Cost-efficiency - Portugal

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PRB monitoring

▪ The en route 2022 actual unit cost of Portugal was 32.34 €2017, 21% lower than the determined unit cost (40.78 €2017). The terminal 2022 actual unit cost was 123.20 €2017, 18% lower than the determined unit cost (150.21 €2017).

▪ The en route 2022 actual service units (3,695K) were 11% higher than the determined service units (3,316K).

▪ The en route 2022 actual total costs were 16 M€2017 (-12%) lower than planned. It was mainly caused by lower staff costs (-9.5 M€2017, or -10%) due to the performance of the defined pension plans, and lower depreciation costs (-3.1 M€2017, or -22%) as a result of the postponement of the implementation of the new ATM system as requested by the Network Manager.

▪ Portugal presented a deviation from the criteria to achieve capacity targets, which was considered justified. Considering that costs are significantly lower and that the 2022 en route capacity targets have not been achieved, the situation raises serious concern. The PRB invites the NSA to analyse the discrepancies and identify their reasons and the Member State to rectify the situation to ensure that the additional means granted through the capacity deviation are used to address the capacity issues.

▪ NAV Portugal spent 16 M€2017 in 2022 related to costs of investments, 19% less than determined (19 M€2017), driven by the postponement of the new ATM system as explained above.

▪ The en route actual unit cost incurred by users in 2022 was 38.24€, while the terminal actual unit cost incurred by users was 145.82€.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 234 130 NA NA
Determined costs 233 139 150 155
Difference costs 1 −9 NA NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.2% 1.3% 1.4%
Determined inflation index NA 103.6 104.9 106.4
Actual inflation rate NA 8.1% NA NA
Actual inflation index NA 110.7 NA NA
Difference inflation index (p.p.) NA +7.1 NA NA

AUC vs. DUC

In 2022, the en route AUC was -20.7% (or -8.44 €2017) lower than the planned DUC. This results from the combination of significantly lower than planned en route costs in real terms (-11.6%, or -15.7 M€2017) and significantly higher than planned TSUs (+11.4%). It should be noted that actual inflation index in 2022 was +7.1 p.p. higher than planned.

En route service units

The difference between actual and planned TSUs (+11.4%) falls outside the ±10% threshold foreseen in the traffic risk sharing mechanism. The resulting gain of additional en route revenues is therefore shared between the ANSPs and the airspace users, with the main ANSP (NAV Portugal) retaining an amount of +4.7 M€2017.

En route costs by entity

Actual real en route costs are -11.6% (-15.7 M€2017) lower than planned reflecting lower than planned costs in real terms for all the reporting entities: main ANSP, NAV Portugal (-12.5%, or -14.4 M€2017), the NSA/EUROCONTROL (-9.9%, or -0.9 M€2017), other ANSP (SAR provider, -6.8%, or -0.4 M€2017) and the MET service provider (-0.3%). It should be noted that, in nominal terms, the costs for the MET service provider were above the plan.

En route costs for the main ANSP at charging zone level

Significantly lower than planned en route costs in real terms for NAV Portugal in 2022 (-12.5%, or -14.4 M€2017) result from:
- Significantly lower staff costs (-11.3%) resulting from the performance of defined benefit pension plans.
- Significantly lower other operating costs (-9.5%) driven by savings on specialist services and travel.
- Significantly lower depreciation (-20.8%) reflecting the postponement of the implementation of the new ATM system.
- Significantly lower cost of capital (-23.0%) reflecting a significantly lower than planned asset base.

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

AUCU components (€/SU) – 2022
Components of the AUCU in 2022 €/SU
DUC 41.96
Inflation adjustment 2.09
Cost exempt from cost-sharing −2.95
Traffic risk sharing adjustment −2.36
Traffic adj. (costs not TRS) −0.48
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 −3.69
AUCU 38.26
AUCU vs. DUC −8.8%
Cost exempt from cost sharing by item - 2022 €'000 €/SU
New and existing investments −3,884.0 −1.05
Competent authorities and qualified entities costs −79.6 −0.02
Eurocontrol costs −747.2 −0.20
Pension costs −6,192.2 −1.68
Interest on loans 0.0 0.00
Changes in law 0.0 0.00
Total cost exempt from cost risk sharing −10,903.1 −2.95

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2022 (38.24 €) is -8.9% lower than the nominal DUC (41.96 €). The difference between these two figures (-3.72 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+2.09 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (-2.98 €/SU);
- the deduction of the traffic risk sharing adjustments (-2.36 €/SU); and,
- the deduction of the traffic adjustment (-0.48 €/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 9.5%.

Regulatory result (RR)

NAV Portugal net gain on activity in the Portugal Continental en route charging zone in the year 2022

NAV Portugal reported a net gain of +11.1 M€, as a combination of a gain of +5.9 M€ arising from the cost sharing mechanism, with a gain of +5.2 M€ arising from the traffic risk sharing mechanism.

NAV Portugal overall regulatory result (RR) for the en route activity

Ex-post, the overall RR taking into account the net gain from the en route activity mentioned above (+11.1 M€) and the actual RoE (+2.1 M€) amounts to +13.2 M€ (10.9% of the en route revenues). The resulting ex-post rate of return on equity is 26.7%, which is higher than the 4.2% planned in the PP.