Cost-efficiency - Denmark

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PRB monitoring

▪ The 2020 actual service units (717K) were 57% lower than the actual service units in 2019 (1,679K).

▪ Denmark increased total costs in 2020 by 1.4 M€2017 (+2%) compared to 2019 actual costs. The main driver of the increase is staff costs, with costs being 5.4 M€2017 higher (+10%), due to costs associated with voluntary resignations. Moreover, cost of capital increased by 2.5 M€2017 (+63%).

▪ Exceptional costs decreased by 7.2 M€2017 (-354%), the reason being unclear since the NSA stated that such decrease is supposed to reflect cost reductions that have not yet been decided.

▪ NAVIAIR shows a perfect execution of its investment plans, with 2020 actual cost of investments being equal to the investment plans (21 M€2017).

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 190 NA NA NA
Determined costs 190 96 98 99
Difference costs 0 NA NA NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.4% 1.5% 1.6%
Determined inflation index NA 104.2 105.7 107.4
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 AUC was lower than the planned DUC (by -1.4%, or -12.82DKK2017, or -1.72€2017). This results from the combination of higher than planned TSUs (+1.2%) and lower than planned en route costs in real terms (by -0.2%, or -2.6 MDKK2017, or -0.3 M€2017).

En route service units

The difference between actual and planned TSUs (+1.2%) falls within the ±2% dead band. Hence the resulting additional revenue is kept by the ANSPs (see items 10 to 14).

En route costs by entity

Actual real en route costs for 2020-2021 are -0.2% (-2.6 MDKK2017, or -0.3 M€2017) lower than planned. This result is driven by the MET service provider (-5.0%, or -0.5 M€2017) while the main ANSP, NAVIAIR costs are +0.1% (+0.1 M€2017) higher than planned.

En route costs for the main ANSP at charging zone level

Slightly higher then planned en route costs in real terms for NAVIAIR in 2020-2021 (+0.1%, or +0.1 M€2017 higher) results from:
- higher staff costs (+0.9%), “mainly driven by costs for extra shifts primarily COVID-related absence;”
- lower other operating costs (-4.3%), “driven by low travel expenses, lower costs on administrative IT, and on fewer costs for training, e.g. COVID-related delays;”
- slightly lower depreciation (-0.1%);
- lower cost of capital (-4.9%), duo to “fewer costs of debt related to lower renegotiated interest on subordinated loan;”
- lower deduction as exceptional costs (-11.4%, as amounts are negative it reflects an increase of total costs), due to no deduction in 2021 actuals;
- lower deduction for VFR exempted flights (-0.4%).

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

AUCU components (€/SU) – 2020-2021
Components of the AUCU in 2020-2021 €/SU
DUC 127.64
Inflation adjustment 0.35
Cost exempt from cost-sharing −0.37
Traffic risk sharing adjustment 0.00
Traffic adj. (costs not TRS) −0.23
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues −1.81
Application of lower unit rate 0.00
Total adjustments −2.07
AUCU 125.57
AUCU vs. DUC −1.6%
Cost exempt from cost sharing by item - 2020-2021 €'000 €/SU
New and existing investments −541.6 −0.36
Competent authorities and qualified entities costs 486.1 0.32
Eurocontrol costs −479.1 −0.32
Pension costs −18.0 −0.01
Interest on loans 0.0 0.00
Changes in law 0.0 0.00
Total cost exempt from cost risk sharing −552.6 −0.37

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in combined year 2020-2021 for Denmark en route charging zone (937.51DKK or 125.95€) is -1.3% lower than the nominal DUC (950.12DKK or 127.64€) which includes DUC initially charged: 475.09DKK (or 63.83€); and to be charged: 475.03DKK (or 63.81€). The difference between these two figures (-12.61DKK/SU or -1.69€/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+2.60DKK/SU or +0.35€/SU);
- the deduction of the traffic adjustment (-1.75DKK/SU or -0.23€/SU) for the costs not subject to traffic risk sharing to be reimbursed in future years;
- the deduction of the other revenues (-13.50DKK/SU or -1.81€/SU).

The share of regulatory result in the AUCU is 6.6%.

Regulatory result (RR)

NAVIAIR net gain on en route activity in the Denmark charging zone in the combined year 2020-2021
NAVIAIR’s net gain amounts to +1.8 M€, as a combination of a loss of -0.1 M€ arising from the cost sharing mechanism and a gain of +1.9 M€ arising from the traffic risk sharing mechanism.
NAVIAIR 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 (+1.8 M€) and the actual RoE (+10.4 M€) amounts to +12.2 M€ (7.5% of the en route revenues). The resulting ex-post rate of return on equity is 5.9%.