots when new High implementation costs; slots capacity is created; Not individual rational. • Auctions for all pool slots. Redistribution to adjust allocation among airlines Reflects willingness to pay; Secondary • Bilateral trades between airlines; Compatible with current system; slot-trading • Central facilitator; Introduces opportunity costs to slots; • External agencies allowed. Practically Airlines non perfect-rational agents. Reflect the external costs generated by the user Peak/peak off charges; • In association with slot control; Congestion Estimation of price elasticity; • In addition to slot control; pricing Institutional barriers; • In substitution of slot control. Unsuccessful experiences. Airport slot allocation: performance of the current system and options for reform 6
Process performance: measurement along Performance areas Need to establish a number of relevant performance areas Consistent with relevant frameworks… ICAO SESAR Performance Framework Flexibility Capacity Economic and and efficiency SES II Performance Scheme Resilience Delay …but adapted to the specific problem Access Equity Interoperability and and Airport context Competition Distributional Issues Long-term planning Strategic decision making Airport slot allocation: performance of the current system and options for reform 7
Process performance: measurement through indicators Need to establish an objective, exhaustive and non overlapping set of indicators Objective way of measuring performance Different types of indicators Intermediate Assess different options Outcome Indicators Vs. Indicators Quantitative Qualitative Vs. Focus the discussion Indicators Indicators Local Global Vs. Support decision making Stakeholder System-wide Vs. Indicators Monitor progresses towards goals Airport slot allocation: performance of the current system and options for reform 8
Capacity Flexibility Economic and and efficiency Resilience Delay Economic Efficiency Access Equity and and Interoperability Competition Distributional Issues This accounts for all Consumer Surplus + Producer Surplus Market Mechanisms Current System Potential inefficient slot allocation: Slots assigned to the Airlines that value Allocative Efficiency willingness to pay is not taken into account them most High cost for designing and operating an Cost of operating Simple and inexpensive auction the system Secondary trading easier and cheaper Cost Efficiency No continuity of schedule guaranteed by Grandfather rights maintain stability and auctions Dynamic efficiency continuity in scheduling Secondary trading could take historic slots as baseline Tactical delays are reduced in favour of scheduled delays Cost of Delay Allocation of revenues in case of auction is No additional revenues for Airports Revenues debated No account for externalities Congestion pricing accounts for externalities Externalities Airport slot allocation: performance of the current system and options for reform 9
Capacity Flexibility Economic and and efficiency Resilience Delay Capacity and Delay Access Equity and and Interoperability Competition Distributional Issues Throughput of the airport Different temporal and spatial scales Market Mechanisms Current System The optimal choice of the number of slots at a given airport implies local interpretations and ad- Capacity specification hoc processes Auctions or congestion pricing could create Incentives for capacity Incumbent airlines have incentive to perverse incentives for airports to underinvest expansion moderate their requests for capacity expansion in new capacity The trade-off between scheduled delay and tactical delay is sought by the slot allocation Delay mechanism Airport slot allocation: performance of the current system and options for reform 10
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