A Market-Based Mechanism for Airport Slot Trading in the Secondary Market

We introduce a bilateral trading mechanism involving an intermediary for the
secondary market of airport slot transactions. This mechanism primarily seeks to
maximize the intermediary's expected earnings from slot exchanges between airlines,
while ensuring incentive compatibility and individual rationality considerations.
Revenue generation for the intermediary arises from two sources: benefiting from the
difference in the ask and bid prices, or through a commission on the traded price. We
propose a mixed-integer linear programming model to formulate the problem. The
secondary market complements the primary allocation resulting from the Worldwide
Airport Slot Guidelines (WASG) by providing airlines with the flexibility to adjust
their slots and enhance their network schedules. Acquiring slots through secondary

market mainly has a bilateral form. Our proposed mechanism stands as the market-
based model, tailored specifically for bilateral trading in the secondary market and

serves as an addition to the existing multilateral swapping trades. Unlike existing
systems where only incumbent airlines collect the benefits of transactions, our
approach distributes advantages among all parties involved, including the
intermediary.

Short Bio

Kamyar Kargar is currently a Senior Research Associate at Lancaster University
Management School, within the Department of Management Science. He earned his
PhD in Industrial Engineering from Bilkent University. Before joining Lancaster
University, he served as an Assistant Professor in the Department of Industrial
Engineering at TED University. His research interests span several key areas,
including mechanism design and scarce resource allocation, transportation and
logistics, and sequential decision-making.

Venue

Middle East Technical University
Department of Industrial Engineering Seminar

Friday, April 26, 2024, 4:00 pm
IE03 Halim Doğrusöz Auditorium