Cost-efficiency - Ireland

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PRB monitoring

▪ The en route 2022 actual unit cost of Ireland was 25.58 €2017, 14% lower than the determined unit cost (29.84 €2017). The terminal 2022 actual unit cost was 169.32 €2017, 3.4% higher than the determined unit cost (163.79 €2017).

▪ The en route 2022 actual service units (4,233K) were 6.1% higher than the determined service units (3,991K).

▪ The en route 2022 actual total costs were 11 M€2017 (-9.1%) lower than determined, as all cost categories decreased. The total cost reduction was mainly driven by lower other operating costs (-5.5 M€2017, or -13%), caused by the postponement of planned OPEX to prioritise service delivery as traffic increased significantly during the year.

▪ IAA ANSP spent 16 M€2017 in 2022 related to costs of investments, 18% lower than determined (20 M€2017), as investments have been delayed due to shortages in resource availability and challenges with sourcing contractors and service providers.

▪ As for the previous monitoring year, the discrepancies regarding costs of investments are significant. The PRB invites the NSA to analyse the discrepancies, identify their reasons, and request the Member State to take immediate, adequate, and proportionate action to ensure the implementation of the investment plans to avoid future capacity gaps.

▪The en route actual unit cost incurred by users in 2022 was 30.93€, while the terminal actual unit cost incurred by users was 164.74€.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 205 119 NA NA
Determined costs 207 124 129 130
Difference costs −2 −5 NA NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.9% 2.0% 2.0%
Determined inflation index NA 105.2 107.3 109.4
Actual inflation rate NA 8.1% NA NA
Actual inflation index NA 112.5 NA NA
Difference inflation index (p.p.) NA +7.3 NA NA

AUC vs. DUC

In 2022, the en route AUC was -14.3% (or -4.26 €2017) lower than the planned DUC. This results from the combination of significantly lower than planned en route costs in real terms (-9.1%, or -10.8 M€2017) and significantly higher than planned TSUs (+6.1%). It should be noted that actual inflation index in 2022 was +7.3 p.p. higher than planned.

En route service units

The difference between actual and planned TSUs (+6.1%) falls outside the ±2% dead band, but does not exceed 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 (IAA) retaining an amount of +3.0 M€2017.

En route costs by entity

Actual real en route costs are -9.1% (-10.8 M€2017) lower than planned. This is the result of lower costs for the main ANSP, IAA (-11.7%, or -11.6 M€2017) and the NSA/EUROCONTROL (-0.7%, or -0.1 M€2017) and higher costs for the MET service provider (+13.1%, or +0.9 M€2017).

En route costs for the main ANSP at charging zone level

Significantly lower than planned en route costs in real terms for IAA in 2022 (-11.7%, or -11.6 M€2017) result from:
- Lower staff costs (-5.3%), mainly due to inflation index impact (+7.3 p.p.) since in nominal terms staff costs are higher than planned by +1.2% reflecting higher costs of overtime.
- Significantly lower other operating costs (-21.1%), partially reflecting cost deferrals in favour of service delivery. This result is also impacted by higher actual inflation index (+7.3 p.p.).
- Significantly lower depreciation (-20.2%), reflecting delays in the implementation of the investment programme due in part to staff shortages and pandemic related supply issues.
- Significantly lower cost of capital (-21.0%) resulting from the delays in investments as outlined above.
- Lower deduction for VFR exempted flights (-6.5%) in real terms, while these costs were in line with the plan when expressed in nominal terms.

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

AUCU components (€/SU) – 2022
Components of the AUCU in 2022 €/SU
DUC 31.05
Inflation adjustment 1.60
Cost exempt from cost-sharing −0.54
Traffic risk sharing adjustment −0.69
Traffic adj. (costs not TRS) −0.30
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues −0.16
Application of lower unit rate 0.00
Total adjustments −0.10
AUCU 30.96
AUCU vs. DUC −0.3%
Cost exempt from cost sharing by item - 2022 €'000 €/SU
New and existing investments −2,293.4 −0.54
Competent authorities and qualified entities costs −82.9 −0.02
Eurocontrol costs 87.1 0.02
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 −2,289.2 −0.54

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2022 (30.93 €) is -0.4% lower than the nominal DUC (31.05 €). The difference between these two figures (-0.12 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+1.60 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (-0.56 €/SU);
- the deduction of the traffic risk sharing adjustments (-0.69 €/SU);
- the deduction of the traffic adjustment (-0.30 €/SU) for the costs not subject to traffic risk sharing; and
- the deduction of the other revenues (-0.16 €/SU).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is 11.4%.

Regulatory result (RR)

IAA net gain on activity in the Ireland en route charging zone in the year 2022

IAA reported a net gain of +13.7 M€, as a combination of a gain of +10.4 M€ arising from the cost sharing mechanism, with a gain of +3.3 M€ arising from the traffic risk sharing mechanism.

IAA 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 (+13.7 M€) and the actual RoE (+2.3 M€) amounts to +16.0 M€ (14.5% of the en route revenues). The resulting ex-post rate of return on equity is 38.9%, which is significantly higher than the 5.5% planned in the PP.