Cost-efficiency - Germany

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PRB monitoring

▪ The 2020 actual service units (6,792K) were 55% lower than the actual service units in 2019 (15,155K).

▪ Germany reduced total costs in 2020 by only 21 M€2017 (-2%) compared to 2019 actual costs. The reduction was mainly driven by a 33 M€2017 lower cost of capital (-58%), resulting from a lower WACC due to a change in capital structure.

▪ Germany increased other operating costs by 18 M€2017 (+15%) due to “many unspecified individual measures”.

▪ DFS spent 87 M€2017 in 2020 related to costs of investments, 3% less than planned in the 2019 draft performance plan (90 M€2017).The reduction is mainly driven by a decrease in costs related to existing investments. Moreover, most of new major investments (which were planned for later years of the reference period) have been either postponed or the planning has been revised in order to achieve long term costs savings in response 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 1,877 NA NA NA
Determined costs 1,935 977 1,010 1,034
Difference costs −59 NA NA NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.1% 1.5% 1.7%
Determined inflation index NA 107.2 108.8 110.6
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 was -4.2% (or -5.46€2017) lower than the planned DUC. This results from the combination of slightly higher than planned TSUs (+0.8%) and lower than planned en-route costs in real terms (-3.4%, or -64.0 M€2017).

En route service units

The difference between actual and planned TSUs (+0.8%) falls within the ±2% dead band. Hence the resulting additional en-route revenue is kept by the ANSPs.

En route costs by entity

Actual real en route costs are -3.4% (-64.0 M€2017) lower than planned. This is driven by the main ANSP, DFS (-3.9%, or -60.8 M€2017), MUAC (-0.5%, or -0.7 M€2017), the MET service provider (+2.7%, or +0.7 M€2017) and the NSA/EUROCONTROL costs (-2.9%, or -3.1 M€2017).

En route costs for the main ANSP at charging zone level

The lower than planned en route costs in real terms for DFS (-3.9%, or -60.8 M€2017) result from:
- lower staff costs (-2.2%), due to “short-term measures to counter the effects of the Corona pandemic, such as suspension of new hires, partial suspension of operational training, and conclusion of a collective agreement to make personnel costs more flexible in the short term”;
- lower other operating costs (-4.7%), due to “a number of several smaller measures and components as travel-expense, education and training, allowance on receivables.”;
- slightly higher depreciation (+0.1%); and
- lower cost of capital (-68.2%), due to a positive financial result in 2021;
- exceptional items corresponding to the IFRS conversion effects in line with the plan (-0.5%).
Note: When expressed in €2017, the depreciation and cost of capital are not adjusted for inflation, in accordance with Article 26 of Regulation (EU) 2019/317.

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

AUCU components (€/SU) – 2020-2021
Components of the AUCU in 2020-2021 €/SU
DUC 134.83
Inflation adjustment 0.54
Cost exempt from cost-sharing −0.35
Traffic risk sharing adjustment 0.00
Traffic adj. (costs not TRS) −0.07
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues −2.29
Application of lower unit rate 0.00
Total adjustments −2.18
AUCU 132.65
AUCU vs. DUC −1.6%
Cost exempt from cost sharing by item - 2020-2021 €'000 €/SU
New and existing investments −71.9 0.00
Competent authorities and qualified entities costs −1,005.0 −0.07
Eurocontrol costs −2,132.5 −0.15
Pension costs −1,849.0 −0.13
Interest on loans 0.0 0.00
Changes in law 0.0 0.00
Total cost exempt from cost risk sharing −5,058.3 −0.35

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in combined year 2020-2021 (132.65€) is -1.6% lower than the nominal DUC (134.83€) which includes DUC initially charged: 73.32€; and to be charged: 61.51€. The difference between these two figures (-2.18€/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+0.54€/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (-0.35€/SU);
- the deduction of the traffic adjustment (-0.07€/SU) for the costs not subject to traffic risk sharing to be reimbursed in future years; and
- the deduction of the other revenues (-2.29€/SU).

The share of the regulatory result in the AUCU (befored the deduction of other revenues) is 3.9%.

Regulatory result (RR)

DFS net gain on activity in Germany en route charging zone in the combined year 2020-2021
DFS incurred a net gain of +74.6 M€, resulting from a gain of +61.4 M€ arising from the cost sharing mechanism and a gain of +13.2 M€ arising from the traffic risk sharing mechanism.
DFS overall regulatory results (RR) for the en route activity
Ex-post, the overall RR corresponds to the net gain from the en route activity mentioned above (+74.6 M€), as the RoE for DFS has been set to zero throughout RP3. The ex-post RR corresponds to 4.5% of the en route revenues). The resulting ex-post rate of return on equity is 7.0%, compared to 0% planned in the PP.