Cost-efficiency - Germany

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PRB monitoring

▪ The en route 2022 actual unit cost of Germany was 70.65 €2017, +4.6% higher than the determined unit cost (67.52 €2017). The terminal 2022 actual unit cost was 258.18 €2017, +19% higher than the determined unit cost (216.36 €2017).

▪ The en route 2022 actual service units (12,519K) were -8.2% lower than the determined service units (13,644K).

▪ In 2022, the en route actual total costs were 37 M€2017 lower (-4.0%) than determined. It was mainly attributable to the reduction in staff costs (-62 M€2017, or -9.0%) mainly due to less full-time equivalents than planned. However, the decrease was partially offset by the significant increase in cost of capital (+37 M€2017, or +198%).

▪ DFS spent 107 M€2017 in 2022 related to costs of investments, +6.5% more than determined (100 M€2017), driven by the substantial increase in cost of capital. The NSA explained that it is stemming from the negative development of commercial papers. At the same time the net book value of fixed assets decreased by -4.0%. The PRB invites the NSA to clarify the reasons and impact of these commercial papers and, if eligible, to present the costs in line with the Regulation.

▪ The en route actual unit cost incurred by users in 2022 was 79.70€, while the terminal actual unit cost incurred by users was 278.54€.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 1,877 1,000 NA NA
Determined costs 1,935 977 1,010 1,034
Difference costs -59 23 NA NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.1% 1.5% 1.7%
Determined inflation index NA 107.2 108.8 110.6
Actual inflation rate NA 8.7% NA NA
Actual inflation index NA 116.4 NA NA
Difference inflation index (p.p.) NA +9.1 NA NA

AUC vs. DUC

In 2022, the en route AUC was +4.6% (or +3.12 €2017) higher than the planned DUC. This results from the combination of significantly lower than planned TSUs (-8.2%) and lower than planned en route costs in real terms (-4.0%, or -36.9 M€2017). It should be noted that actual inflation index in 2022 was +9.1 p.p. higher than planned.

En route service units

The difference between actual and planned TSUs (-8.2%) falls outside the ±2% dead band, but does not exceed 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 (DFS) bearing a loss of -26.7 M€2017.

En route costs by entity

Actual real en route costs are -4.0% (-36.9 M€2017) lower than planned. This is the result of lower costs for the main ANSP, DFS (-3.0%, or -22.4 M€2017), the other ANSP (MUAC (Germany), -12.6%, or -12.6 M€2017) and the MET service provider (-25.9%, or -3.1 M€2017) and higher costs for the NSA/EUROCONTROL (+2.2%, or +1.2 M€2017).

En route costs for the main ANSP at charging zone level

Lower than planned en route costs in real terms for DFS in 2022 (-3.0%, or -22.4 M€2017) result from:
- Significantly lower staff costs (-8.3%), due to two opposite effects, from one side lower staff (FTE’s) compared to the planned while increasing costs for special payments in order to maintain capacity as part of the COVID-19 agreements,
- Significantly lower other operating costs (-13.0%), reflecting lower costs in projects like “Transmission paths”, “Data Center”, the construction of a new building at the DFS Campus Munich and lower costs relating to facility management and infrastructure.
- Slightly lower depreciation (-0.9%). None lower costs driver information has been provided.
- Significantly higher cost of capital (+199.8%), “caused by the negative development of the commercial papers.”

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

AUCU components (€/SU) – 2022
Components of the AUCU in 2022 €/SU
DUC 71.64
Inflation adjustment 5.66
Cost exempt from cost-sharing -0.03
Traffic risk sharing adjustment 3.17
Traffic adj. (costs not TRS) 0.45
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues -1.19
Application of lower unit rate 0.00
Total adjustments 8.06
AUCU 79.70
AUCU vs. DUC + 11.3%
Cost exempt from cost sharing by item - 2022 €'000 €/SU
New and existing investments -970.6 -0.08
Competent authorities and qualified entities costs -2,408.7 -0.19
Eurocontrol costs 4,767.8 0.38
Pension costs -1,675.8 -0.13
Interest on loans 0.0 0.00
Changes in law -85.2 -0.01
Total cost exempt from cost risk sharing -372.5 -0.03

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2022 (79.70 €) is +11.3% higher than the nominal DUC (71.64 €). The difference between these two figures (+8.06 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+5.66 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (-0.12 €/SU);
- the addition of the traffic risk sharing adjustments (+3.17 €/SU);
- the addition of the traffic adjustment (+0.45 €/SU) for the costs not subject to traffic risk sharing; and
- the deduction of the other revenues (-1.10 €/SU).
The share of regulatory result in the AUCU (befored the deduction of other revenues) is 1.2%.

Regulatory result (RR)

DFS net gain on activity in the Germany en route charging zone in the year 2022

DFS reported a net loss of -1.3M€, as a combination of a gain of +29.7 M€ arising from the cost sharing mechanism, with a loss of -31.1 M€ arising from the traffic risk sharing mechanism.

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

Ex-post, the overall RR corresponds to the net loss from the en route activity mentioned above (-1.3 M€), as the RoE for DFS has been set to zero throughout RP3. The ex-post RR corresponds to -0.2% of the en route revenues). The resulting ex-post rate of return on equity is -0.2%, compared to 0% planned in the PP.

Note 1: The proportion of financing trough equity for 2022A should be corrected to reflect the actual share, in spite of the specific composition of the asset base and the significantly higher than planned cost of capital reported to be due to “the negative development of the commercial papers”. For the purpose of the analysis, it has been set at the level of the 2022D presented in the revised draft performance plan.