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    Cost-efficiency - Estonia

    Download Report

    Terminal charging zone

    Unit cost (KPI#1)

    Actual and determined data
    Total costs - nominal (M€) 2020-2021 2022 2023 2024
    Actual costs 5 3 NA NA
    Determined costs 5 2 3 3
    Difference costs 0 0 NA NA
    Inflation assumptions 2020-2021 2022 2023 2024
    Determined inflation rate NA 2.5% 2.1% 1.9%
    Determined inflation index NA 110.4 112.7 114.8
    Actual inflation rate NA 19.4% NA NA
    Actual inflation index NA 132 NA NA
    Difference inflation index (p.p.) NA +21.6 NA NA
    Focus on unit cost

    AUC vs. DUC

    In 2022, the terminal AUC was +6.0% (or +7.76 €2017) higher than the planned DUC. This results from the combination of significantly higher than planned terminal costs in real terms (+6.2%, or +0.1 M€2017) and slightly higher than planned TNSUs (+0.2%). It should be noted that actual inflation index in 2022 was +21.6 p.p. higher than planned.

    Terminal service units

    The difference between actual and planned TNSUs (+0.2%) falls inside the ±2% dead band. Hence gain of additional terminal revenues is kept by the ANSP .

    Terminal costs by entity

    Actual real terminal costs are +6.2% (+0.1 M€2017) higher than planned. This is the result of higher costs for the main ANSP, EANS (+5.2%, or +0.1 M€2017) and the NSA (+11.6%, or +0.04 M€2017).

    Terminal costs for the main ANSP at charging zone level

    Higher than planned terminal costs in real terms for EANS in 2022 (+5.2%, or +0.1 M€2017) result from:
    - Significantly lower staff costs (-8.5%),
    - Higher other operating costs (+3.4%),
    These changes should be seen in the light of the high actual inflation in 2022 (19.4%). Note that in nominal terms, staff costs and other operating costs are much higher than planned (respectively +9% and +24%). Based on additional information to terminal reporting tables provided by Estonia, this is due to the fact that “a higher proportion of actual costs were allocated to terminal costs” due to a significant loss of en route traffic.
    - Slightly higher depreciation (+1.3%),
    - Significantly higher cost of capital (+128.8%) due to an additional equity injection that increased the weighted average cost of capital rate (%) and the share of financing through equity.

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

    AUCU components (€/SU) – 2022
    Components of the AUCU in 2022 €/SU
    DUC 137.76
    Inflation adjustment 16.60
    Cost exempt from cost-sharing 3.80
    Traffic risk sharing adjustment 0.00
    Traffic adj. (costs not TRS) -0.05
    Finantial incentives 0.00
    Modulation of charges 0.00
    Cross-financing 0.00
    Other revenues -35.51
    Application of lower unit rate 0.00
    Total adjustments -15.15
    AUCU 122.60
    AUCU vs. DUC -11.0%
    Cost exempt from cost sharing by item - 2022 €'000 €/SU
    New and existing investments 27.7 1.59
    Competent authorities and qualified entities costs 38.5 2.21
    Eurocontrol costs 0.0 0.00
    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 66.2 3.80
    Focus on AUCU

    The actual terminal unit cost incurred by airspace users (AUCU) in respect of activities performed in 2022 (127.88 €) is -7.2% lower than the nominal DUC (137.76 €). The difference between these two figures (-9.88 €/SU) is due to:
    - the positive inflation adjustment resulting from higher than planned inflation (+16.60 €/SU);
    - the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (+9.07 €/SU);
    - the deduction of the traffic adjustment (-0.05 €/SU) for the costs not subject to traffic risk sharing; and
    - the deduction of the other revenues (-35.51 €/SU).
    The share of the regulatory result in the AUCU (before the deduction of other revenues) is 7.4%.

    Regulatory result (RR)

    Focus on regulatory result

    EANS net gain on activity in the Estonia terminal charging zone in the year 2022

    EANS reported a net gain of +0.034 M€, as a combination of a gain of +0.031 M€ arising from the cost sharing mechanism, with a gain of +0.003 M€ arising from the traffic risk sharing mechanism.

    EANS overall regulatory results (RR) for the terminal activity

    Ex-post, the overall RR taking into account the net gain from the terminal activity mentioned above (+0.034 M€) and the actual RoE (+0.177 M€) amounts to +0.211 M€ (8.5% of the terminal revenues). The resulting ex-post rate of return on equity is 8.7%, which is higher than the 7.3% planned in the PP.

     
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