An Incentive Compatible, Efficient Market for Air Traffic Flow Management

TL;DR

This paper proposes a market-based system for air traffic flow management where airlines buy delays, providing an incentive-compatible, efficient allocation of landing slots computed via a polynomial-time algorithm.

Contribution

It introduces a novel market mechanism for ATFM that ensures incentive compatibility and efficiency, with a combinatorial algorithm for equilibrium computation.

Findings

Market equilibrium can be computed in strongly polynomial time.

The market's equilibrium prices match the VCG solution, ensuring incentive compatibility.

The approach effectively allocates landing slots based on airline payments for delays.

Abstract

We present a market-based approach to the Air Traffic Flow Management (ATFM) problem. The goods in our market are delays and buyers are airline companies; the latter pay money to the FAA to buy away the desired amount of delay on a per flight basis. We give a notion of equilibrium for this market and an LP whose solution gives an equilibrium allocation of flights to landing slots as well as equilibrium prices for the landing slots. Via a reduction to matching, we show that this equilibrium can be computed combinatorially in strongly polynomial time. Moreover, there is a special set of equilibrium prices, which can be computed easily, that is identical to the VCG solution, and therefore the market is incentive compatible in dominant strategy.