Economic Regulation - IATA

00 Foreword
The case for independent
economic regulation of
airports and ANSPs is clear.
It improves efficiency and
productivity throughout the
industry. It encourages cost
effective new investment.
It benefits all stakeholders,
from the regulated airports
and ANSPs to the customers
and the wider economy.
IATA and its member airlines welcome the trend towards
greater commercialisation amongst our airport and air
navigation service provider (ANSP) partners. The efficient
delivery of air transport services would benefit from our
suppliers being economically motivated, cost-efficient
and customer-focused businesses.
However, too often this is not the case.
Airports and ANSPs are natural monopolies that are
able to exert significant market power. In the absence of
independent economic regulation this market power can
be exploited. There are examples of good relationships
between airlines and suppliers. But too often airlines
are not treated as customers. In most cases, airlines
are unable to take their business elsewhere, due to the
costs and disruption involved. In such captive markets,
the service provided by airports can be both expensive
and not necessarily what is wanted by airlines.
There is no “one-size fits all” regulatory framework. The
key is to implement a regulatory framework appropriate
to the nature of and objectives for the regulated company.
Nevertheless, in each case the underlying principle should
be for an independent and robust framework that allows
a fair and constructive relationship between airlines and
suppliers to develop and flourish.
Regulation does not simply benefit airlines at the
expense of airports or ANSPs. If implemented correctly,
it can provide clear benefits for all parties. A credible and
robust regulatory framework can reduce uncertainty –
especially political uncertainty – boosting the credit
strengths of regulated airports and ANSPs and lowering
their financing costs.
The global aviation industry, faced with the challenges
of improving financial sustainability and addressing
environmental concerns, must focus on using its existing
resources more efficiently and delivering significant
new capital investment cost-effectively. An effective
regulatory framework, overseeing the key relationships
between airlines and our industry partners, is an essential
requirement for these challenges to be met successfully –
to the mutual benefit of the industry, our customers and
the wider global economy.
Giovanni Bisignani - Director General & CEO, IATA