Cost-efficiency - Slovakia

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PRB monitoring

▪ Slovakia encountered the largest decrease in service units across Member States, with 2020 actual service units (475K) being 63% lower than the actual service units in 2019 (1,295K).

▪ Slovakia had the highest percentage of savings in 2020 across all Member States, decreasing total costs in 2020 by 20 M€2017 (-32%). The reduction is primarily driven by a decrease of 17 M€2017 (-41%) in staff costs, resulting from freezing of recruitment, non-payment of bonuses, decrease in social fund contribution and education costs and salaries.

▪ LPS SR spent 6.8 M€2017 related to cost of investments in 2020, 12% less than planned in the 2019 draft performance plan (7.7 M€2017). The reduction can be explained by a decrease in depreciation and cost of capital, due to a decrease in both the asset base and the WACC.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 85 NA NA NA
Determined costs 93 59 62 64
Difference costs -7 NA NA NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.9% 2.0% 2.1%
Determined inflation index NA 110.9 113.1 115.5
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 (73.90 €2017) was lower by -8.2% (or -6.61 €2017) compared with the DUC (80.51 €2017). This was mainly the effect of the lower than planned en route costs in real terms (-7.9%, -6.9 M€2017).

En route service units

The difference between actual and planned TSU (+0.3%) is within the ±2% dead-band, which results in additional revenues kept by the ANSPs.

En route costs by entity

Actual en route costs are -7.9% lower than planned (-6.9 M€2017), which is mainly driven by the lower costs for LPS (-8.3%, or -6.2 M€2017). Actual 2020-2021 costs for METSP and NSA/EUROCONTROL were also lower, by -11.7% (or -0.4 M€2017) and -3.9% (-0.4 M€2017) respectively.

En route costs for the main ANSP at charging zone level

The lower than planned en route costs in real terms for LPS (-8.3%, or -6.2 M€2017) result from:
- lower than planned, by -13.5% (or -6.5 M€2017) en route staff costs reasulted from freezing of variable wage components in 2020 and continuation of this measure in 2021;
- lower, by -6.8% (or -0.9 M€2017) en-route other operating costs due to continuation of the cost containment measures such as limited travel expenses, trainings and consumption of materials, etc.
- higher, by +14.2% (or +1.3 M€2017) depreciation, however, as explained by LPS, the depreciation was in line with the investment plan and the difference came from the deduction in 2021 of the carry-overs of unrealized investments in RP2; and,
- lower costs of capital by -0.7% (or -0.03 M€2017).

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

AUCU components (€/SU) – 2020-2021
Components of the AUCU in 2020-2021 €/SU
DUC 85.37
Inflation adjustment 0.52
Cost exempt from cost-sharing -0.36
Traffic risk sharing adjustment 0.00
Traffic adj. (costs not TRS) -0.04
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues -4.82
Application of lower unit rate 0.00
Total adjustments -4.70
AUCU 80.67
AUCU vs. DUC -5.5%
Cost exempt from cost sharing by item - 2020-2021 €'000 €/SU
New and existing investments 0.0 0.00
Competent authorities and qualified entities costs -141.8 -0.13
Eurocontrol costs -251.9 -0.23
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 -393.7 -0.36

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in the combined year 2020-2021 (80.67€) is -5.5% lower than the nominal DUC (85.37€), which includes DUC initially charged: 47.71€; and to be charged: 37.66€. The difference between these two figures (-4.70€/SU) is due to:
- the positive inflation adjustment (+0.52€/SU) resulting from higher than planned inflation;
- the deduction of the adjustment for costs exempt from cost-sharing (-0.36€/SU), to be reimbursed to airspace users in future years;
- the deduction of traffic adjustments (-0.04€/SU), for the costs not subject to traffic risk sharing to be reimbursed to airspace users in future years; and,
- the deduction of other revenues (-4.82€/SU).

The share of the regulatory result in the AUCU (before the deduction of other revenues) is 12.3%.

Regulatory result (RR)

LPS net gain on activity in the en route charging zone in the combined year 2020-2021
LPS’s net gain amounts to +7.2 M€, mainly due to a gain of +6.9 M€ from the cost sharing mechanism and a gain of +0.2 M€ from the traffic risk sharing mechanism.
LPS 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 (+7.2 M€) and the actual RoE (+3.8 M€) amounts to +11.0 M€ (13.8% of the en route revenues). The resulting ex-post rate of return on equity is 13.1% which is higher than the 4.6% planned in the PP.