Highlights I examine the effect of airport slot trading on route-level competition. I find the potential anticompetitive effect of slot trades between rival carriers. Slot trades between rival carriers have reduced rivalry on the route level. The effect seems to be resulted from mutual forbearance among competitors. Schemes that make it harder to exploit mutual forbearance need to be explored.

    Abstract This paper examines the effect of airport slot trading on route-level competition using data on slot trades in the UK. The estimation results suggest that the slot trades among partner carriers contributed to slightly increased competition measured in terms of the number of competitors per route, whereas the slot trades between rival carriers had a negative effect on the number of competitors at the route level. The results suggest that carriers seem to have used the slots obtained from their rivals not to compete with each other but to strengthen their dominance on their existing routes. This behavior is considered to be derived from the bilateral nature of slot trading, which facilitates mutual forbearance among competitors. To cope with the potential anticompetitive effect of mutual forbearance, it would be worthwhile to explore slot-trading schemes that make it harder for carriers to take advantage of multimarket contact as well as alternative methods of primary slot allocation.


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    Title :

    Effect of slot trading on route-level competition: Evidence from experience in the UK


    Contributors:


    Publication date :

    2014-08-17


    Size :

    18 pages




    Type of media :

    Article (Journal)


    Type of material :

    Electronic Resource


    Language :

    English