How we helped
Christchurch Airport was subject to a light-handed regulatory regime, requiring it to negotiate with airlines in good faith subject to information disclosure rules and non-enforceable regulatory opinion issued by the Commerce Commission. Castalia helped the Airport with the negotiations. We developed a pricing framework which embedded a set of regulatory good practice approaches to calculate reasonable and efficient charges, thus providing a principled basis for the negotiations. The model calculated regulatory cost building blocks, estimated efficient costs, and calculated charges that would recover costs and a reasonable return on capital. To address concerns that increased charged would reduce use of the airport, we analyzed airline yields for Christchurch services and assessed how new charges would affect demand from the airlines. This included analysis of how different charging structures would affect airlines choices about aircraft types used and whether or not to open new routes.