The Commission for Aviation Regulation (CAR) regulates certain aspects of the aviation and travel trade sectors in Ireland. The principal function of the Commission is to set the maximum level of airport charges at Dublin Airport by its operator, daa.
CAR required a range of independent expert inputs to inform the process of the fifth determination governing the maximum level of airport charges that daa may levy at Dublin Airport during the period 1 January 2020 – 31 December 2024. One critical input in the regulatory process was a requirement for a review of all aspects of the current operating cost base at the airport and a forecast of future operating costs for the coming period.
What we did
Reviewing operational efficiency to set the baseline:
Working with CEPA, Taylor Airey supported CAR in the review of the operating costs of Dublin Airport, focusing on the efficiency of the Airport’s key operational processes such as a security, customer services, airside operations, police and fire services. Through a combination of analysing the evolution of historic costs, bottom up modelling, and benchmarking against other airports, we were able to assess the efficiency of the current baseline.
Building operating cost forecasts:
We used a combination of techniques to create forward projections for operating costs in all areas. In some cases we applied elasticities to cost drivers to model future years whereas in others, particularly security, we used comprehensive bottom-up modelling. In each case we identified the potential for operating efficiencies and considered the impacts of capital investment in new infrastructure and technology on future opex.
Outcome and Benefit
Our opex analysis was a key component informing the regulator’s determination:
Our analysis was a key component which informed the regulator’s ultimate decision-making in setting the fifth determination. The rigour and detail of our analysis meant that challenges to our conclusions were limited in their effect and our views on the potential for operating efficiencies were welcomed by airport users.
“Many thanks for all the great work over the last few months. Your work was very high quality and has provided us with a really robust position in what was a complex building block this time around” – Luke Manning, Economist, Commission for Aviation Regulation.
Services we offered
With our Partners, Taylor Airey provided the following services to our client:
- Operating cost analysis, based on in depth airport operations expertise
- Cost modelling