Regulating Privatized Infrastructures and Airport Services
62 Pages Posted: 20 Apr 2016
Date Written: September 1999
A background paper for a course on transport privatization and regulation, organized by the World Bank Institute.
For a World Bank Institute course on transport privatization, Betancor and Rendeiro (of the University of Las Palmas, Spain) cover basic issues associated with the regulation of privatized airport infrastructure and services: - Economic characteristics of airports. Three types of activities are carried out in airports: essential operational services (aeronautical and non-aeronautical), handling services (aeronautical and non-aeronautical), and commercial activities.
Demand for basic airport services is directly influenced by trip purpose. The two types of airline customers (business and leisure travelers) need different levels of flexibility and tend to travel at different times. Analyzing airport capacity (practical and saturation) under peak demand is essential to airport success.
Among other important issues: Runway costs, level and volume of service, pollution, congestion, and air traffic control. - Recent trends in the airport industry. The movement toward privatization may involve public ownership and private operation, including joint ventures; partial or majority divestiture; management contracts; and BOT (build-operate-transfer) schemes and variants, including BOOT (build-own-operate-transfer) schemes and LDO (lease-develop-operate) schemes.
Or it may involve private ownership and operation. - Price regulation. Topics covered include traditional pricing policies; price regulation through an RPI-X formula; charges for congestion, noise, and other externalities; investment plans; and design of the regulatory system. - Regulation of quality in the industry. Topics covered: regulation of services to passengers (as measured by targets for check-in queues, immigration queues, baggage reclaim queues, concourse crowding, shopping, parking, and so on); fault repair times; average levels of passenger boarding and disembarkation and baggage delivery; safety; and investment obligations. - Performance indicators in the industry. Topics covered: strategic indicators and other financial indicators (including revenues), as well as indicators of cost, productivity, and quality of service.
This paper - a product of Governance, Regulation, and Finance, World Bank Institute - was prepared as a background paper for the course on transport privatization organized by the institute. Ofelia Betancor may be contacted at email@example.com
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