Transport

Aviation

Economics plays a vital role in understanding many key issues in aviation, including whether there is a need for regulation, different methods of regulating airport charges, potential mechanisms to allocate scarce capacity, the impact of competition and liberalization, and promoting the cost-effective provision of key services. NERA’s experts have extensive experience in applying insights from economics to issues relating to airports, airlines, and air traffic control. We have played a leading role in airport privatizations and regulatory reform in several countries.

NERA works on a wide range of issues relating to aviation:

• Design of regulatory frameworks. NERA provides world-class expertise in the design of regulatory frameworks. We have advised on the need for regulation and the most effective forms of regulation, in advance of airport privatizations. In addition,we have reviewed and recommended improvements to existing regulatory frameworks.
• Implementation of economic regulation. Our extensive knowledge and practical experience makes us ideally placed to advise international airports and regulators during price cap reviews. We advise on issues including asset valuation principles, single/dual till approaches, the structure of price cap formulae, the cost of capital, efficiency benchmarking, and financial sustainability.
• Due diligence studies. NERA provides commercial and regulatory due diligence advice to investors in the aviation industry. We advise on potential market or competitive developments, and their implications for the firm(s) being sold. Where parts of the industry are subject to economic regulation, we explain how the current regulatory framework operates, highlighting the risks arising and protections provided, and consider potential future developments.
• Industry-wide policy. NERA is a leading adviser on industry-wide policy in aviation. We provide economic expertise on important public policy issues such as reform of airport slot allocations and the impact of further liberalizing airline markets.
• International arbitration. NERA is a leading provider of economic expertise to support participants in complex cases. We have examined business plans, critically reviewed damages claims, and advised on asset valuation in a number of international and national arbitration cases relating to airports.
• Competition. NERA's experts have extensive experience with a wide range of competition issues relating to both airports and airlines. This includes work on airline mergers in both US and European jurisdictions, advice on barriers to competition for airlines, and assistance in a competition review of airport charges. We also advise on whether incentives offered to airlines by airports are consistent with the "private investor in a market economy" principle applied in State Aid cases.
• Appraisal and evaluation. We have excellent knowledge of the principles of appraisal and their application, and have undertaken cost-benefit analyses and economic impact studies of major international airports and proposed new developments. We also advise on the adequacy of existing guidance and possible improvements to evaluation and appraisal methodologies.