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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.

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