Simulations show that adaptive channel allocation significantly increases the capacity of a system as compared to traditional fixed channel allocation. With 90 channels it is possible to carry 10 erlangs per cell, with a blocking of 2.4% at initial access, and with a neglectable number of calls lost during handover. This is estimated to be almost twice the capacity of a system with fixed channel allocation. Two different algorithms are studied. In the first algorithm all channels can be used both at call setup and after a handover, while in the second algorithm 10% of the channels are reserved for hand-over only, in order to minimize the number of lost calls.