Cost-efficiency - Italy

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▪ The 2020 actual service units (3,990K) were 60% lower than the actual service units in 2019 (10,060K).

▪ In 2020, Italy reduced total costs by 62 M€2017 (-10%) compared to 2019 actual costs. Italy capped its cost of capital in order to achieve such result. Moreover, Italy reduced staff costs by 30 M€2017 (-9%) due to an increase of days of holidays, the suspension of the management incentive scheme, a decrease of overtime, costs for unused holidays, trips allowances and social security contribution.

▪ ENAV spent 77 M€2017 in 2020 related to costs of investments, 38% less than planned in the 2019 draft performance plan (124 M€2017). Such decrease is partially due the national restrictions in relation 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 1,186 NA NA NA
Determined costs 1,197 651 674 689
Difference costs -12 NA NA NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.8% 1.2% 1.2%
Determined inflation index NA 105.3 106.6 107.9
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 (-3.5%, or -4.36€2017). This results from the combination of higher than planned TSUs (+2.8%) and lower than planned en route costs in real terms (-0.8%, or -9.4 M€2017).

En route service units

The difference between actual and planned TSUs (+2.8%) falls outside of the ±2% dead band. Hence, the resulting gain is shared between the ANSP and airspace users, with the ANSP retaining an amount of 22.2 M€ (see items 10 to 14).

En route costs by entity

Actual real en route costs for 2020-2021 are -0.8% (-9.4 M€2017) lower than planned. This reflects the results across all the entities in the charging zone: main ANSP - ENAV (-0.6%, or -5.5 M€2017), other ANSP - ITAF (-0.9%, or -0.8 M€2017) and the NSA/EUROCONTROL (-3.5%, or -3.1 M€2017).

En route costs for the main ANSP at charging zone level

The lower than planed en route costs in real terms for ENAV in 2020-2021 reflects a combination of:
- slightly lower staff costs (-0.1%);
- lower other operating costs (-3.1%), which are understood to reflect costs savings for utilities and communications, external services and maintenance of non-operational equipment;
- lower depreciation costs (-1.5%); and,
- higher cost of capital (+2.2%), resulting from the use of higher than planned average interest rate on debts (from 1.9% to 3.04%) to compute the WACC.

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

AUCU components (€/SU) – 2020-2021
Components of the AUCU in 2020-2021 €/SU
DUC 125.99
Inflation adjustment 0.10
Cost exempt from cost-sharing -0.80
Traffic risk sharing adjustment -0.59
Traffic adj. (costs not TRS) -0.61
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues -0.46
Application of lower unit rate 0.00
Total adjustments -2.35
AUCU 123.64
AUCU vs. DUC -1.9%
Cost exempt from cost sharing by item - 2020-2021 €'000 €/SU
New and existing investments -4,376.8 -0.45
Competent authorities and qualified entities costs -718.0 -0.07
Eurocontrol costs -3,075.2 -0.31
Pension costs 0.0 0.00
Interest on loans 322.2 0.03
Changes in law 0.0 0.00
Total cost exempt from cost risk sharing -7,847.8 -0.80

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in combined year 2020-2021 (123.86€) is -1.7% lower than the nominal DUC (125.99€) which includes DUC initially charged: 65.81€; and to be charged: 60.18€. The difference between these two figures is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+0.10€/SU), to be charged to the airspace users in future years.
- the deduction of the other revenues (-0.46€/SU);
- the deduction of the traffic risk sharing adjustments (-0.59€) and the traffic adjustment (-0.61€/SU) for the costs not subject to traffic risk sharing to be reimbursed in future years;
- and the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (-0.58€/SU).
The share of regulatory result in the AUCU is 9.1%.

Regulatory result (RR)

ENAV net gain on en route activity in the Italian charging zone in the combined year 2020-2021
ENAV’s net gain amounts to +25.3 M€, as a combination of a gain of +3.1 M€ arising from the cost sharing mechanism and a gain of +22.2 M€ arising from the traffic risk sharing mechanism.
ENAV 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 (+25.3 M€) and the actual RoE (+85.0 M€) amounts to +110.3 M€ (10.7% of the en route revenues). The resulting ex-post rate of return on equity is 7.4%, which is higher than the 5.7% planned in the PP.