Economic Regulation
 
 

The Airports Company Act provides for an independent statutory body, the Regulating Committee, to oversee the economic regulation of Airports Company South Africa. The principal objectives of the Regulating Committee are to:

  • Restrain Airports Company South Africa from abusing its monopoly position, without placing undue restrictions on its commercial activities

  • Promote the reasonable interests and needs of the users of Airports Company South Africa airports

  • Promote the safe, efficient, economical and profitable operation of Airports Company South Africa airports

  • Encourage timely improvement of facilities at Airports Company South Africa airports so as to satisfy anticipated demand

  • Ensure Airports Company South Africa is able to finance its obligations and has a reasonable prospect of earning a commercial return

Under the Act, the Regulating Committee regulates Airports Company South Africa in two ways. Firstly, it limits aeronautical charges for each year of the Permission period for any or all of Airports Company South Africa’s airports. Aeronautical charges are determined for a period of five years, with a two-year overlap. In effect, the application is made every three years. Charges at the beginning of the period take into account the anticipated revenues of all activities undertaken by Airports Company South Africa, whereby profits from non-aeronautical activities are used to e aeronautical charges. This is referred to as ‘single till’ regulation. Secondly, it prescribes service standards at any or all of Airports Company South Africa’s airports.

Airport charges are regulated through the use of a price cap formula, CPI-X, which limits the increase in a basket of revenue weighted tariffs to a rate of inflation less an X-factor (efficiency factor). The X-factor is determined by applying the building blocks methodology whereby each block of Airports Company South Africa’s activities is identified, namely operating costs, depreciation, return on capital and taxation. From this revenue requirement, the non-aeronautical revenues are subtracted to determine the aeronautical revenue requirement, which is divided by anticipated volumes to determine the level of the anticipated unit price increases. Airports Company South Africa charges users for the use of its facilities, in accordance with these regulatory provisions. The categories of airport charges are:

  • Landing fees

  • Passenger service charges

  • Aircraft parking fees

Landing fees vary according to the origin of the aircraft and the aircraft weight across three categories, namely: domestic, regional and international. Similarly passenger service charges vary according to the destination of the passenger. While for aircraft parking, the combination weight of the aircraft and the duration parked (to the extent that time exceeds four hours) and the parking stand  utilised will be considered in determining the parking charges. See the Government Gazette for future details.  

Business excellence

Airports Company South Africa is focused on delivering core services more cost-effectively and more efficiently through:

  • Delivering efficient capacity expansion in order to match forecast passenger growth and meet the traffic requirements for the future, 

  • Developing process excellence and continuous improvement, 

  • Constantly re-engineering processes to manage costs and increase revenues, 

  • Ensuring the delivery of the regulatory commitments by spending capital sums approved by the Regulator in the Permission Document and maintaining appropriate infrastructure to deliver optimal customer service, 

  • Focusing on Broad-Based Black Economic Empowerment and Socio-Economic Development, and 

  • Improving efficiency in processing of passengers and goods by facilitating seamless end-to-end service.