Cost-efficiency - Norway

Terminal charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 89 49 NA NA
Determined costs 88 44 46 48
Difference costs 1 5 NA NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 2.0% 2.0% 2.0%
Determined inflation index NA 111.2 113.4 115.6
Actual inflation rate NA 6.2% NA NA
Actual inflation index NA 117.7 NA NA
Difference inflation index (p.p.) NA +6.5 NA NA

AUC vs. DUC

In 2022, the terminal AUC was -2.0% (or -36.04 NOK2017, -3.86 €2017) lower than the planned DUC resulting from significantly higher than planned TNSUs (+7.5%) and higher than planned terminal costs in real terms (+5.3%, or +20.0 MNOK2017, +2.1 M€2017). It should be noted that actual inflation index in 2022 was +6.5 p.p. higher than planned.

Terminal service units

The difference between actual and planned TNSUs (+7.5%) falls outside the ±2% dead band, but does not exceed the ±10% threshold foreseen in the traffic risk sharing mechanism. Hence the additional terminal revenue is shared between the ANSP and the airspace users, with the ANSP (Avinor) retaining an amount of +1.3 M€2017.

Terminal costs by entity

Actual real terminal costs are +5.3% (+2.1 M€2017) higher than planned. This is the result of higher costs for the main ANSP, Avinor (+5.1%, or +2.0 M€2017) and the MET service provider (+19.0%, or +0.2 M€2017) and lower costs for the NSA (-7.0%, or -0.01 M€2017).

Terminal costs for the main ANSP at charging zone level

Significantly higher than planned terminal costs in real terms for Avinor in 2022 (+5.1%, or +2.0 M€2017) result from the combination of:
- Significantly higher staff costs (+6.4%), the main driver being the significantly higher than planned traffic at Norwegian regulated airports;
- Significantly higher other operating costs (+6.6%), resulting from higher than planned travel, consultancy and energy costs, and to a lesser extent, re-allocation between staff and other operating cost, linked with the organizational restructuring ;
- Lower depreciation (-2.2%), “due to the delayed capitalization of the new terminal radar at Oslo airport”;
- Slightly higher cost of capital (+0.4%), due to a slightly higher asset base resulting from the higher investment level than foreseen in the performance plan for RP3; and,
- Higher deduction for VFR exempted flights (+4.3%).

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

AUCU components (€/SU) – 2022
Components of the AUCU in 2022 €/SU
DUC 197.92
Inflation adjustment 8.99
Cost exempt from cost-sharing −0.03
Traffic risk sharing adjustment −6.87
Traffic adj. (costs not TRS) −0.31
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues 0.00
Application of lower unit rate −19.89
Total adjustments −18.11
AUCU 179.81
AUCU vs. DUC −9.1%
Cost exempt from cost sharing by item - 2022 €'000 €/SU
New and existing investments 0.0 0.00
Competent authorities and qualified entities costs −6.0 −0.03
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 −6.0 −0.03

The actual terminal unit cost incurred by airspace users (AUCU) in respect of activities performed in 2022 (1 827.99 NOK or 181.06 €) is -8.5% lower than the nominal DUC (1 998.23 NOK or 197.92 €). The difference between these two figures (-170.24 NOK/SU or -16.86 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+90.73 NOK/SU or +8.99 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (+12.31 NOK/SU or +1.22 €/SU);
- the deduction of the traffic risk sharing adjustments (-69.40 NOK/SU or -6.87 €/SU);
- the deduction of the traffic adjustment (-3.09 NOK/SU or -0.31 €/SU) for the costs not subject to traffic risk sharing; and
- application of a lower unit rate as foreseen in Art. 29(6) in year 2022 (-200.79 NOK/SU or -19.89 €/SU); and
The share of regulatory result in the AUCU (before the deduction of other revenues) is 3.9%.

Regulatory result (RR)

Avinor net gain on activity in the Norway terminal charging zone in the year 2022

Avinor reported a net loss of -4.8 MNOK, as a combination of a loss of -19.3 MNOK arising from the cost sharing mechanism and a gain of +14.5 MNOK arising from the traffic risk sharing mechanism.

Avinor overall regulatory results (RR) for the terminal activity

Ex-post, the overall RR taking into account the net loss from the terminal activity mentioned above (-4.8 MNOK) and the actual RoE (+22.0 MNOK) amounts to +17.2 MNOK (3.9% of the terminal revenues). The resulting ex-post rate of return on equity is 8.0%. See also Note 2 above.

Note 1: Ex-ante and ex-post RoE are computed based on the notional gearing of 60% debt used in the RP3 PP. The actual gearing of Avinor should be reported.
Note 2: Ex-post RR should be seen in the light of the decision of the State of Norway to set the unit rate 2022 at a lower level (Art. 29(6)) than the one resulting from the RP3 PP. This decision generated losses of -44 MNOK for entities providing services in the terminal charging zone (-40 MNOK for Avinor), which will be covered by the State of Norway.