Estimating the monetary value of airport runway departure slots

Slot allocation is one of the most contentions and keenly debated topics within the air transport industry. The issue of pricing access to airport slots, as a means of relieving congestion, has received increased attention in recent years. However, little attempt has been made to determine how airlines value access to slots, or to measure the impact quantitatively of introducing the pricing mechanism into slot allocation. It is the objective of this thesis to establish a process whereby the potential value of a slot can be determined. Since the value of a slot is ultimately a function of the how highly passengers value travelling at different times of the day, the research problem is initially approached from the passenger’s perspective. Analysis focused initially on the use of stated preference methods, to derive parameters which measure how highly passengers value different departure times. These parameters were then calibrated on a departure time choice model, which estimates, given assumptions on the distribution of ideal departure times on a given route, how passengers select flights scheduled at different times. Decision-rules governing the scheduling of profitable flights were developed. These rules determine the conditions necessary for the scheduling of profitable flights and the setting of fares. Combining both passenger and flight scheduling decision-rules within a simulation model it was then possible to generate, given various assumptions on aircraft size and total demand, a set of equilibrium flights scheduled at different departure times, associated with a level of passenger demand and equilibrium fare. From these simulations, slot value estimates were derived. Within the context of the thesis objective, analysis focused on a wide range of issues. These were: stated preference experimental design and parameter estimation, how passengers value departing at different times of the day, competition for slots, time of day pricing, and estimating potential slot values for different aircraft types. This thesis has contributed to existing literature on slot allocation through firstly; outlining a method to estimate slot values, secondly, providing a more thorough analysis of passenger departure time preferences in air transportation, and thirdly, a further demonstration of the application of stated preference techniques within an aviation context.