Policies On Airport And Air Navigation Charges

Published Date: 02 Nov 2017

There are different regulations in the world of aviation first of all there is the international civil aviation organization ICAO what the foundation is for the regulation of aviation where policies of airport and air navigation charges in is described. In order to describe the incentive of an airport an airport can be sorted in dual till or single till. At last there is a comparing between the airports in the EU and USA where the difference will described.

1.6.1 ICAO

The civil aviation organization is related with charges in different ways but three important documents are: the article 15 of the Chicago convention, document 9082: policies on airport charges and air navigation services and document 9562: the airport economics manual.

Article 15 of the Chicago convention

In article 15 of the Chicago convention is the policy concerning the airport and air navigation service described. In this the following three principles are important:

There will be uniform conditions held for the airport and air navigation facilities in a contracting state for all other contracting states

The burden imposed by a contracting state shall not be higher for the use of airport en air navigation facilities than for aircrafts of a non-contracting state

There should be no charges are imposed for flying over, arrival or departure. However, all states have their right for declared the cost they provide of their services. The content of this is that a aircraft not have to paid for a license to fly over but paid for the services the state provided/given

Also, article 15 says that all the member states must publish their airport and air navigation charges and passed them to the ICAO. Ass well the article says that the ICAO by representation of a contracting state can review the charges and give a recommendation.

Document 9082: policies on airport and air navigation charges

Additional en more detailed policies of airport and air navigation charges is found in document 9082: policies on airport and air navigation charges. Those recommendations established by large international conventions and are a strong moral commitment to ensure that airport and air navigation cover the costs. In documents 9082 the airport and airport navigation are separated.

By airport charges will be explained witch charges related to the airport en where they consist of. Among airport charges are:

Parking and hangar charges

Passenger service charges

Security charges

Noise-related charges

Emissions-related aircraft charges(to address local air quality (LAQ)problems at or around airports)

Fuel concession fees

By air navigation charges will be explained witch charges a related to air navigation service en where they consist of. Among airport navigation are:

Air approach and aerodrome control charges

Route air navigation service charges

Charges for air navigation services used by aircraft when not over provider state

The revenues that where coming from airport and air navigation charges covered the aeronautical revenues

ICAO document 9562: The airport economics manual

The object/purpose of ICAO document 9562: The airport economics manual is to guide the state, airport managing and service, and designated charging authorities to help in the implementation of ICAO document9082:policies on airport charges and for an efficient management of airports.

This document is composed of the following seven chapters

ICAO policies on airport charges

Organizational structure of airports

Airport financial management

Determining the cost basis for charging purpose

Charges on air traffic and their collection

Development and management of non-aeronautical activities

Financing airport infrastructure

1.6.2 single, dual till

There are different economical regulation methods but they can separated in two main groups dual till and single till. The groups can be sorted by the incentive they offer towards costs minimization. Dual till what have a very low degree of incentive what includes the rate of return regulation and single till what have a high degree of incentive what includes the price cap regulation.

Also the revenue can split up in two main groups aeronautical en non-aeronautical. Where in the aeronautical group the revenue comes from charges of landing, parking from the airplane, passenger service, security, emissions and noise-related charges. Is in the non-aeronautical group aimed at the revenue from commercial activities like retail, car parking and catering. Aeronautical and non-aeronautical revenues can also defined as revenues that where undertaken by an airport itself are aeronautical and revenues that where undertaken by other handling agents ore airlines are non-aeronautical. Also can be concluded that non-aeronautical revenues grow faster than aeronautical revenues. Which it may be wise if the aeronautical costs not can be covered some of the non-aeronautical operations are included by the airport itself so maybe the aeronautical costs will covered

1.6.2a Dual till

If an airport follow the principle of the dual till it separates the aeronautical en non-aeronautical revenue en will it generated the price of airport charges only from the profit from the aeronautical service. Under aeronautical service consist: .charges.

The dual till can also called or compared with the rate of return regulation(RoR) or cost based regulation) which means that the airport set a charge price based on the costs that are made on the aeronautical services and investments. When the return on investment higher is than the capital cost that are made. than the profit will separated under the participating business. The aeronautical revenue must be clearly indicated so that it is clear that the revenue return to aeronautical purpose

1.6.2b Single till

If an airport follow the principle of the single till the aeronautical en non-aeronautical revenues both generated the price of the airport charge. In the single till is the airline and passenger the key factor to generate the ability to develop the non-aeronautical revenue. What brings lower prices as result of reduction from the airport charges as well the increase the non-aeronautical revenues en decrease the charges to the airline. what means that the profit from non-aeronautical revenues will used for investments at the aeronautical side.

Single till also called price cap regulation what means that the there is an upper limit imposed on the average cost of the provided services. And with the charges price defined in the beginning of each charges period there may can be arise profit if there is a reduction in the cost in this period. This will encourage the efficiency en innovation because in the next period the average cost of the provide service are decrease what will reduce the price of the charges.

1.6.3 EU compared with USA

If the Europa is compared with the USA is it obvious that the most difference are found in the way they are operated en financed. Their two importan costs elements: the staff or labor costs and the capital charges what includes interest paid and depreciation. Where in the USA have a much higher capital charges than staff costs in contrast with the EU what have a higer staff costs than capital chargers.

At airports in the EU the staff or labor costs is the largest costs element. In sometimes its even higher as the airport it self take care over facilities that other aiports have carried out like passenger or baggage handling, catering, the operating of tax-freeshops or other shopping faccilities. These areas are very labor intensetive so how more the aiport is involved in these aerea’s the more the staff or labor costs wil become. The second major costs element for EU airports is the capital charges these can be reduced if the government give grants en the airport don’t charges the governments assets and depreciation. What results in a lower level of capital charges and is it possible that the staff or labor costs wil be higher than the capital charges.

The facilities that in the most of the world are operated by the airport itself are in the USA rented or leased to airlines or other companies. In some cases the whole therminal is leased or rented by an airline. In the case the facilities are given to an airline or other companie those are non-aeronautical. this will reduce the staff or labor costs for the airports. The most airports in the USA are not directly engaged to passenger or baggage handling but leave those and equal serviec to the airline or the other companies. The second a lot of the USA airports made them development from revenues froms interst whether it is profitable. So the importants revenues for airports in the USA is the capital charges this is enhanced because the staf en labor cost are a less important costs element.

other differences between the EU and USA is the land lord principle in the USA wich meaning that the most USA airports renting or leasing out land and facilities. Which results in lower direct operations costs but higer maintance and repair costs for the airport. This made that the maintance and repair costs in the USA airports are more than those in the EU airports

and in the EU it is obliged by the IATA that the airport the passenger charges direcelty claimed by the airline and where the airline the price can calculate through the passenger. In the rest of the world the passenger paid the passenger charges directly to the aiport when they departes. This made the price for airlines that land in th EU more expensive than in the rest of the world