There is a good, but incomplete proposal for landing slot auctions at Chicago O'Hare at AW&ST, June 6, p.31. (Subscription required)

It includes the following:

• Rolling auctions annually for 5 year rights


• Forced reauction so that every airline must participate


• Peak time pricing


• Same price regardless of plane size

One thing that is not decided is "who should get the increased revenues that [the Justice Dept.'s] regime would likely generate or what should be done with them."

My proposal is that the money go to the current rights holder for existing rights and the airport for new rights. That includes the auction winners. I.e., the rights would be resold and the former owner would get the proceeds. This gives the airport the right incentive to make improvements that allow more landings. It also turns the rights into capital assets. We might see better stewardship of them.

We might also see less screaming from existing rights holders because if they get the money, they are no worse off than under the current system. (Unless they were going to go bankrupt and stiff their creditors.)

Sam,

This is a great idea that somebody I know (wink) could probably improve on. Let's see, we declare that the 1st, 6th, 11th, ... slots have 1 year of shelf life. 2nd, 7th, ... have 2. Etc. You then do an initial auction of all of the slots NOW. The airport gets a good fraction of this initial cash windfall. Most goes to the current slot holder. Prices would be higher based on time AND how long the buyer gets to hold onto the slot before forced reauctioning. But the kicker would be to create a dynamic process for early reauctioning if the slotholder wanted to see what its value was, with the buyer getting (automatically) a full five years. Within a few years you basically have a stock market of slots. Ye Gods, Capitalism in the Skies.

Gee, how about doing it at Love Field as well, and taking the politics out of it?

Auction off all the airport gates and stop using govenrment money to bail the airline failures. I believe that is a recipe for healthy air commerce.

A big bang with sales of 1 year-5 year slots would indeed be good. That is how we phased into rolling three year contracts auctioned annually for New Jersey electricity supply. Saved the rate payers about $800M a year since 2002. They pay about $2.4B/year less than New York with about 1/3 of that due to the auction.

Let´s auction the federal stock and bond holdings in airlines while we are auctioning O´Hare slots.

The original money from the slots should go to the original recipients kind of like home owner association payments. There should be some accounting of fixed versus marginal costs. Once that is done, additional slots can be offered during off-peak times that are below the usual landing fee prices to increase traffic to the airport.