Article

Development of efficient combinatorial auction mechanism for airport slot allocation

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  • Pennsylvania State University Harrisburg
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Abstract

The current allocation of slots in congested airports is fraught with deficiencies because of the liberalisation of air transportation undertaken all over the world. The existing grandfather rights rule is slowly being replaced with auctions. In the airport slot allocation problem, in order to effectively auction the slots, multiple-item auctions are employed. It is in this aspect that combinatorial auctions are employed, as they are the most efficacious in dealing with complimentarity. Since the existing mechanisms are more inclined towards maximising the auctioneer's profit – with the monetary issue being the only concern – they lead to biased allocations. Therefore, this paper develops a model and proposes a mechanism that could overcome the shortcomings of the existing auctioning procedures by incorporating the concepts of welfare issues with due consideration given to the flight capacity to effectively allot the slots.

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... Consequently, many studies recommend an open market for the acquisition of airport slots both in the EU and the US [5]. Mathematical improvements based on optimisation mechanisms [6], [7], and auction markets have already been proposed [8], [9], [10] but none of them studies the problem from a SoSE perspective. This is the motivation to establish a roadmap to tackle this problem from a SoSE perspective and show its benefits. ...
Conference Paper
Airport slot allocation is a combinatorial allocation problem (CAP) involving different complex and autonomous systems. Nowadays, the slots are allocated in a two-stage process: primary allocation is performed according to a set of administrative rules and for each airport independently, while secondary allocation is based on trading mechanisms. Several studies have raised inefficiencies in these processes. To enhance the airport slot allocation, this work proposes the study of the problem from a System of Systems Engineering approach (SoSE), both for the primary and secondary scenarios. Through the application of Auction Engineering and Experimental Economics, a set of market mechanisms is proposed to engineer these SoS. This paper presents their high-level formalisation, that will be implemented in future works and assessed according to a set of pre-established key performance indicators.
... Markets are based on supply and demand, which are ultimately founded on economic factors, so they can provide information about how valuable a slot is in economic terms. Besides, a market where the participants maximise their surplus is usually associated with a maximisation of the social welfare [8][9][10]. ...
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Airport slot allocation is a combinatorial allocation problem involving different complex and autonomous systems. Nowadays, airport slots are allocated in a two-stage process: primary allocation is performed according to a set of administrative rules and for each airport independently, while secondary allocation is based on trading mechanisms. Several studies have raised inefficiencies in these processes. To enhance the airport slot allocation process we use an auction-based market. More specifically, we present an airport slot allocation mechanism based on a price-setting auction that has been implemented and evaluated by means of Agent-Based Modelling (ABM) and simulation techniques. The solutions obtained using our approach are compared and assessed with the ones obtained using linear programing, showing that market mechanisms can be an efficient alternative to the current administrative procedure.
... Many studies recommend open markets and auction markets for the acquisition of airport slots both in the EU and the US [6], [7], [8], [9], [10], [11]. Works such as [12] propose mechanisms that try to overcome the shortcomings of the typical auctioning procedures by incorporating the concept of social welfare. Another auction system aimed at progressively introducing auctions to replace administrative allocation is presented in [13], but it could involve different prices for slots in the same coordination time interval. ...
... Consequently, many studies claim for an open market for the acquisition of airport slots both in any EU member and in the US [5]. Mathematical improvements based on optimisation mechanisms [6], [7], and auction markets have already been proposed [8], [9], [10] but none of them tackle the problem from a SoSE perspective. This have been the motivation to establish a roadmap that will show how to tackle this problem with a SoSE approach and its benefits. ...
... See Madas & Zografos (2006) for an up-to-date review of the current instruments and proposals of enhanced slot allocation procedures. In Arul et al. (2007) a new model for allocating the slots is presented. ...
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Combinatorial Auctions in Procurement, The Practice of Supply Chain Management
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