Cost-efficiency - Croatia

PRB monitoring

▪ The en route 2022 actual unit cost of Croatia was 34.32 €2017, 36% lower than the determined unit cost (53.35 €2017). Croatia does not have a terminal charging zone.

▪ The en route 2022 actual service units (2,229K) were 41% higher than the determined service units (1,582K).

▪ The en route 2022 actual total costs were 7.9 M€2017 (-9.4%) lower than determined, as all cost categories decreased. It was mainly attributable to lower staff costs (-5.6 M€2017, or -11%). The NSA explained that it is mainly due to not fully realised recruitment plan. The decreases in real terms were also a result of significantly higher-than-expected inflation.

▪ Croatia Control spent 10.5 M€2017 in 2022 related to costs of investments, 3.4% less than determined (10.9 M€2017), mainly due to the postponement of investments.

▪ As for the previous monitoring year, the discrepancies regarding total costs were significant. As mentioned last year, the PRB invites the NSA to analyse the discrepancies, identify their reasons, and the Member State to take immediate, adequate, and proportionate actions.

▪ The en route actual unit cost incurred by users in 2022 was 41.73€.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 162 87 NA NA
Determined costs 171 86 94 97
Difference costs −9 0 NA NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.1% 1.9% 2.2%
Determined inflation index NA 104.3 106.3 108.7
Actual inflation rate NA 10.7% NA NA
Actual inflation index NA 116.4 NA NA
Difference inflation index (p.p.) NA +12.1 NA NA

AUC vs. DUC

In 2022, the en route AUC was -35.7% (or -142.04 HRK2017, -19.04 €2017) lower than the planned DUC. This results from the combination of significantly higher than planned TSUs (+40.9%) and significantly lower than planned en route costs in real terms (-9.4%, or -59.1 MHRK2017, -7.9 M€2017). It should be noted that actual inflation index in 2022 was +12.1 p.p. higher than planned.

En route service units

The difference between actual and planned TSUs (+40.9%) falls outside the ±10% threshold foreseen in the traffic risk sharing mechanism. The resulting gain of additional en route revenues is therefore shared between the ANSP and the airspace users, with the ANSP (Croatia Control) retaining an amount of +2.8 M€2017.

En route costs by entity

Actual real en route costs are -9.4% (-7.9 M€2017) lower than planned. This is the result of lower costs for the main ANSP, Croatia Control (-10.2%, or -8.0 M€2017) and higher costs for the NSA/EUROCONTROL (+1.1%, or +0.07 M€2017).

En route costs for the main ANSP at charging zone level

Significantly lower than planned en route costs in real terms for Croatia Control in 2022 (-10.2%, or -8.0 M€2017) result from:
- Significantly lower staff costs (-12.3%), due to not fully realized recruitment plan. This result is also impacted by higher actual inflation index (+12.1 p.p.).
- Significantly lower other operating costs (-7.5%), mainly due to inflation index impact (+12.1 p.p.) since in nominal terms other operating costs are higher than planned by 3.2%.
- Significantly lower depreciation (-5.4%), due to lower than planned realization of capex due to logistic and production delays and decommissioning of some CC’s assets.
- Lower cost of capital (-4.7%), due to lower than expected assets base.
- Significantly lower deduction for VFR exempted flights (-11.8%).

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

AUCU components (€/SU) – 2022
Components of the AUCU in 2022 €/SU
DUC 54.59
Inflation adjustment 3.48
Cost exempt from cost-sharing 0.61
Traffic risk sharing adjustment −12.20
Traffic adj. (costs not TRS) −2.17
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues −2.57
Application of lower unit rate 0.00
Total adjustments −12.86
AUCU 41.73
AUCU vs. DUC −23.6%
Cost exempt from cost sharing by item - 2022 €'000 €/SU
New and existing investments −366.5 −0.16
Competent authorities and qualified entities costs −56.3 −0.03
Eurocontrol costs 174.6 0.08
Pension costs 0.0 0.00
Interest on loans 0.0 0.00
Changes in law 1,601.2 0.72
Total cost exempt from cost risk sharing 1,353.0 0.61

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2022 (314.27 HRK or 41.73 €) is -23.6% lower than the nominal DUC (411.32 HRK or 54.61 €). The difference between these two figures (-97.05 HRK/SU or -12.89 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+26.19 HRK/SU or +3.48 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (+4.40 HRK/SU or +0.58 €/SU);
- the deduction of the traffic risk sharing adjustments (-91.95 HRK/SU or -12.21 €/SU);
- the deduction of the traffic adjustment (-16.33 HRK/SU or -2.17 €/SU) for the costs not subject to traffic risk sharing; and
- the deduction of the other revenues (-19.35 HRK/SU or -2.57 €/SU).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is 18.4%.

Regulatory result (RR)

Croatia Control net gain on activity in the Croatia en route charging zone in the year 2022

Croatia Control reported a net gain of +102.5 MHRK, as a combination of a gain of +77.8 MHRK arising from the cost sharing mechanism, with a gain of +24.7 MHRK arising from the traffic risk sharing mechanism.

Croatia Control 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 (+102.5 MHRK) and the actual RoE (+34.0 MHRK) amounts to +136.5 MHRK (19.6% of the en route revenues). The resulting ex-post rate of return on equity is 25.4%, which is higher than the 6.3% planned in the PP.