Cost-efficiency - Slovakia

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PRB monitoring

▪ The en route 2022 actual unit cost of Slovakia was 50.66 €2017, 26% lower than the determined unit cost (68.51 €2017). Slovakia does not have a terminal charging zone.

▪ The en route 2022 actual service units (973K) were 22% higher than the determined service units (798K).

▪ The en route 2022 actual total costs were 5.4 M€2017 (-10%) lower than planned. The significant increases in depreciation and cost of capital partially offset the decrease in total costs. The decrease was mainly attributable to lower staff costs (-5.3 M€2017, or -15%) due to the non-payment of the variable salaries, a COVID-19 measure already taken in 2020 (for cashflow reasons).

▪ Slovakia 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 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.

▪ LPS SR spent 8.1 M€2017 in 2022 related to costs of investments, 27% more than determined (6.3 M€2017). The NSA explains that the increase is due to the fact that determined costs of investments were lowered in the plan by the amount underspent in RP2.

▪ The en route actual unit cost incurred by users in 2022 was 68.58€.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 85 58 NA NA
Determined costs 93 59 62 64
Difference costs −7 −1 NA NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.9% 2.0% 2.1%
Determined inflation index NA 110.9 113.1 115.5
Actual inflation rate NA 12.1% NA NA
Actual inflation index NA 123.9 NA NA
Difference inflation index (p.p.) NA +13 NA NA

AUC vs. DUC

In 2022, the en route AUC was -26.1% (or -17.85 €2017) lower than the planned DUC. This results from the combination of significantly higher than planned TSUs (+21.9%) and significantly lower than planned en route costs in real terms (-9.9%, or -5.4 M€2017). It should be noted that actual inflation index in 2022 was +13.0 p.p. higher than planned.

En route service units

The difference between actual and planned TSUs (+21.9%) 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 ANSP and the airspace users, with the ANSP (LPS) retaining an amount of +1.9 M€2017.

En route costs by entity

Actual real en route costs are -9.9% (-5.4 M€2017) lower than planned. This is the result of lower costs for the main ANSP, LPS (-8.3%, or -4.0 M€2017), the NSA/EUROCONTROL (-21.4%, or -1.0 M€2017) and the MET service provider (-22.0%, or -0.4 M€2017).

En route costs for the main ANSP at charging zone level

Significantly lower than planned en route costs in real terms for LPS in 2022 (-8.3%, or -4.0 M€2017) result from:
- Significantly lower staff costs (-14.7%), which is the result of continuation of various cost containment measures, including non-payment of some variable wage components. This result is also impacted by higher actual inflation index (+13.0 p.p.).
- Significantly lower other operating costs (-11.1%), mainly due to inflation index impact (+13.0 p.p.).
- Significantly higher depreciation (+33.3%). This is the effect of lowering the determined depreciation costs by 1.3 M€ of the unrealized investment from RP2.
- Significantly higher cost of capital (+20.1%), due to the increase in the value of the asset base together with the increase in the interest rate on loan.
- Significantly higher deduction for VFR exempted flights (+90.6%).

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

AUCU components (€/SU) – 2022
Components of the AUCU in 2022 €/SU
DUC 74.41
Inflation adjustment 5.80
Cost exempt from cost-sharing −0.58
Traffic risk sharing adjustment −9.45
Traffic adj. (costs not TRS) −1.52
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues −0.04
Application of lower unit rate 0.00
Total adjustments −5.79
AUCU 68.62
AUCU vs. DUC −7.8%
Cost exempt from cost sharing by item - 2022 €'000 €/SU
New and existing investments 441.1 0.45
Competent authorities and qualified entities costs −296.1 −0.30
Eurocontrol costs −705.1 −0.73
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 −560.0 −0.58

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2022 (68.58 €) is -7.8% lower than the nominal DUC (74.41 €). The difference between these two figures (-5.83 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+5.80 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (-0.61 €/SU);
- the deduction of the traffic risk sharing adjustments (-9.45 €/SU);
- the deduction of the traffic adjustment (-1.52 €/SU) for the costs not subject to traffic risk sharing; and
- the deduction of the other revenues (-0.04 €/SU).
The share of the regulatory result in the AUCU (before deduction of other revenues) is 16.3%.

Regulatory result (RR)

LPS net gain on activity in the Slovakia en route charging zone in the year 2022

LPS reported a net gain of +8.2 M€, as a combination of a gain of +5.8 M€ arising from the cost sharing mechanism, with a gain of +2.3 M€ arising from the traffic risk sharing mechanism.

LPS 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 (+8.2 M€) and the actual RoE (+2.2 M€) amounts to +10.4 M€ (17.1% of the en route revenues). The resulting ex-post rate of return on equity is 23.8%, which is higher than the 5.1% planned in the PP.