A general framework for price regulation of airports

• Main Author: PHANG, Sock Yong
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2016
• Subjects: Airport regulatory regimes; Price cap regulation; Earnings sharing; Choice of till; Economics; Public Economics; Transportation
• Online Access: https://ink.library.smu.edu.sg/soe_research/1737; https://ink.library.smu.edu.sg/context/soe_research/article/2736/viewcontent/GeneralFrameworkPriceRegulationAirports.pdf
• Institution: Singapore Management University

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.