The effects of airport slot allocation method on competition: Empirical analysis of competition through slots at JFK International Airport

Abstract

Purpose- This study aims to indicate the effects of the current slot allocation method specified in the IATA Worldwide Slot Guidelines, which is used to allocate airport slots to airlines, on airline transport market concentration and competition. Methodology- John F. Kennedy Airport (JFK), which allocates slots to airlines with the IATA method, was taken as a sample in the study. Airline’s JFK slot data obtained from the Federal Aviation Administration's Slot Administration Office were analysed with the Herfindahl-Hirschman Index (HHI) and the n-Firm Concentration Ratio (CRn). Findings- According to the findings obtained from the analyses, it has been stated that the concentration in the JFK International Airport market is high and the competition is low. It has been determined that the majority of the slots are owned by 3 long-established US airlines using the airport as their base airport, and the remaining slots are shared by many airlines. Conclusion- As a result of the study, it is revealed how the historical rights and pool system in the current slot allocation method affect concentration, competition, new entrants to the market and the power of new entrants to increase their shares. Keywords: Airport slot, market concentration, competition, Herfindahl-Hirschman, CRn JEL Codes: B22, D40, L93