Airports Company South Africa (ACSA) and the regulating committee

Deputy Minister Cronin on Airports Company South Africa (ACSA) and the regulating committee

4 May 2010

With regard to the current stand-off between Airports Company South Africa (ACSA) and its regulating committee, the Department of Transport strongly supports the principle of an independent airport regulator.

There are two critical features of this independence that need to be appreciated. In the first instance, it is an independence that must be protected not just against unwarranted government interference, but also against undue interference from other major stakeholders in the aviation sector, including ACSA and critically, the airline industry.

In the second instance, the operational independence of the regulator in deciding upon airport tariffs should not be confused with open-ended, go it alone policy independence. For instance, the Reserve Bank has a constitutionally entrenched independence in deciding upon interest rates, but that independent decision-making occurs within the framework of policy determined by Treasury (in this case, inflation targeting).

Transport Minister Sibusiso Ndebele has made it abundantly clear that he has no right, nor intention to decide for the airport regulator on what percentage tariff increase or decrease to declare. That is for the regulator to decide independently. However, the minister has both the right and obligation to play an active role in clarifying the policy framework upon which any tariff decision is to be made. Clearly, that policy must seek to maintain an effective balance between ensuring the viability and ongoing upgrading of our airports and air traffic control infrastructure, on the one hand, while ensuring that our airport charges do not undermine airline viability and therefore passenger numbers, on the other.

ACSA has taken the regulator to court on the grounds that it acted illegally in failing to consult with the minister prior to gazetting the most recent revised tariff determination. As this matter is before the courts, it would be inappropriate at this time to say more about the recent interactions between the minister and regulator.

However, events over the last few months have highlighted several challenges that need to be addressed. Without necessarily imputing anything, we need to safeguard South African public strategic interests against the danger of corporate capture of a national regulator by business interests, including non-South African business interests.
The current regulatory entity is, also, a part-time structure and the question arises as to whether, given the complexity of the task, we should not look to developing an independent regulator with a more full-time capacity and budget to match.

Issued by: Department of Transport
4 May 2010