Economic Regulation - IATA

02 Report Outline
Airports and ANSPs are key partners
for airlines. However, this partnership
needs to be based on a fair and balanced
relationship that protects, promotes and
enhances the interests of all parties.
In many cases, due to the monopoly power
held by airports and ANSPs, independent
economic regulation is required to ensure
that infrastructure services are delivered
efficiently and in consultation with the
needs of airline users and their customers.
The cost of infrastructure use is a significant element of an airline’s total operating
costs. Airlines and their users pay an estimated US$42 billion each year to airports
and ANSPs, equivalent to 11% of the global airline industry’s revenues. Increases in
the unit rate of user charges can have an even larger marginal effect, having a direct
impact on individual route profitability levels.
Of course, infrastructure costs have not been the main driver behind the US$40
billion of losses incurred by the airline industry between 2001 and 2006. However,
they must be part of the solution as airlines and the wider aviation industry seek to
improve their financial performance and efficiency. With the global airline industry
continuing to make significant gains in labour productivity, fuel efficiency and nonfuel
cost savings, infrastructure suppliers cannot justify using monopolistic power
to raise prices or to deliver inefficient or unnecessary services. It is essential that
services are delivered cost-effectively across the supply chain and that risks and
rewards are shared appropriately. Greater efficiencies in airline operations can
provide spillover benefits to airports, ANSPs and others in the aviation supply chain,
and vice versa, highlighting the advantages of combined efforts to improve efficiency
within the industry as a whole.