Economic Regulation

Economic regulation is a feature of large airports to act as a counterbalance to natural monopolies with significant market power.
A range of airport economic regulation frameworks has been adopted at airports worldwide to mimic the effects of a competitive market.
Unfortunately there is no consensus on which model works best for all stakeholders:
Airports seek sufficient aeronautical revenue to support ‘lumpy’ infrastructure investment
Airlines push for low charges as airport charges are one of the few variable charges they can influence to improve business performance.

Our Approach

We support airports to navigate economic regulation, which can affect a wide range of aspects of the client’s business. We have extensive experience of modelling a range of economic regulation frameworks including single till, dual till, hybrid till, and bespoke regulation in concession agreements.
Creating regulatory models relies on a variety of inputs such as traffic forecasts, capital expenditure requirements and operating costs to determine an appropriate aeronautical revenue cap or price profile. Our expertise enables delivery of a fully integrated regulatory assessment.
Our regulatory services include:
- Contributions to airport market power assessment through, for example, detailed traffic segmentation and market share analysis;
- Detailed traffic, revenue and cost inputs to support development of an integrated financial model which can be used to assess aeronautical price paths under a range of regulatory approaches; and
- Qualitative assessment of the most appropriate regulatory approaches, drawing on our experience of industry best practice from across the world.