– On several occasions in recent weeks, the Independent Supervisory Authority for Airport Charges (ASI) has refused to approve the evolution of tariffs charged to airlines planned for 2019 by several French airports such as Nice (double-booked), Marseille and Paris before, for the latter two, the ASI validates their second proposal revised downward. Is there a hardening of the UPS or an airport drift?
Marianne Leblanc Laugier. There is no hardening on our part, maybe a little more vigilance. I remind you that royalties must cover only the cost of public services rendered. When this is not the case and the overall amount of royalties exceeds these costs, we are obliged to sound the alarm. We did it in Nice, Paris and Marseille. These last two airports reformulated a new proposal revised downwards that we accepted: + 1% against nearly + 3% originally proposed for ADP and -0.3% against + 2.6% for Marseille. As for Nice, we had to refuse the second tariff proposal for various reasons. As the regulations take us there, so it is the ASI that will set the Nice rates.
– Concerning ADP, the DGAC (General Directorate of Civil Aviation) indicated that it "did not fully share the recitals of the ASI" when it refused to approve the first tariff proposal which was nevertheless compatible with the economic regulation contract (CRE) of the manager of Paris airports. Others claimed that you exceeded your rights by invoking a high weighted average cost of capital (WACC) for this refusal. In other words, for simplicity, the profitability was excessive while the proposed rates were below the threshold authorized by this regulatory contract. What do you answer?
M.L.L In fact, the disagreement was that the ASI is reviewing the fair return on capital invested as it is doing to certify rates. When we look at the applicable texts, we see that in article R 224 3–4 of the Civil Aviation Code the ASI ensures that the tariffs and their modulations comply with the general rules applicable to fees. However, concerning these rules, Article L.6325-1 of the Transport Code states that "the amount of the fees takes into account the remuneration of the invested capital". In other words, the overall revenue from these fees can not exceed the cost of the service rendered. And in order to calculate the latter, we must of course evaluate how much is the remuneration of the invested capital. It's indisputable. The skills or non-skills of the UPS are sometimes discussed because the laws governing the economic regulation of airports can be interpreted differently.
– Have you feared recourse in the event of a second non-homologation of ADP's tariffs?
M.L.L. No. We are not afraid of recourse, which is a recognized right of the parties and which makes it possible to specify the rules applicable to the regulation. Moreover, we have among the members of the Authority a master of petitions to the Council of State well versed in these subjects. The ASI does not wish to take decisions that could be questioned and annulled by the Council of State. We are very vigilant about the law as we are vigilant about the economic dimension of our decisions. ASI is not there to prevent economic operators from having a certain profitability. We are only enforcing the general rules that apply to royalties. We accepted ADP's second tariff proposal simply because the remuneration of capital invested in the regulated scope resulting from the reduction of royalties within the limit of the cost of services rendered had become acceptable.
– Do you really have the means to measure the return on capital employed?
M.L.L. Yes of course. The ASI has real expertise because of its members. In particular, we have a lecturer in corporate finance at the Sorbonne School of Management, who teaches his students every day how to calculate CMPCs. We are armed to do our assessments. We use financial data of the operator on which we undertake to respect the confidentiality.
– By launching its privatization project for ADP under the Pact Act, the government has indicated that it will increase the weight of regulation to avoid, in particular, a sharp rise in airport charges? What do you think of the bill and the various amendments proposed?
M.L.L. As I said, the skills of the UPS and their limitations are the subject of much discussion. The government has introduced an amendment in the Pact bill, which is currently being debated in Parliament, stating that when there is a signed CRE, tariff developments will be deemed to comply with the general rules on royalties.
– With this system, the first proposal of ADP would have been accepted?
M.L.L. Without a doubt.
– Can we talk about strengthening regulation?
M.L.L. Not exactly, but such an amendment consolidates a CRE by providing stability in terms of royalty evolution. However, to the extent that the ASI will have an assent to issue on the next draft CRE (a priori 2021-2025), we can not say that the ASI would be totally deprived of its powers. But it will be necessary to be vigilant on the content of these contracts. Everything will be played during their preparation. This is even very interesting for operators because a CRE provides visibility in the medium term. On the other hand, the question of the duration of the CRE can arise. Five years as is the case in the current CRE, it is too long. Elements that determine the rate curves may change during this period, such as airport investments, airline flights, inflation and many other contextual elements. The ASI had proposed a mid-term review. CREs.
– Are there any points that make you feel bad about the ADP privatization bill?
M.L.L. There are no things that bother us. There is, however, one point that introduces the idea that in the absence of a CRE signature between the state and ADP, it is the minister who will have the power to set the tariffs. The UPS would only have a validation role. This principle does not seem to me to be in line with the European Directive of 11 March 2009 on airport charges, according to which the power to approve or set charges is at the level of ASI. But this point can still be discussed, the law has not yet been passed.
– As you said, you have twice refused to approve Nice airport fares and you will have to set the fares. How is it going to happen?
M.L.L. We are launching a consultation of the airlines and their representatives on the Economic Advisory Committee (Cocoéco) and other stakeholders (airport, DGAC). In this context, we expose our methodology, the level of royalties that must not be exceeded, with appendices including our assessments of the overall WACC and the new regulated scope introduced by the decree of July 12, 2018. This will probably induce a lower prices. Around March 10 we will set the rates. From this date, the airport will have one month to implement them. They will come into effect mid-April or May 1 if the airport and the users prefer a beginning of month for their accounting.
– Bordeaux airport is also in its second year without homologation, where are we?
M.L.L. We warned them that they would not be late, otherwise we could set the rates. The airport officials told us that they would hold their advisory committee before March 1, for a tariff application on July 1.