Cost-efficiency - Ireland
PRB monitoring
▪ The 2020 actual service units (1,988K) were 57% lower than the actual service units in 2019 (4,607K).
▪ In 2020 Ireland reduced total costs by 8.4 M€2017 (-7%) compared to 2019 actual costs. The main driver of the reduction is the 4 M€2017 lower staff costs (-6%), due to the reduction of the working week, employment wage subsidy scheme and the reduction of overtime.
▪ The cost of capital decreased by 2.5 M€2017(-58%), due to a lower WACC.
▪ IAA ANSP spent 12 M€2017 in 2020 related to costs of investments, 53% less than planned in the 2019 draft performance plan (25 M€2017). The decrease is due to a lower WACC and a lower asset base.
En route charging zone
Unit cost (KPI#1)
| Actual and determined data |
| Total costs - nominal (M€) |
2020-2021 |
2022 |
2023 |
2024 |
| Actual costs |
205 |
NA |
NA |
NA |
| Determined costs |
207 |
124 |
129 |
130 |
| Difference costs |
−2 |
NA |
NA |
NA |
| Inflation assumptions |
2020-2021 |
2022 |
2023 |
2024 |
| Determined inflation rate |
NA |
1.9% |
2.0% |
2.0% |
| Determined inflation index |
NA |
105.2 |
107.3 |
109.4 |
| 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
The AUC for the combined year 2020-2021 (45.48 €2017) was lower by -3.7% (or -1.76 €2017) from DUC (47.25 €2017). This is the result of higher than planned TSUs (+2.5%) and lower than planned en route costs in real terms (by -1.3%, or -2.7 M€2017).
En route service units
The difference between actual and planned TSUs (+2.5%) falls between the ±2% dead band and +10% threshold. Hence the resulting gain will be split between the airspace users and the ANSPs.
En route costs by entity
Actual real en route costs for 2020-2021 are -1.3 % (-2.7 M€2017) lower than planned. This result is driven by the main ANSP (IAA) with the costs lower by -1.6% (-2.7 M€2017) and NSA/EUROCONTROL with costs lower by -2.1% (-0.5 M€2017). Actual 2020-2021 costs for METSP were higher by +3.9% (+0.5 M€2017).
En route costs for the main ANSP at charging zone level
Overall, the en route costs in real terms for IAA in 2020-2021 were lower by -1.6% (-2.7 M€2017) comparing to the determined costs from the performance plan. The 2020 actual costs are not equal to the 2020 determined costs by the decision of Irish NSA to limit the level of determined costs for 2020.The lower 2020-2021 costs result from:
- higher staff costs (+1.2%, +1.2 M€2017) resulting from the decision to unwind some of the staff cost containment measures due to the traffic increase at the end of 2021;
- lower other-operating costs (-9.5%) due to “the cost containment programme yielding better results than originally anticipated on non-staff Opex, relative to the NSAs target for 2021, which set based on benchmarked cost savings of other ANSPs”;
- slightly lower depreciation, by -0.5% or -0.1 M€2017 and higher costs of capital, by +16.3% or +0.6 M€2017 due to the changes to the CAPEX delivery profile. Additionally, NSA set a lower WACC in the revised Performance Plan which resulted in lower WACC used for the calculation of the final UR to be charged for both 2020 and 2021.
- lower exceptional costs (-2.0%) and slightly 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 |
48.14 |
| Inflation adjustment |
0.15 |
| Cost exempt from cost-sharing |
−0.22 |
| Traffic risk sharing adjustment |
−0.13 |
| Traffic adj. (costs not TRS) |
−0.21 |
| Finantial incentives |
0.00 |
| Modulation of charges |
0.00 |
| Cross-financing |
0.00 |
| Other revenues |
−3.32 |
| Application of lower unit rate |
0.00 |
| Total adjustments |
−3.74 |
| AUCU |
44.40 |
| AUCU vs. DUC |
−7.8% |
| Cost exempt from cost sharing by item - 2020-2021 |
€'000 |
€/SU |
| New and existing investments |
−443.3 |
−0.10 |
| Competent authorities and qualified entities costs |
11.7 |
0.00 |
| Eurocontrol costs |
−540.4 |
−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 |
−971.9 |
−0.22 |
The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in the combined year 2020-2021 (44.40€) is -7.8% lower than the nominal DUC (48.14€) that includes DUC initially charged: 30.52€; and to be charged: 17.62€. The difference between these two figures (-3.74€/SU) resulted from:
- the positive inflation adjustment resulting from higher than planned inflation (+0.15€/SU);
- the deduction of the adjustment for costs exempt from cost-sharing (-0.22€/SU), to be reimbursed to the airspace users in future years;
- the deduction of the traffic risk sharing adjustment of -0.13€/SU to be reimbursed to the airspace users in the future years;
- the deduction of traffic adjustment (-0.21€/SU), for the costs not subject to traffic risk sharing to be reimbursed to the airspace users in future years; and
- the deduction of other revenues (-3.32€/SU), which include also the return of unspent CAPEX allowances relating to RP2.
The share of the regulatory result in the AUCU (before the deduction of other revenues) is 4.6%.
IAA net gain on activity in the en route charging zone in the combined year 2020-2021
IAA’s net gain amounts to +6.0 M€ mainly due to the gains of +3.6 M€ from the traffic risk sharing mechanism and the gains of +2.4 M€ from cost sharing mechanism.
IAA 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 (+6.0 M€) and the actual RoE (+4.2 M€) amounts to +10.2 M€ (5.9% of the en route revenues). The resulting ex-post rate of return on equity is 12.5% which is higher than the 4.2% planned in the PP.