Cost-efficiency - Croatia

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PRB monitoring

▪ The 2020 actual service units (929K) were 58% lower than the actual service units in 2019 (2,192K).

▪ Croatia had more staff retiring in 2020 compared to 2019, managing as well to reduce total costs in 2020 by 3 M€2017 (-3%) compared to 2019 actual costs. The reduction in costs is driven by a reduction of 4 M€2017 (-20%) in other operating costs, due to the postponement and freeze of ATCO trainings, missions, maintenance and utilities.

▪ Croatia Control spent 16 M€2017 in 2020 related to cost of investments, 8% less than planned in the 2019 draft performance plan (18 M€2017). The decrease in cost of investments is due to the postponement of significant number of investments, in order to preserve liquidity due to COVID-19.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 162 NA NA NA
Determined costs 171 86 94 97
Difference costs −9 NA NA NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.1% 1.9% 2.2%
Determined inflation index NA 104.3 106.3 108.7
Actual inflation rate NA NA NA NA
Actual inflation index NA NA NA NA
Difference inflation index (p.p.) NA NA NA NA

AUC vs. DUC

In the combined year 2020-2021, the en route AUC (486.67 HRK2017 or 65.22 €2017) was lower by -6.1% (-31.62 HRK2017 or -4.24 €2017) comparing with the DUC (518.29 HRK2017 or 69.46 €2017). This was mainly the effect of the lower than planned en route costs in real terms (-5.8%, -73.0 MHRK2017 or -9.8 M€2017).

En route service units

The actual TSUs slightly exceed the planned level (+0.3%) and is within the ±2% dead-band which result in additional gains kept by the ANSP.

En route costs by entity

Actual en route costs are -5.8% lower than planned (-9.8 M€2017) which is mainly driven by the lower costs for Croatia Control (-6.1% or -9.6 M€2017). Actual 2020-2021 NSA/EUROCONTROL costs are lower by -1.7% (or 0.2 M€2017).

En route costs for the main ANSP at charging zone level

The lower than planned en route costs in real terms for Croatia Control (-6.1%, or -9.6 M€2017) result from:
- lower than planned, by -5.4% (-5.5 M€2017) en route staff costs mainly resulting from the hiring freeze and salary cuts;
- lower en-route other operating costs (by -10.8% or -2.7 M€2017), due to the limitation of expenses, including staff trainings, business trips and maintenance expenses;
- lower, by -6.0% (-1.4 M€2017) depreciation due to redefinition of CAPEX planning;
- slightly higher, by +0.5% (+0.04 M€2017) cost of capital; and,
- lower deduction of costs of exempted VFR flights (-18.9%).

Actual unit cost incurred by the users (AUCU) (PI#1)

AUCU components (€/SU) – 2020-2021
Components of the AUCU in 2020-2021 €/SU
DUC 70.21
Inflation adjustment 0.52
Cost exempt from cost-sharing −0.59
Traffic risk sharing adjustment 0.00
Traffic adj. (costs not TRS) −0.03
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues −4.28
Application of lower unit rate 0.00
Total adjustments −4.39
AUCU 65.83
AUCU vs. DUC −6.2%
Cost exempt from cost sharing by item - 2020-2021 €'000 €/SU
New and existing investments −1,260.4 −0.51
Competent authorities and qualified entities costs 91.0 0.04
Eurocontrol costs −286.2 −0.12
Pension costs 0.0 0.00
Interest on loans 0.0 0.00
Changes in law 0.0 0.00
Total cost exempt from cost risk sharing −1,455.6 −0.59

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in the combined year 2020-2021 (495.99HRK or 65.86€) is -6.2% lower than the nominal DUC (529.03HRK or 70.24€) which includes DUC initially charged: 345.94HRK or 45.94€; and to be charged: 183.09HRK or 24.30€. The difference between these two figures (-33.04HRK/SU or -4.39€/SU) is due to:
- the positive inflation adjustment (+3.92HRK/SU or +0.52€/SU) resulting from higher than planned inflation;
- the deduction of the adjustment for costs exempt from cost-sharing (-4.48HRK/SU or -0.60€/SU), to be reimbursed to the airspace users in future years;
- the deduction of traffic adjustment (-0.24HRK/SU or -0.03€/SU), for the costs not subject to traffic risk sharing to be reimbursed in future years; and
- the deduction of the other revenues (-32.24HRK/SU or -4.28€/SU), which also represent the costs associated with the provision of services by CCL in the airspace of Bosnia and Herzegovina, and are excluded from the CUR to avoid double charging (these costs are the part of BHANSA chargeable cost base).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is 9.8%.

Regulatory result (RR)

Croatia Control net gain on activity in the en route charging zone in the combined year 2020-2021
Croatia Control’s net gain amounts to +69.1 MHRK or +9.2 M€, mainly due to gains of +65.2 MHRK from the cost sharing mechanism, and gains of +3.9 MHRK from the traffic risk sharing mechanism.
Croatia Control overall regulatory results (RR) for the en route activity
Ex-post, the overall RR taking into account the net gain from the en route activity mentioned above (+9.2M€) and the actual RoE (+57.1 MHRK or +7.6 M€) amounts to +126.2 MHRK or + 16.8 M€ (10.4% of the en route revenues). The resulting ex-post rate of return on equity is 13.5% which is higher than the 6.1% planned in the PP.