Wednesday, October 17, 2007

Airline competition and delays

In 2000, in an attempt to promote entry and competition, Congress relaxed, and ultimately eliminated, slot constraints at three airports: LaGuardia, JFK and O'Hare. As shown in Table 2, in all three cases airlines quickly expanded the number of flights they offered regardless of total airport capacity. Not surprisingly, delay problems significantly worsened.

In the table below "Slots" refers to the period before Congress got involved; "No Slots" refers to the period after they got involved.

Table 2. Number of Scheduled Arrivals and On-Time Performance


Arrivals On-Time %
Slots No Slots Change Slots No Slots Change
LaGuardia 10,477 14,063 34% 75% 47% -28%
O'Hare 25,944 35,597 37% 83% 67% -16%
JFK 8,037 12,680 58% 78% 65% -13%

Economists in the Antitrust Division have a simple solution: reduce the number of landing slots, and then auction them off to the highest bidders. Reduce delays and promote competition.

Perhaps the best reason for having antitrust laws and agencies who enforce them is that they can provide a little light in a very dark place.

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