Airline route network expansion: Modelling the benefits of slot purchases

This paper describes a decision-making model for estimating the value of airport slots for airlines. Assuming that an airline wants to improve its flight schedule by adding new slots to its portfolio the model would enable it to investigate if such a purchase of slots in the secondary market would be profitable. The model outputs are the new flight schedule, the years necessary to recoup the initial outlay in buying the new slots, and the number of potential connections that the airline could realize if the new slots are introduced. The solutions are feasible from the aspect of aircraft availability for new flights, the realized profit for an airline, and finally, an acceptable pay-off period for the purchased slots. The model is tested on real data from a mid-sized European airline.

► The paper devolved a decision-making model to estimate the value of airline’s valuations of airport slots. ► The model is tested using data for a hub-and-spoke structured airline network. ► It considers methods for assessing whether slots purchased on the secondary market would be profitable.