ABSTRACT
Chapter 6 deals with the related topics of regulation and competition. In years gone by, it was assumed that airports normally had substantial market power and that there was a case for regulation if the airport was privately owned. However, if airports compete with one another, there may be no need for regulation to safeguard against the use of market power. The chapter discusses the likelihood of airports competing with one another, and the ways in which their competitiveness can be measured. After this, the three main forms of regulation for airports, namely cost-plus regulation, incentive regulation and light-handed regulation are analysed and the properties of each of them and discussed. There are particular issues for regulation that arise when investment is needed to increase capacity, and these are outlined, and the practical ways regulators handle investment are outlined. Non-aeronautical services provided by airports give rise to questions as to whether airports should be regulated on a “single till” or a “dual till” basis, and how the interactions between the aeronautical and non-aeronautical can be handled.
