Cost-efficiency - Netherlands

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PRB monitoring

▪ The 2020 actual service units (1,480K) were 55% lower than the actual service units in 2019 (3,314K).

▪ The Netherlands increased total costs in 2020 by 3.7 M€2017 (+2%) compared to 2019 actual costs. Moreover, the Netherlands did not achieve the cost-efficiency targets in 2019.

▪ The cost increase is mainly due to the increase in MUAC staff costs due to high indexation and ATCOs negotiations on remuneration and the new Polaris building that has been put into operation.

▪ LVNL spent 20 M€2017 in 2020 related to costs of investments, 2% less than planned in the 2019 draft performance plan (21 M€2017). The underspending is due to issues with practical execution of projects 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 474 NA NA NA
Determined costs 478 246 253 259
Difference costs −4 NA NA NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.5% 1.6% 1.6%
Determined inflation index NA 108.6 110.3 112.1
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 -3.1% (or -4.64 €2017) lower than the planned DUC. This results from the combination of higher than planned TSUs (+1.7%) and lower than planned en route costs in real terms (-1.4%, or -6.5 M€2017).

En route service units

The difference between actual and planned TSUs (+1.7%) 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 -1.4% (-6.5 M€2017) lower than planned. This is driven by the lower costs across all the entities in the charging zone: main ANSP - LVNL
(-1.1%, or -3.6 M€2017), other ANSP - MUAC (-0.6%, or -0.5 M€2017), MET service provider (-2.7%, or -0.5 M€2017) and NSA/EUROCONTROL (-4.6%, or -1.9 M€2017).

En route costs for the main ANSP at charging zone level

The lower than planned en route costs in real terms for LVNL (-1.1%, or -3.6 M€2017) result from:
- lower staff costs (-1.5%) reflecting cost-containment measures relating to staff wages;
- slightly higher other operating costs (+0.7%);
- lower depreciation (-2.5%) reflecting delays in projects implementation due to the impact of Covid-19;
- lower cost of capital (-15.1%) resulting from the lower than planned asset base and lower than planned average interest on debts; and,
- slightly lower than planned deduction for VFR exempted flights (-0.7%).

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

AUCU components (€/SU) – 2020-2021
Components of the AUCU in 2020-2021 €/SU
DUC 159.49
Inflation adjustment 0.88
Cost exempt from cost-sharing −0.87
Traffic risk sharing adjustment 0.00
Traffic adj. (costs not TRS) −0.34
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues −7.58
Application of lower unit rate 0.00
Total adjustments −7.91
AUCU 151.58
AUCU vs. DUC −5.0%
Cost exempt from cost sharing by item - 2020-2021 €'000 €/SU
New and existing investments −799.6 −0.26
Competent authorities and qualified entities costs −253.0 −0.08
Eurocontrol costs −1,610.0 −0.53
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 −2,662.6 −0.87

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in the combined year 2020-2021 (151.58€) is -5.0% lower than the nominal DUC (159.49€) which includes DUC initially charged: 73.99€; and to be charged: 85.50€. The difference between these two figures (-7.91€/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+0.88€/SU);
- the impact of adjustments resulting from the costs exempt from cost-sharing mechanism (-0.87€/SU);
- the deduction of the traffic adjustment (-0.34€/SU) for the costs not subject to traffic risk sharing to be reimbursed in future years; and,
- the deduction of the other revenues (-7.58€/SU).

The share of regulatory result in the AUCU (before the deduction of other revenues) is 2.3%.

Regulatory result (RR)

LVNL net gain on activity in the Netherlands en route charging zone in the combined year 2020-2021
LVNL generated a net gain of +8.8 M€, resulting from a gain of +3.1 M€ arising from the cost sharing mechanism and a gain of +5.7 M€ arising from the traffic risk sharing mechanism.
LVNL overall regulatory results (RR) for the en route activity
Ex-post, the overall RR is equal to the net gain from the en route activity mentioned above (+8.8 M€) and corresponds to 2.5% of the en route revenues.
The RoE cannot be computed for LVNL, as its assets are entirely financed through debt.