Brown Bag Meeting about Demand Management with Prof Odoni

11.07.2006

On the 11th of July Prof. dr. Amedeo Odoni gave a presentation and participated in a discussion about demand management at the venue of the Ministry of Transport in The Hague 

This meeting was held under the Chatham House Rule. More about this rule

Short introduction on demand management
Demand management (or access control) refers to any set of regulations or other measures aimed at constraining the demand for access to a busy airfield and/or at modifying the temporal characteristics of such demand. Examples are slot restrictions and airport pricing schemes aimed at discouraging the scheduling of flights during peak traffic hours and inducing airlines to shift some operations to off-peak hours.
 
In short, demand exceeds supply and it's unlikely that the supply of airport capacity will be able to accommodate growing demand in the foreseeable future. Some form of demand management may be the only available alternative, at least for short and medium terms. The demand management approach could be divided into three categories:

  •  Purely administrative
  • Purely economic
  • Hybrid (combinations of the two above)


The main feature of the purely administrative approach is the schedule coordination. This could only effective at mildly congested airports and in regulatory environments where change is slow and gradual. In a dynamic, deregulated environment and at airports facing severe congestion, purely administrative procedures will unavoidably lead to significant market distortion in the long run and will inhibit competition.
 
In the purely economic approach airport users should be forced to internalize the external costs imposed by their use of the facility. In this case it's possible to optimize use of a congested facility. Congestion pricing can be particularly effective at airports where traffic is nonhomogeneous and is not dominated by one or two carriers.
 
It is difficult to apply this congestion pricing in practice, both for technical and political reasons. As a result, the congestion-related landing fee schedules that have been implemented to date impose relatively low tolls on peak-period operations and are greatly simplified in structure.
 
Hybrid demand management systems combine elements of administrative and economic approaches. Their common characteristic is the use of administrative procedures to specify the number of slots available at an airport. Economic devices are congestion pricing, slot markets and slot auctions to arrive at the final allocation of slots. Several airports use already a combination of this.
 
The concept of buy-and-sell slots is also interesting. However, it's difficult to distinguish who the original owner or provider of airport slots is. Auctioning of airport slots is an idea that is largely unexplored in practice and whose application entails many complications.
 
Interest in airport demand management is growing quickly throughout the world. It will probably expand in the future, with hybrid systems likely to be widely adopted.
 
Source: de Neufville/Odoni, 2003 


Category: more, Amedeo Odoni