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Setting a regulated airport charge: single till or dual till?
The prompt
A regulator in the UK is setting the charge per passenger at Harbourfield Airport (fictional) for the next five years. The airport's regulated asset base is GBP 10,000 million and the allowed return is 5 percent a year. Depreciation is GBP 400 million a year and operating costs GBP 1,100 million. Shops, parking and property earn GBP 800 million a year. The forecast is 60 million passengers a year. What charge per passenger follows if shop income counts (single till), and what if the airport side alone needs GBP 1,650 million (dual till)? What if only 50 million passengers come?
Your interviewer will share data as you ask for it. Ask clarifying questions, state a hypothesis, then lay out your structure out loud before you calculate.
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