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Australian airport regulation: Exploring the frontier

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  • Littlechild, Stephen C.

Abstract

In 2002 Australia removed its price freeze on major airports and instituted light-handed regulation including price monitoring. Internationally, this policy is at the frontier. In general it has worked well but there are concerns that it is ineffective in protecting against windfall gains for airports, that investment incentives are a weak link, that Sydney Airport has deferred investment and let service quality fall, and that airlines are still vulnerable to airport market power. These concerns do not justify re-imposition of price control but they require a method for addressing them. Airlines have proposed independent dispute resolution. Experience elsewhere suggests that concerns about this approach are unjustified, and that it would take light-handed regulation forward.

Suggested Citation

  • Littlechild, Stephen C., 2012. "Australian airport regulation: Exploring the frontier," Journal of Air Transport Management, Elsevier, vol. 21(C), pages 50-62.
    • Handle: RePEc:eee:jaitra:v:21:y:2012:i:c:p:50-62
    DOI: 10.1016/j.jairtraman.2011.12.017
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    References listed on IDEAS

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    1. Littlechild, Stephen, 2012. "The process of negotiating settlements at FERC," Energy Policy, Elsevier, vol. 50(C), pages 174-191.
    2. Zhongmin Wang, 2004. "Settling Utility Rate Cases: An Alternative Ratemaking Procedure," Journal of Regulatory Economics, Springer, vol. 26(2), pages 141-163, September.
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    5. Littlechild, Stephen C., 2012. "German airport regulation: Framework agreements, civil law and the EU Directive," Journal of Air Transport Management, Elsevier, vol. 21(C), pages 63-75.
    6. Doucet, Joseph & Littlechild, Stephen, 2009. "Negotiated settlements and the National Energy Board in Canada," Energy Policy, Elsevier, vol. 37(11), pages 4633-4644, November.
    7. Stephen Littlechild, 2009. "Stipulated settlements, the consumer advocate and utility regulation in Florida," Journal of Regulatory Economics, Springer, vol. 35(1), pages 96-109, February.
    8. Littlechild, Stephen, 2009. "The bird in hand: Stipulated settlements in the Florida electricity sector," Utilities Policy, Elsevier, vol. 17(3-4), pages 276-287, September.
    9. Schuster, Dominic, 2009. "Australia's approach to airport charges: The Sydney Airport experience," Journal of Air Transport Management, Elsevier, vol. 15(3), pages 121-126.
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    Cited by:

    1. Kratzsch, Uwe & Sieg, Gernot, 2012. "No need to regulate airports with predominantly non-aeronautical revenues," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 52, pages 1-7.
    2. Littlechild, Stephen, 2018. "Economic regulation of privatised airports: Some lessons from UK experience," Transportation Research Part A: Policy and Practice, Elsevier, vol. 114(PA), pages 100-114.
    3. Arblaster, Margaret, 2016. "Negotiate-arbitrate regulation of airport services: Twenty years of experience in Australia," Journal of Air Transport Management, Elsevier, vol. 51(C), pages 27-38.
    4. Kistler, Beat & Trischler, Jakob & Lohmann, Gui, 2018. "Passenger representation within the light-handed regulation – Insights from the Australian air transport market," Transport Policy, Elsevier, vol. 71(C), pages 106-115.
    5. Xiao, Yibin & Fu, Xiaowen & Zhang, Anming, 2016. "Airport capacity choice under airport-airline vertical arrangements," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 298-309.
    6. Christine Brandstätt & Gert Brunekreeft & Nele Friedrichsen, 2013. "The Need for More Flexibility in the Regulation of Smart Grids – Stakeholder Involvement," Bremen Energy Working Papers 0013, Bremen Energy Research.
    7. Trischler, Jakob & Lohmann, Gui, 2018. "Monitoring quality of service at Australian airports: A critical analysis," Journal of Air Transport Management, Elsevier, vol. 67(C), pages 63-71.
    8. Littlechild, Stephen, 2018. "Regulation and the nature of competition," Journal of Air Transport Management, Elsevier, vol. 67(C), pages 211-223.
    9. Michael Brandau & Christoph Endenich & Andreas Hoffjan & Florian Müller, 2014. "Zum Einfluss der Entgeltregulierung auf die Unternehmenssteuerung–Eine empirische Analyse europäischer Großflughäfen," Schmalenbach Journal of Business Research, Springer, vol. 66(3), pages 242-268, May.
    10. Lohmann, Gui & Trischler, Jakob, 2017. "Licence to build, licence to charge? Market power, pricing and the financing of airport infrastructure development in Australia," Transport Policy, Elsevier, vol. 59(C), pages 28-37.
    11. Nele Friedrichsen & Christine Brandstätt & Gert Brunekreeft, 2014. "The need for more flexibility in the regulation of smart grids – stakeholder involvement," International Economics and Economic Policy, Springer, vol. 11(1), pages 261-275, February.
    12. Zhang, Yahua & Sampaio, Breno & Fu, Xiaowen & Huang, Zhibin, 2018. "Pricing dynamics between airline groups with dual-brand services," Transportation Research Part A: Policy and Practice, Elsevier, vol. 112(C), pages 46-59.
    13. Yang, Hangjun & Fu, Xiaowen, 2015. "A comparison of price-cap and light-handed airport regulation with demand uncertainty," Transportation Research Part B: Methodological, Elsevier, vol. 73(C), pages 122-132.
    14. Arblaster, Margaret, 2014. "The design of light-handed regulation of airports: Lessons from experience in Australia and New Zealand," Journal of Air Transport Management, Elsevier, vol. 38(C), pages 27-35.
    15. Kivits, Robbert & Charles, Michael B., 2015. "Aviation planning policy in Australia: Identifying frames of reference to support public decision making," Journal of Air Transport Management, Elsevier, vol. 47(C), pages 102-111.
    16. Arblaster, Margaret & Hooper, Paul, 2015. "Light handed regulation–Can it play a role in the developing world?," Transport Policy, Elsevier, vol. 43(C), pages 32-41.
    17. Andrzej T. Szablewski, 2018. "Kolejny etap ewolucji koncepcji i praktyki regulacji ekonomicznej," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 2, pages 49-72.
    18. Brown, Richard S., 2016. "Lobbying, political connectedness and financial performance in the air transportation industry," Journal of Air Transport Management, Elsevier, vol. 54(C), pages 61-69.

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