EU Slot Policy at Congested Hubs, and Incentives to Add Capacity

We examine the slot management regime used in congested EU airports and investigate how it might, in the short run, lead to inefficient outcomes and, in the long run, discourage support for expanding airport capacity. The EU Regulation limiting incumbent airlines' access to newly available slots exacerbates incumbents' reluctance to support runway capacity expansion since they would lose market share and scarcity rents. The paper illustrates this using the debate concerning runway expansion at London Heathrow and Gatwick. It concludes by suggesting only the taxation of rents is likely to alter incumbent airlines' opposition to expansion of congested hubs.