Mitigating Airport Congestion: Market Mechanisms and Airline Response Models

Efficient allocation of scarce resources in networks is an important problem worldwide. In this thesis, we focus on resource allocation problems in a network of congested airports. The increasing demand for access to the world’s major commercial airports combined with the limited operational capacity at many of these airports have led to growing air traffic congestion resulting in several billion dollars of delay cost every year. In this thesis, we study two demand-management techniques – strategic and operational approaches – to mitigate airport congestion. As a strategic initiative, auctions have been proposed to allocate runway slot capacity. We focus on two elements in the design of such slot auctions – airline valuations and activity rules. An aspect of airport slot market environments, which we argue must be considered in auction design, is the fact that the participating airlines are budget-constrained. • The problem of finding the best bundle of slots on which to bid in an iterative combinatorial auction, also called the preference elicitation problem, is a particularly hard problem, even more in the case of airlines in a slot auction. We propose a valuation model, called the Aggregated Integrated Airline Scheduling and Fleet Assignment Model, to help airlines understand the true value of the different bundles of slots in the auction. This model is efficient and was found to be robust to data uncertainty in our experimental simulations. • Activity rules are checks made by the auctioneer at the end of every round to suppress strategic behavior by bidders and to promote consistent, continual preference elicitation. These rules find applications in several real world scenarios including slot auctions. We show that the commonly used activity rules are not applicable for slot auctions as they prevent straightforward behavior by budget-constrained bidders. We propose the notion of a strong activity rule which characterizes straightforward bidding strategies. We then show how a strong activity rule in the context of budget-constrained bidders (and quasi-