SUBJECT: Recommendation that the Department of Transportation should implement a competitive market system of slot allocation as a means of achieving efficiency. In this scheme, supply and demand determines the market price for slots, resulting in an optimal price and output of landing slots for all airlines.

This policy memo recommends shifting to a market system of slot allocation. Airport deregulation and various other issues have led the FAA and the Department of Transportation to make a decision to resolve competing demands for airport slots. This analysis describes options ranging from auctions to "grandfathering," allowing airlines that had based decisions on large amounts of slots to avoid disruption. Implementing a solution that encompasses the auctioning off of slots in an effective manner and then shifting to a market system is clearly the most socially efficient solution. In order to gain the support of large incumbent airlines it has been suggested that those airlines receive discounted prices at the time of the auction ensuring equity and efficiency.

 Prevents smaller carriers from being pushed out of the market by larger, wealthier airlines.

 Historically successful in distribution of slots, especially with few new entrants as in 1970s.

 May be challenging to get major airlines to support.

 Remnant of closed-club regulatory era that no longer exists elsewhere in airline market.

Some common words found in the essay are:
Department Transportation, Advisors CEA, Political Environment, DOT FAA, International AOCI, Deregulation Act, Status Quo, CONTEXT Stakeholders, FTC CEA, Administration FAA, market system, incumbent airlines, slot allocation, windfall profits, department transportation, market approach, grandfather rights, allocation slots, supply demand, market solution, system slot allocation, airport expansion schemes, oppose airport expansion, shifting market system, deregulation airline pricing,
Approximate Word count = 2710
Approximate Pages = 11 (250 words per page double spaced)