Aux armes, citoyens! A revolution in airport economic regulation: A regulator’s perspective

Abstract

This paper provides the author’s personal perspective on the revolution in airport economic regulation following the UK Civil Aviation Act 2012. It explains how economic regulation grew in complexity under the old system dating back to 1986, but was becoming increasingly inflexible. The CAA has used the new ‘toolkit’ at its disposal to regulate London airports in innovative ways, which facilitate commercial outcomes and solutions when these seem fair and reasonable. But a major challenge for the new approach lies ahead with the financing of new runway capacity in the London area. The paper also exposes a dilemma for regulators at capacity-constrained airports as well as assessing suggestions that regulators may have adopted policies that over-rewarded companies during the financial crisis. As a conclusion the author provides some lessons for other jurisdictions that are considering how to regulate the participation of private enterprise in the airport sector.