Economic Regulation - IATA

More documents

Recommendations

Info

06 The Experience of Economic Regulation In countries where a form of economic regulation for airports and ANSPs has already been implemented a variety of systems have been used. The different approaches to regulation largely reflect different views and objectives in pursuing efficiency and investment. There is no one standard model for regulation, but experience can provide important lessons on where best practice is shown and where problems can arise.
06 - Economic Regulation 41 NORTH AMERICA United States of America This chapter discusses the experience, so far, of independent economic regulation of airports and ANSPs, focusing on North America, Australasia and Europe 19 . It examines the different systems that have been put in place and assesses the advantages and disadvantages of each one. The different approaches reflect different circumstances and objectives for individual airports and ANSPs, but also highlight the problem of regulatory inconsistency in some countries. The experience of each highlights the advantages and challenges of regulation, along with the ongoing need for improvement and flexibility in regulatory structures. The US is the largest aviation market in the world but has seen little change in terms of the ownership structure and regulation of airports since they were first established. The vast majority of US airports are publicly-owned, while air traffic control is provided through the Federal Aviation Administration (FAA) and funded through a specific and separate passenger charge. US airports enter into legally binding contracts with airline users that detail the calculation and conditions of charges. At many airports, airlines will lease or own terminal facilities on an exclusive or joint-use basis. US airports source finance from commercial bonds, passenger facility charges and the Airport Improvement Fund, with the latter provided through the FAA and financed by general charges on airport users. This system provides a degree of longer-term certainty in terms of revenues for airports and user charges for airlines. Consequently, US airports essentially operate under a cost-plus, rate-of-return system, implemented through two main approaches: Residual approach (e.g. used at Los Angeles International, San Francisco, Dallas Fort Worth, Miami). Airlines are responsible for paying the net operational costs of the airport after taking account of any commercial and non-airline sources of revenue (i.e. a cost-plus and single-till system). Under this approach airlines assume a large amount of operational risk at the airport, providing a guarantee that overall charges will be set so as to guarantee that the airport will break-even. Compensatory approach (e.g. used at Chicago O’Hare, New York JFK). Each airline pays agreed charges to the airport on the basis only of the cost of services associated with the facilities they use (i.e. a cost-plus and dual-till system). Under this approach, the overall airport operational risk remains with the airport operator. However, regardless of which approach is adopted, the cost-plus nature of the system contains few incentives for an airport to improve efficiency or to increase revenues from non-aeronautical sources. There is no clear incentive to minimise costs, as it simply reduces 19 Detailed accounts of many of the examples in this chapter are available from Forsyth, P, et al (2004), “The Economic Regulation of Airports”, Ashgate Publishing.
Page 1 and 2: Economic Regulation IATA ECONOMICS
Page 3: Contents 00 Foreword by Giovanni Bi
Page 6 and 7: Key Conclusions and Recommendations
Page 8 and 9: Key recommendations for the framewo
Page 10 and 11: 01 Executive Summary Independent ec
Page 12 and 13: Setting the scope for Economic Regu
Page 14 and 15: Experiences of Economic Regulation
Page 16 and 17: 02 Report Outline Airports and ANSP
Page 18 and 19: 03 The Case for Independent Economi
Page 20 and 21: Stability of returns. Airports and
Page 22 and 23: • Does the existence of competiti
Page 24 and 25: A POTENTIAL WIN-WIN SITUATION A wel
Page 26 and 27: 04 The Scope of Independent Economi
Page 28 and 29: REGULATORY TIME-CONSISTENCY Regulat
Page 30 and 31: SINGLE-TILL VS DUAL-TILL REGULATION
Page 32 and 33: DEFINING AND VALUING AN APPROPRIATE
Page 34 and 35: The WACC is typically fixed in adva
Page 36 and 37: 05 The Options for Independent Econ
Page 38 and 39: There are alternative versions of a
Page 40 and 41: LIGHT-HANDED REGULATION (PRICE MONI
Page 44 and 45: AUSTRALASIA Australia revenues rece
Page 46 and 47: EUROPE United Kingdom - Designated
Page 48 and 49: Republic of Ireland Price-cap regul
Page 51 and 52: 06 - Economic Regulation 49 OTHER R
Page 53 and 54: 07 - Economic Regulation 51 This ch
Page 55 and 56: 07 - Economic Regulation 53
Page 57 and 58: 07 - Economic Regulation 55 The air
Page 59 and 60: 08 - Economic Regulation 57 This ch
Page 61 and 62: 08 - Economic Regulation 59 FINANCI
Page 63 and 64: 08 - Economic Regulation 61 Adapt r
Page 65 and 66: 09 - Economic Regulation 63 The rep
Page 67 and 68: 09 - Economic Regulation 65 San Fra
Page 69 and 70: 08 - Economic Regulation 67 The Ben
Page 72: www.iata.org PRINTED IN SWITZERLAND

Economic Regulation - IATA

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?