Cost-efficiency - Lithuania

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PRB monitoring

▪ The en route 2022 actual unit cost of Lithuania was 47.50 €2017, 2.8% lower than the determined unit cost (48.87 €2017). Lithuania does not have a terminal charging zone

▪ The en route 2022 actual service units (376K) were 1.0% higher than the determined service units (372K).

▪ The en route 2022 actual total costs were 0.3 M€2017 (-1.8%) lower than determined. The main driver was the lower depreciation costs (-0.2 M€2017, or -7.3%). The NSA explained that some investment projects and asset acquisitions were behind schedule or bought at a lower price.

▪ SE Oro Navigacija spent 3.6 M€2017 in 2022 related to costs of investments, 6.1% less than determined (3.9 M€2017), driven by lower depreciation costs as explained above.

▪ The en route actual unit cost incurred by users in 2022 was 58.65€.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 41 22 NA NA
Determined costs 40 22 25 26
Difference costs 1 0 NA NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 17.9% 8.5% 3.0%
Determined inflation index NA 130.6 141.7 146
Actual inflation rate NA 18.9% NA NA
Actual inflation index NA 131.7 NA NA
Difference inflation index (p.p.) NA +1.1 NA NA

AUC vs. DUC

In 2022, the en route AUC was -2.8% (or -1.36 €2017) lower than the planned DUC. This results from the combination of lower than planned en route costs in real terms (-1.8%, or -0.3 M€2017) and higher than planned TSUs (+1.0%).

En route service units

The difference between actual and planned TSUs (+1.0%) falls inside the ±2% dead band. Hence gain of additional en route revenues is kept by the ANSPs .

En route costs by entity

Actual real en route costs are -1.8% (-0.3 M€2017) lower than planned. This is the result of lower costs for the main ANSP, Oro Navigacija (-1.9%, or -0.3 M€2017), the other ANSP (LGS, -11.1%, or -0.03 M€2017) and the MET service provider (-1.8%, or -0.01 M€2017). The NSA/EUROCONTROL costs were slightly higher than planned (+0.6%, or +0.01 M€2017).

En route costs for the main ANSP at charging zone level

Lower than planned en route costs in real terms for Oro Navigacija in 2022 (-1.9%, or -0.3 M€2017) result from:
- Slightly lower staff costs (-0.1%) mainly due to the inflation index impact (+1.1 p.p.) since in nominal terms staff costs were slightly higher than planned (+0.7%);
- Lower other operating costs (-2.9%) mainly due to the decline in energy prices in the 4th quarter and the delay in signing the ATM system supply contracts; and,
- Lower depreciation (-6.9%) and cost of capital (-1.5%) resulting mainly from delays in investments or acquisitions at lower prices.

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

AUCU components (€/SU) – 2022
Components of the AUCU in 2022 €/SU
DUC 58.96
Inflation adjustment 0.36
Cost exempt from cost-sharing −0.55
Traffic risk sharing adjustment 0.00
Traffic adj. (costs not TRS) −0.07
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues 0.00
Application of lower unit rate 0.00
Total adjustments −0.26
AUCU 58.70
AUCU vs. DUC −0.4%
Cost exempt from cost sharing by item - 2022 €'000 €/SU
New and existing investments −231.3 −0.62
Competent authorities and qualified entities costs −6.1 −0.02
Eurocontrol costs 34.7 0.09
Pension costs −4.4 −0.01
Interest on loans 0.0 0.00
Changes in law 0.0 0.00
Total cost exempt from cost risk sharing −207.1 −0.55

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2022 (58.65 €) is -0.5% lower than the nominal DUC (58.96 €). The difference between these two figures (-0.30 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+0.36 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (-0.60 €/SU); and,
- the deduction of the traffic adjustment (-0.07 €/SU) for the costs not subject to traffic risk sharing.
The share of the regulatory result in the AUCU (before the deduction of other revenues) is 5.8%.

Regulatory result (RR)

Oro Navigacija net gain on activity in the Lithuania en route charging zone in the year 2022

Oro Navigacija reported a net gain of +0.3 M€, as a combination of a gain of +0.1 M€ arising from the cost sharing mechanism and a gain of +0.2 M€ arising from the traffic risk sharing mechanism.

Oro Navigacija 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 (+0.3 M€) and the actual RoE (+0.9 M€) amounts to +1.2 M€ (6.4% of the en route revenues). The resulting ex-post rate of return on equity is 3.9%, which is slightly higher than the 3.0% planned in the PP.