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Setting a regulated airport charge: single till or dual till?

You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.

Case timer

00:00

Target length:

1. Read the prompt aloud

Read it slowly, then pause. Let the candidate ask questions before they structure.

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?

2. Answers to clarifying questions

This case has no scripted clarifying answers. Answer from the prompt, and say "assume what you think is reasonable" if the prompt does not cover it.

3. A model structure

Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.

Charge per passenger = revenue the airport is allowed, minus what the till counts, divided by passengers
- Allowed revenue = return on the asset base + depreciation + operating costs
- Which income offsets it: single till (all income) or dual till (airport side only)
- Divide by the passenger forecast
- Traffic risk: who pays if fewer passengers come

4. The working, step by step

Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.

Step 1: Return on the asset base
What a strong candidate does: 5 percent of GBP 10,000 million.
Allowed return (GBP million): 10,000 × 0.05 = 500
Step 2: Allowed revenue
What a strong candidate does: Return plus depreciation plus operating costs.
Allowed revenue (GBP million): 500 + 400 + 1,100 = 2,000
Step 3: Charge under a single till
What a strong candidate does: Shop and parking income of GBP 800 million is taken off first.
Charge per passenger, single till (GBP): (2,000 - 800) ÷ 60 = 20
Step 4: Charge under a dual till
What a strong candidate does: The airport side alone needs GBP 1,650 million, and the airport keeps its shop profit.
Charge per passenger, dual till (GBP): 1,650 ÷ 60 = 27.5
Step 5: Shortfall if traffic falls
What a strong candidate does: Under a single till at GBP 20, 10 million fewer passengers means less charge income.
Yearly shortfall at 50 million passengers (GBP million): (60 - 50) × 20 = 200

The recommendation to listen for

At the end, say: "The CEO walks in. What is your recommendation?"

The regulator should set the charge at about GBP 20 per passenger under a single till, because shop and parking income exists only because airlines bring passengers, and counting it cuts the charge from GBP 27.50 to GBP 20. First, the GBP 2,000 million of allowed revenue still covers a 5 percent return, depreciation and costs, so investors are paid for the assets. Second, a lower charge helps keep airlines and routes at the airport. The risk is traffic: if only 50 million passengers come, the airport is GBP 200 million short each year, so the rules must say who bears it. As a next step, add a traffic band that shares gains and losses between the airport and its users, and test the charge against a low passenger forecast.

Risks a strong answer names: A single till weakens the airport's reason to grow shop income; A shock such as a pandemic or closed airspace can break any five-year settlement.

Score the candidate

Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.

This case has no exhibit. Score Exhibit reading on how the candidate used the data you gave them: did they pick out the number that matters and say what it means?

Structuring

1: No clear structure, or a memorized framework that does not fit the problem.
3: A sensible structure, but with some overlap, a gap, or no clear priority.
5: A structure built for this problem, with no overlap and no gaps, a stated hypothesis, and a clear first step.

Math

1: Frequent errors, no units, or needed heavy help to finish.
3: Right answers but slow or messy working, or one error caught late.
5: Accurate and clearly narrated, with units, a sense check, and what the number means.

Exhibit reading

1: Read the chart aloud without finding the number that matters.
3: Found the key number but gave only part of the so-what.
5: Pulled the right number quickly and said what it means for the case.

Synthesis

1: Summarized what was done, with no clear answer.
3: Gave an answer, but with weak reasons or no next step.
5: Answer first, then two or three reasons with numbers, the main risk, and next steps.

Communication

1: Hard to follow: long silences, no signposting.
3: Clear most of the time, with some rambling.
5: Calm and concise, signposted each step, and checked in with the interviewer.

Total

0 out of 25

Score all five criteria to see the band and the feedback template.

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Swap roles and run the next case, so you both practise answering and scoring.

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