Cost-efficiency - Sweden

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PRB monitoring

▪ The 2020 actual service units (1,676K) were 56% lower than the actual service units in 2019 (3,789K).

▪ Sweden increased total costs in 2020 by 50 M€2017 (+23%) compared to 2019 actual costs, being the Member States with the largest cost increase. Moreover, Sweden did not achieve the cost-efficiency targets in 2019.

▪ Sweden increased staff costs by 58 M€2017 (+42%) due to notably higher pension costs. The increase is a lump sum and would only affect 2020.

▪ LFV spent 15 M€2017 in 2020 related to cost of investments, 21% less than planned in the 2019 draft performance plan (19 M€2017). The decrease is due to the fact that Swedish government decided to charge a WACC without return on equity.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 496 NA NA NA
Determined costs 502 240 245 232
Difference costs -6 NA NA NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 4.8% 2.2% 1.7%
Determined inflation index NA 112.4 114.9 116.9
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 -3.4% (or -45.65 SEK2017, -4.74 €2017) lower than the planned DUC. This results from the combination of higher than planned TSUs (+1.8%) and lower than planned en route costs in real terms (-1.6%, or
-72.8 MSEK2017, -7.6 M€2017).

En route service units

The difference between actual and planned TSUs (+1.8%) 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 -1.6% (-7.6 M€2017) lower than planned. This is driven by the main ANSP, LFV (-1.0%, or -3.8 M€2017), other ANSPs (-5.4%, or -2.3 M€2017) and NSA/EUROCONTROL (-3.0%, or -1.6 M€2017), while the actual costs of the MET service provider are close to the determined costs (+0.6%, or +0.1 M€2017).

En route costs for the main ANSP at charging zone level

The lower than planned en route costs in real terms for LFV in 2020-2021 reflect a combination of:
- slightly lower staff costs (-0.6%); due to lower than planned pension costs. In addition, “staff costs were reduced by the revenues for staff participating in projects or other parts not financed by en route charges”;
- lower other operating costs (-3.9%); “mainly due to lower costs for maintaining the systems and pandemic effects of less travelling and consultants”;
- lower depreciation costs (-2.6%); reflecting “delayed investments as a result of the pandemic and lack of staff”; and,
- significantly higher cost of capital (+16.7%); linked with a higher interest rate on debt used to compute the cost of capital.

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

AUCU components (€/SU) – 2020-2021
Components of the AUCU in 2020-2021 €/SU
DUC 137.43
Inflation adjustment 0.57
Cost exempt from cost-sharing -1.45
Traffic risk sharing adjustment 0.00
Traffic adj. (costs not TRS) -0.33
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues -2.87
Application of lower unit rate 0.00
Total adjustments -4.08
AUCU 133.35
AUCU vs. DUC -3.0%
Cost exempt from cost sharing by item - 2020-2021 €'000 €/SU
New and existing investments -748.9 -0.22
Competent authorities and qualified entities costs -128.6 -0.04
Eurocontrol costs -1,359.2 -0.39
Pension costs -2,791.9 -0.80
Interest on loans 0.0 0.00
Changes in law 0.0 0.00
Total cost exempt from cost risk sharing -5,028.7 -1.45

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in the combined year 2020-2021 (1,376.92 SEK or 133.35 €) is
-2.9% lower than the nominal DUC (1,418.75 SEK or 137.43 €) which includes DUC initially charged: 588.37 SEK or 57.13 €; and to be charged: 830.38 SEK or 80.29 €. The difference between these two figures (-41.83 SEK/SU or -4.08 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+5.79 SEK/SU or +0.57 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (-14.68 SEK/SU or -1.45 €/SU);
- the deduction of the traffic adjustment (-3.39 SEK/SU or -0.33 €/SU) for the costs not subject to traffic risk sharing to be reimbursed in future years; and,
- the deduction of the other revenues (-29.55 SEK/SU or -2.87 €/SU).
The share of regulatory result in the AUCU (before the deduction of other revenues) is 2.3%.

Regulatory result (RR)

LFV net gain on en route activity in the Sweden charging zone in the combined year 2020-2021
LFV generated a net gain of +76.5 MSEK, as a combination of a gain of +6.9 MSEK arising from the cost sharing mechanism and a gain of +69.6 MSEK arising from the traffic risk sharing mechanism.
LFV 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 (+76.5 MSEK) and the actual RoE (+5.1 MSEK) amounts to +81.6 MSEK (2.1% of the en route revenues). The resulting ex-post rate of return on equity is 7.6%, which is higher than the 0.5% planned in the PP.