Regulating Privatized Infrastructures and Airport Services

Abstract

For a World Bank Institute course on transport majority divestiture; management contracts; and BOT privatization, Betancor and Rendeiro (of the University (build-operate-transfer) schemes and variants, including of Las Palmas, Spain) cover basic issues associated with BOOT (build-own-operate-transfer) schemes and LDO the regulatioln of privatized airport infrastructure and (lease-develop-operate) schemes. services: Or it may involve private ownership and operation. * Eco1zomic characteristics of airports. Three types of * Price regulation. Topics covered include traditional activities are carried out in airports: essential operational pricing policies; price regulation through an RPI-X services (aeronautical and non-aeronautical), handling formula; charges for congestion, noise, and other services (aeronautical and non-aeronautical), and externalities; investment plans; and design of the commercial activities. regulatory system. Demand for basic airport services is directly influenced by trip purpose. The two types of airline customers * Regulation of quality in the industry. Topics covered: (business and leisure travelers) need different levels of regulation of services to passengers (as measured by flexibility and tend to travel at different times. Analyzing targets for check-in queues, immigration queues, baggage airport capacity (practical and saturation) under peak reclaim queues, concourse crowding, shopping, parking, demand is essential to airport success. and so on); fault repair times; average levels of passenger Among other important issues: Runway costs, level boarding and disembarkation and baggage delivery; and volume of service, pollution, congestion, and air safety; and investment obligations. traffic control. Performance indicators in the industry. Topics Recent trends in the airport industry. The movement covered: strategic indicators and other financial toward privatization may involve public ownership and indicators (including revenues), as well as indicators of private operation, including joint ventures; partial or cost, productivity, and quality of service. 'See Doganis (1992).

Contribution to the study of PPP arrangements in airport development, management and operation

“…Canada privatized its air traffic control system in 1996, selling it to a private enterprise, NAV Canada. Before that, in 1987, New Zeeland Air Traffic Control (ATC) services were commercialized and nowadays they are a government corporation, with revenues coming directly from their activities (air traffic navigation and consulting activities) and directed by an independent board of directors, whose dividends are distributed to the shareholders (Betancor and Rendeiro, 1999). In this case, shareholders are public entities, the Ministers for State-Owned Enterprises and Finance.…”

“…Private 1 Divestiture can be divided into divestiture by sale and divestiture by license (Guasch, 2004) Theoretically, this categorization clarifies the different relationships established, but reality suggests a far more complex set of models, especially concerning issues like asset ownership, risk allocation (incentives to efficiency) and investment decisions, to name a few. The asset ownership is a key element to understand these types of models (Betancor and Rendeiro, 1999). For instance, in privatization and BOO regimes, the private firm owns ad aeternum the infrastructure, while in concession arrangements it can (or not) own the asset but only until the end of their term.…”

Changing Frames of Reference and Regulatory Structures: French Airport Policy in Transition

“…The divestiture of BAA (the British Airport Authority), for example, was made in order to promote a “market-function” of network industries with the concept of price-cap regulation (Currier 2008). According to a RPI-X formula, a price-cap regulation aims to “encompass a pricing structure that is subject to specified maximum fare increases, expressed in terms of percentages that cannot exceed the difference between the Retail Price Index and a given factor X” (Betancor and Rendeiro 1999: 29). The factor X is a productivity factor, which integrates the goals of both productivity and investment with the minimization of costs leading to higher profits.…”

Hybrid governance structure between public company and private partners: the case of Infraero in the Brazilian airline sector

“…In the 1990s, the main idea was to transfer the risk to private companies who would be in a better position to assess the risks and potential profits of the business to be explored. For instance, in a 1999 background paper for a course on transport privatization and regulation organized by the World Bank, Ofelia Betancor and Robert Rendeiro indicate that there was, at that time, a movement towards privatization of airport services (BETANCOR; RENDEIRO, 1999).…”