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Regulating airport market power

Vicente Padilla

Vicente Padilla

AERTEC / CEO & Founder


Not many years ago, in the middle of a dreadful economic crisis, some European airports increased their airport fees. In some instances it was up to a 50% hike.

We can’t blame airports for what they did. It did make sense for them. Results show that even if passenger traffic figures dropped, airport revenues went up again. Airport authorities can now boast with pride a healthy profit-and-loss sheet.

In Europe alone, 78% of airports remained in majority public ownership and control in 2010.

But airports, especially public airports, are also meant to be economic boosters for their region. Passenger loss means less traffic for operating airlines, less sales for airport retail and, ultimately, less business for the surrounding region. If passenger traffic drops, the economy of the whole region suffers.

This is why a strong and independent airport sector regulator is mandatory. A regulator is necessary to ensure that airports – public and private alike – don’t abuse their market power. Cranking up airport fees when in trouble is too tempting – much easier than fixing in-house inefficiencies – especially when it is at the cost of hurting someone else.

The regulator must be bulletproof against any political meddling. In Europe alone, according to IATA, 78% of airports remained in majority public ownership and control in 2010. The conflict of interests is too obvious when operators and regulator sit at the same table and share the same boss. An independent regulatory body at European level would do the trick.

Europe faces intense global competition. In this context, the aviation sector is vital to stimulate the European economy. A healthy sector requires a fair deal for all players. We can’t afford having a bunch of narrow-minded and short-sighted political chieftains abusing it.



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