Department of transportation and airport landing slot allocation

FAA Airline Slots Marketing

The United States government itself should not only allow the slots to be marketed, it should employ a person without formal ties to any of the airlines to market the slots at a profit to generate revenue for the government during a time of severe recession (or any time for that matter). While the Federal Aviation Administration (FAA) has been accused of favoring regulatory approaches over non-regulatory approaches Alfred F. Kahn's "special kind of idiocy" can be applied here as well when government creates the market and is not allowed to control the sale of the product or service it produces ("Case Studies on Public Management," p. 2).

The following arguments support my recommendation:

1)

While there may have been too much regulation at the beginning of the Reagan administration, the pendulum has certainly swung the other way by now.

2)

If the FAA to relinquish control over such an important part of the nation's transportation system, why not do so over the road system as well? This is simply because the system is too diverse to allow multiple companies to be calling the shots overall. If taxpayer money is used in the buildup of the network, then it must also be allowed a commanding presence in the distribution of slots in the system it helped to build. This would address Representative Norm Mineta's concern (ibid, p. 1).

3)

This author's position is a compromise between the previous slot allocation system and an all out free market auction. It accommodates both ends of the spectrum. It employs the free market and yet keeps the government fully in the loop with regard to regulating the slot allocations. The ancillary benefit is a source of revenue for the case strapped Federal government during a long recession.

The counter-arguments are as follows:

1)

The market is the best way to regulate supply and demand disparities in any case.

artificial action will only upset the balance.

2)

The market would not favor only those carriers with deep pockets with largess that was paid for by the taxpayer. The FAA came to the conclusion that it would not be profitable for a large airline to operate a low-valued flight just because it had the cash to do this (ibid, p. 5).

3)

An airplane carrier that expects to offer high-valued flights but is also short of cash ought to be able to borrow to finance needed slots. The ability of an airline to finance equipment and slot purchases depends upon the expected profits from the use to which the equipment or slots will be put.