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Economic Theories on Capacity Management - Dictionary of Arguments

Mause I 462f
Capacity management/Economic Theory: e.g. transport policy: At first glance, reducing delays leads to an increase in welfare.
Problem: this is thought too short: e.g. allocation of slots at airports: these are divided into: a) caused by the airline (technical problems with the aircraft)
Mause I 463
b) caused by the airport (infrastructure), c) deviations from the planned flight route, d) reactionary delays (caused by earlier delays); the latter is the most frequent cause. Reactionary delay: a) rotational: the return flight is delayed due to the delayed outbound flight of the same airline), b) non-rotational: a non-rotational delay occurs when a flight has to wait for passengers on a delayed flight (possibly of another airline). In this way, delays can spread worldwide.
Costs: a) Passenger time costs, b) "hard", c) "soft" costs of the airline.
Hard costs of the airline: operating and personnel costs, costs for rebooking and refunds.
Soft costs of the airline: customer losses due to dissatisfaction.
Passenger time costs: can largely be understood as opportunity costs.
Opportunity costs: in this case the time evaluated in monetary terms, which could have been used better otherwise. (1) (2)
Slots: are managed by the European Union. Capacity bottlenecks can be solved by voluntary coordination. In addition, there are many regional airports that are not fully utilized. Delays can be minimized by reducing the number of approvals and equalizing the flight plan.
Problem: from an economic point of view, minimising delays in this way does not increase welfare per se: the maximum number of arrivals and departures is reduced, thereby a) increasing average costs per flight, but also b) reducing network effects at hubs.
Network effects: Airlines are interested in hub airports because they can bundle many flights in one time window. There is then a trade-off between the network effects due to additional approvals and the increased susceptibility to delays.
Mause I 465
Capacity reduction: makes sense from a theoretical point of view, depending on whether the airport is to the right or left of the optimum value resulting from the total cost curve at the current capacity utilisation. (3) This example can also be applied to rail traffic or platforms at railway stations (see Swaroop et al. 2012, p. 1240).
Problem: the existing practice is criticized from an economic point of view, since permits are free of charge and trade with them is prohibited. (See also Emissions Trading). The system is referred to as "off-market".
Solution: an auction of slots could generate profits.
A secondary market could ensure that the airline with the highest benefit (and thus the highest willingness to pay) would receive an approval.

1. University of Westminster. 2015. The cost of passenger delay to airlines in Europe. http:// ansperformance. eu/ references/ library/ passengerdelayco st. pdf. (Access date 25.11.2016
2. Bratu, Stephane, und Cynthia Barnhart. 2006. Flight operations recovery: New approaches considering passenger recovery. Journal of Scheduling 9( 3): 279– 298.
3. Swaroop, Prem, Bo Zou, Michael O. Ball, und Mark Hansen. 2012. Do more US airports need slot controls? A welfare based approach to determine slot levels. Transportation Research Part B: Methodological 46( 9): 1239– 1259.

Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments
The note [Author1]Vs[Author2] or [Author]Vs[term] is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.
Economic Theories
Mause I
Karsten Mause
Christian Müller
Klaus Schubert,
Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018

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