Cost-efficiency - Denmark

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PRB monitoring

▪ The en route 2022 actual unit cost of Denmark was 72.63 €2017, 13% higher than the determined unit cost (64.47 €2017).3 The terminal 2022 actual unit cost was 169.47 €2017, 3.9% higher than the determined unit cost (163.07 €2017).

▪ The en route 2022 actual service units (1,282K) were 12% lower than the determined service units (1,455K).

▪ Despite variations within cost categories, the en route 2022 actual total costs were in line (-0.7 M€2017, or -0.7%) with the determined. Even though actual costs in nominal terms were slightly higher than determined mainly due to higher staff costs, actual costs in real terms were slightly lower than determined as a result of higher-than-expected inflation.

▪ NAVIAIR spent 19.4 M€2017 in 2022 related to costs of investments, 4.1% less than determined (20.2 M€2017), due to postponed and delayed investments.

▪ The en route actual unit cost incurred by users in 2022 was 74.37€, while the terminal actual unit cost incurred by users was 186.19€.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 190 100 NA NA
Determined costs 190 96 98 99
Difference costs 0 4 NA NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.4% 1.5% 1.6%
Determined inflation index NA 104.2 105.7 107.4
Actual inflation rate NA 8.5% NA NA
Actual inflation index NA 112.5 NA NA
Difference inflation index (p.p.) NA +8.2 NA NA

AUC vs. DUC

In 2022, the en route AUC was +12.7% (or +60.75 DKK2017, +8.17 €2017) higher than the planned DUC. This results from the combination of significantly lower than planned TSUs (-11.9%) and slightly lower than planned en route costs in real terms (-0.7%, or -4.9 MDKK2017, -0.7 M€2017). It should be noted that actual inflation index in 2022 was +8.2 p.p. higher than planned.

En route service units

The difference between actual and planned TSUs (-11.9%) falls outside the ±10% threshold foreseen in the traffic risk sharing mechanism. The resulting loss of en route revenues is therefore shared between the ANSP and the airspace users, with the ANSP (NAVIAIR) bearing a loss of -3.2 M€2017.

En route costs by entity

Actual real en route costs are -0.7% (-0.7 M€2017) lower than planned. This is the result of lower costs for the MET service provider (-8.8%, or -0.4 M€2017) and the NSA/EUROCONTROL (-4.8%, or -0.5 M€2017). The costs for the main ANSP, NAVIAIR were slightly higher than planned (+0.4%, or +0.3 M€2017).

En route costs for the main ANSP at charging zone level

Slightly higher than planned en route costs in real terms for NAVIAIR in 2022 (+0.4%, or +0.3 M€2017) result from the combination of:
- Staff costs that remained in line with the plan in real terms. In nominal terms, staff costs were +7.9% higher than plan mainly due to the “not realised effects from the implementation of the Strategy and more extra shifts”;
- Lower other operating costs (-5.8%), mainly due to the inflation index impact (+8.2 p.p.) since in nominal terms other operating costs were slightly higher than planned (+1.6%);
- Lower depreciation (-5.7%), resulting from “fewer and postponed investments, and later date of entry into operation than planned”;
- Higher cost of capital (+6.4%), resulting from the use of higher share of financing through equity than planned (54.8% instead of 46.3%) to compute actual cost of capital;
- No deduction through exceptional costs in 2022, which was foreseen in the PP reflecting a “top-down” approach applied by Denmark to contribute to the objective of cost-efficiency;
Note: It is understood that the relevant figures for 2022 will be slightly updated in the Monitoring Report 2023 following the correction of 2022 actual costs in the November 2023 reporting tables.

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

AUCU components (€/SU) – 2022
Components of the AUCU in 2022 €/SU
DUC 66.31
Inflation adjustment 4.10
Cost exempt from cost-sharing −0.93
Traffic risk sharing adjustment 4.71
Traffic adj. (costs not TRS) 1.45
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues −1.20
Application of lower unit rate 0.00
Total adjustments 8.13
AUCU 74.44
AUCU vs. DUC +12.3%
Cost exempt from cost sharing by item - 2022 €'000 €/SU
New and existing investments −791.7 −0.62
Competent authorities and qualified entities costs −795.5 −0.62
Eurocontrol costs 388.7 0.30
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 −1,198.4 −0.93

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2022 (553.10 DKK or 74.37 €) is +12.1% higher than the nominal DUC (493.19 DKK or 66.31 €). The difference between these two figures (+59.91 DKK/SU or +8.06 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+30.49 DKK/SU or +4.10 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (-7.47 DKK/SU or -1.00 €/SU);
- the addition of the traffic risk sharing adjustments (+35.00 DKK/SU or +4.71 €/SU);
- the addition of the traffic adjustment (+10.82 DKK/SU or +1.45 €/SU) for the costs not subject to traffic risk sharing; and
- the deduction of the other revenues (-8.93 DKK/SU or -1.20 €/SU).
The share of regulatory result in the AUCU (before the deduction of other revenues) is 0.5%.

Regulatory result (RR)

NAVIAIR net gain on activity in the Denmark en route charging zone in the year 2022

NAVIAIR reported a net loss of -34.1 MDKK, as a combination of a loss of -7.6 MDKK arising from the cost sharing mechanism, with a loss of -26.4 MDKK arising from the traffic risk sharing mechanism.

NAVIAIR overall regulatory results (RR) for the en route activity

Ex-post, the overall RR taking into account the net loss from the en route activity mentioned above (-34.1 MDKK) and the actual RoE (+35.2 MDKK) amounts to +1.1 MDKK (0.2% of the en route revenues). The resulting ex-post rate of return on equity is 0.2%, which is lower than the 5.0% planned in the PP.