Practical Difficulties in Airport Benchmarking - The Case of Dublin Airport

Abstract

This chapter provides an overview of some of the practical issues facing a regulatory office seeking to use benchmarking to set a price cap at an airport. The focus is on operating costs, rather than commercial revenues (under a single till) or capital costs. Top­down as well as bottom­up approaches are considered. To focus on the practical, the chapter describes and seeks to draw lessons from the specific experience of Dublin airport regulation, where many different approaches to benchmarking have been investigated over the years. For reasons of space, the chapter concentrates on the particular difficulties of introducing benchmarking for the first time (Dublin in 2001) before turning to a more recent set of investigations (Dublin in 2014). It is concluded that benchmarking is possible, though not straightforward, provided that data can be assembled, that parties engage on the evidence, and that the economists working on the project have learned the lessons of regulatory gaming implied by the incentives facing parties to a price cap review.