ABSTRACT
Australia provides an interesting case study of airport regulation. The chapter reviews developments in price regulation of airports in Australia. The report advocated the removal of direct price regulation and the imposition price monitoring for the major airports, to be reviewed in five years time. In Australia, price-cap regulation is often implemented with cost-based resets at the end of regulatory periods nevertheless, regulation as it is implemented does have some of the properties of incentive regulation. In Australia, the US and the UK governments have implemented price-caps as part of a regulatory package designed to improve incentives for productive efficiency. The Australian move away from price regulation can be seen as a response to the problems the former regulatory system was encountering, or expected to encounter. Australia has a system of access regulation for natural monopoly essential facilities. The prospects for airport price monitoring in Australia are problematic.
