CALIFORNIA STATE UNIVERSITY, HAYWARD

COLLEGE OF BUSINESS AND ECONOMICS

MANAGERIAL ECONOMICS

GUIDELINES FOR CASE ANALYSIS

The DOT and Airport Landing Slots

I. MAIN ISSUES

1. Whether or Not to Establish a Market in Slots:

(i) What are the arguments for and against establishing a market in slots?

(ii) What will be the effect of such a scheme in terms of distributive efficiency for small communities?

(iii) Will a market in slots reduce competition and create barriers to entry?

(iv) Are scheduling committees the best alternative or are they worse than the market alternative?

(v) Will the market option reduce the incentives of the airports and airlines to increase airport capacity?

(vi) What are the analytical considerations underlying (I) to (v) above?

II. ALTERNATIVES (EVALUATE EACH)

1. "Grandfathering" incumbents with right to resale

2. One-time government slot auction with resale rights

3. Governmental rent out of slots for a limited term, with periodic auctions with reversion to government

4. Privatize all airports

Evaluate each one of these alternatives in terms of efficiency, equity/fairness and political feasibility.

Please use the data in the case to support your arguments on these issues and look at the questions at the end of the case.