Airport take-off and landing slots are currently allocated to airlines on an arbitrary basis, even at the most congested airports such as Heathrow and Gatwick. The right to land or take off an aeroplane at congested airports is hugely valuable – perhaps worth billions of pounds to a major airline with established rights at an international airport. However, the ownership of such rights is unclear. For the most part, airlines are allowed to use the most valuable slots simply because they have used them in the past.

Authors Keith Boyfield, David Starkie, Tom Bass and Barry Humphreys in A Market in Airport Slots recognise that there are practical and political obstacles to meaningful reform. However, they argue that reform is essential. The current system impedes new entry into the air transport market, it prevents take-off and landing slots being used by airlines that value them most and it leads to greater congestion at Heathrow and Gatwick airports. As a minimum, the political authorities (both the UK government and the EU) need to determine who are the legitimate owners of take-off and landing slots. Is it the government, the airports or the airlines? Then a mechanism needs to be developed for the trading off slots – something which only happens covertly at the moment because it is not technically permitted. Only within such a framework can the practical issues be addressed.

The EU is continuing to delay reform of its regulations in this area, but the need to reform is urgent. Passenger numbers at Gatwick have increased from 19 million to 31 million in 10 years. Heathrow airport is operating 20% above capacity. There is pressure to expand both airports or build a further London airport. A rational system of pricing and trading of take off and landing rights is needed first.

Read the full paper here.