The impact of regulation on the airport industry: the Italian case

In this chapter, we discuss the role of airport regulation and its potential impact on the airport manager’s performance. The aim is to provide a framework that can be useful to assess the effect of a change in the regulatory framework in a specific country. With this goal, we apply our analysis to the Italian airport industry. In 2013, a new institutional framework was introduced with the establishment of an independent regulator, the Italian transport regulation authority. In 2014, the Authority modified the regulatory mechanism by introducing a negotiation procedure between airport managers and airline users, in application of the EU Directive 2009/12/EC, as well as new pricing schemes and incentives to improve efficiency. Those regulatory changes are not a singleton in Europe but, on the contrary, are in line with most of the EU countries’ experiences in airport regulation. We assess the impact this regulatory change has had on the average costs of affected airport. Our analysis suggests that the average costs of airports that adopted the new regulatory framework significantly decline as a result of the change in regulation compared to the performance of airports which do not apply the new regulatory approach yet. All in all, results suggest that the new regulatory approach has increased the overall efficiency of the Italian airport system.