Cost-efficiency - Netherlands

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PRB monitoring

▪ The en route 2022 actual unit cost of the Netherlands was 80.81 €2017, -8.8% lower than the determined unit cost (88.63 €2017). The terminal 2022 actual unit cost was 182.59 €2017, -18% lower than the determined unit cost (221.58 €2017).

▪ The en route 2022 actual service units (2,586K) were in line with the determined service units (2,593K).

▪ In 2022, the en route actual total costs were 21 M€2017 (-9.1%) lower compared to determined. It was attributable to the substantial reduction in staff cost (-25 M€2017, or -17%) mainly due to lower full-time equivalents and pension premium than planned.

▪ Even though net book value of fixed assets was -12% lower than planned, LVNL spent 23 M€2017 in 2022 related to costs of investments, in line with the determined.

▪ The en route actual unit cost incurred by users in 2022 was 101.15€, while the terminal actual unit cost incurred by users was 246.52€.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 474 245 NA NA
Determined costs 478 246 253 259
Difference costs -4 -1 NA NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.5% 1.6% 1.6%
Determined inflation index NA 108.6 110.3 112.1
Actual inflation rate NA 11.6% NA NA
Actual inflation index NA 121 NA NA
Difference inflation index (p.p.) NA +12.5 NA NA

AUC vs. DUC

In 2022, the en route AUC was -8.8% (or -7.82 €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 -20.9 M€2017) and slightly lower than planned TSUs (-0.3%). It should be noted that actual inflation index in 2022 was +12.5 p.p. higher than planned.

En route service units

The difference between actual and planned TSUs (-0.3%) falls inside the ±2% dead band. Hence loss of en route revenues is borne by the ANSPs .

En route costs by entity

Actual real en route costs are -9.1% (-20.9 M€2017) lower than planned. This is the result of lower costs for the main ANSP, LVNL (-8.8%, or -14.0 M€2017), the other ANSP (MUAC (Netherlands), -14.9%, or -6.2 M€2017) and the MET service provider (-14.9%, or -1.6 M€2017) and higher costs for the NSA/EUROCONTROL (+5.5%, or +1.0 M€2017).

En route costs for the main ANSP at charging zone level

Significantly lower than planned en route costs in real terms for LVNL in 2022 (-8.8%, or -14.0 M€2017) result from:
- Significantly lower staff costs (-17.8%), due to lower FTE’s and lower pension costs than planned in performance plan.
- Significantly higher other operating costs (+14.3%), as a result of the increase in the training costs, due to outsourcing of the Initial training of air traffic controllers for RP4 and the inflation, impacting among others, the energy and external hiring costs
- Higher depreciation (+2.0%), related to numerous small changes.
- Significantly higher cost of capital (+24.5%), due to increased interest rate.
- Significantly lower deduction for VFR exempted flights (-6.9%).

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

AUCU components (€/SU) – 2022
Components of the AUCU in 2022 €/SU
DUC 95.03
Inflation adjustment 9.33
Cost exempt from cost-sharing 0.14
Traffic risk sharing adjustment 0.00
Traffic adj. (costs not TRS) 0.03
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues -1.76
Application of lower unit rate 0.00
Total adjustments 7.74
AUCU 102.77
AUCU vs. DUC + 8.1%
Cost exempt from cost sharing by item - 2022 €'000 €/SU
New and existing investments -150.8 -0.06
Competent authorities and qualified entities costs 0.0 0.00
Eurocontrol costs 1,191.5 0.46
Pension costs -1,145.0 -0.44
Interest on loans 470.0 0.18
Changes in law 0.0 0.00
Total cost exempt from cost risk sharing 365.6 0.14

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2022 (101.15 €) is +6.4% higher than the nominal DUC (95.03 €). The difference between these two figures (+6.12 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+9.33 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (+0.05 €/SU);
- the addition of the traffic adjustment (+0.03 €/SU) for the costs not subject to traffic risk sharing; and
- the deduction of the other revenues (-3.29 €/SU).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is 9.3%.

Regulatory result (RR)

LVNL net gain on activity in the Netherlands en route charging zone in the year 2022

LVNL reported a net gain of +16.1 M€, as a combination of a gain of +16.6 M€ arising from the cost sharing mechanism, with a loss of -0.5 M€ arising from the traffic risk sharing mechanism.

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

LVNL has no return on equity, as its assets are entirely financed through debt, no ex-ante estimated surplus was embedded in the cost of capital provided in the PP for RP3. Therefore, ex-post, the overall RR is equal to the net gain from the en route activity mentioned above (+16.1 M€) and corresponds to 8.5% of the en route revenues.