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A general framework for price regulation of airports

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  • Phang, Sock-Yong

Abstract

Price cap regulation (PCR) was first implemented for privatized utilities in the UK in the 1980s. It has since been adopted by numerous countries as a regulatory regime in several sectors. This paper focuses on the development of different forms of price regulation of airports of which PCR is one variant. In countries where airport privatization is still in the early stages, the spectrum of airports and varied nature of regulatory regimes can be confusing and the lack of a general framework can itself become an obstacle to privatization. This paper proposes a general framework comprising decisions to be made for seven variables which is able to accommodate the diversity of airports and varied approaches that may be required as well as transitions between approaches. These approaches include light-handed regulation, price or revenue yield caps, rate of return regulation, earnings sharing, as well as choice of till.

Suggested Citation

  • Phang, Sock-Yong, 2016. "A general framework for price regulation of airports," Journal of Air Transport Management, Elsevier, vol. 51(C), pages 39-45.
    • Handle: RePEc:eee:jaitra:v:51:y:2016:i:c:p:39-45
    DOI: 10.1016/j.jairtraman.2015.11.001
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    References listed on IDEAS

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    1. Sappington, David E. M. & Weisman, Dennis L., 1996. "Revenue sharing in incentive regulation plans," Information Economics and Policy, Elsevier, vol. 8(3), pages 229-248, September.
    2. Hangjun Yang & Anming Zhang, 2011. "Price-cap regulation of congested airports," Journal of Regulatory Economics, Springer, vol. 39(3), pages 293-312, June.
    3. Gillen, David, 2011. "The evolution of airport ownership and governance," Journal of Air Transport Management, Elsevier, vol. 17(1), pages 3-13.
    4. Vogelsang, Ingo, 2002. "Incentive Regulation and Competition in Public Utility Markets: A 20-Year Perspective," Journal of Regulatory Economics, Springer, vol. 22(1), pages 5-27, July.
    5. Tae Hoon Oum & Anming Zhang & Yimin Zhang, 2004. "Alternative Forms of Economic Regulation and their Efficiency Implications for Airports," Journal of Transport Economics and Policy, University of Bath, vol. 38(2), pages 217-246, May.
    6. David Sappington & Dennis Weisman, 2010. "Price cap regulation: what have we learned from 25 years of experience in the telecommunications industry?," Journal of Regulatory Economics, Springer, vol. 38(3), pages 227-257, December.
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    Cited by:

    1. Littlechild, Stephen, 2018. "Economic regulation of privatised airports: Some lessons from UK experience," Transportation Research Part A: Policy and Practice, Elsevier, vol. 114(PA), pages 100-114.
    2. Valdes, Victor & Corzo, Oscar & Canfield, Carlos, 2024. "Airport incentive regulation in practice," Journal of Air Transport Management, Elsevier, vol. 117(C).

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