Cost-efficiency - Spain

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PRB monitoring

▪ The en route 2022 actual unit cost of Spain Continental was 58.30 €2017, 8.7% higher than the determined unit cost (53.64 €2017). The en route 2022 actual unit cost of Spain Canarias was 56.93 €2017, 15% lower than the determined unit cost (66.92 €2017).

▪ The terminal 2022 actual unit cost of Spain was 126.16 €2017, 6.6% higher than the determined unit cost (118.36 €2017).

▪ The en route 2022 actual service units of Spain Continental (11,079K) were 1.0% lower than the determined service units (11,190K). The en route 2022 actual service units of Spain Canarias (1,790K) were 27% higher than the determined (1,415K).

▪ In 2022, Spain Continental increased en route total cost by 46 M€2017 (+7.6%) compared to the determined. All cost categories increased, except the cost of capital. The increase in staff cost in ENAIRE (+45 M€2017, or +10.5%) was the main driver of the increase, the NSA noted that it is due to unforeseen increases in salaries derived from new national law requirements.

▪ In 2022, Spain Canaries increased en route total cost by 7.2 M€2017 (+7.6%) compared to determined. Similar to Spain Continental, all cost categories increased except for the cost of capital. The reasons are the same as for Spain Continental.

▪ These significant differences in staff costs amount to 97 M€ in nominal terms, which Spain intended to charge to airspace users through the cost sharing mechanism. The PRB invites the NSA to investigate the eligibility of such costs and to ensure proper consultation with airspace users on this topic.

▪ ENAIRE spent 115 M€2017 in 2022 related to costs of investments, 4.1% less than determined (120 M€2017) mainly due to some delays to take account of new technological evolution and regulation requirements in the investments.

▪ The en route Spain Continental actual unit cost incurred by users in 2022 was 70.16€, while the en route Spain Canarias actual unit cost incurred by users was 48.44€. The terminal actual unit cost incurred by users was 27.02€.

En route charging zone - Spain Continental

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 1,180 717 NA NA
Determined costs 1,191 622 630 634
Difference costs −11 95 NA NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.3% 1.5% 1.6%
Determined inflation index NA 104.9 106.5 108.2
Actual inflation rate NA 8.3% NA NA
Actual inflation index NA 114.4 NA NA
Difference inflation index (p.p.) NA +9.5 NA NA

AUC vs. DUC

In 2022, the en route AUC was +8.7% (or +4.66 €2017) higher than the planned DUC. This results from the combination of significantly higher than planned en route costs in real terms (+7.6%, or +45.6 M€2017) and lower than planned TSUs (-1.0%). It should be noted that the actual inflation index in 2022 was +9.5 p.p. higher than planned.

En route service units

The difference between the 2022 actual and planned TSUs (-1.0%) falls inside the ±2% dead band. Hence the loss of en route revenues is borne by the ANSPs .

En route costs by entity

The 2022 actual real en route costs are +7.6% (or +45.6 M€2017) higher than planned. This is the result of higher than planned costs for ENAIRE (+8.4%, or +42.3 M€2017), the other ANSP (EA, +16.0%, or +4.0 M€2017) and the NSA/EUROCONTROL (+1.6%, or +0.6 M€2017) and lower than planned costs for the MET service provider (-4.7%, or -1.3 M€2017).

En route costs for the main ANSP at charging zone level

Significantly higher than planned en route (Continental) costs in real terms for ENAIRE in 2022 (+8.4%, or +42.3 M€2017) result from:
- Significantly higher than planned staff costs (+12.4%, or +45.3 M€2017), reported to be due to “unforeseeable new cost items not covered in the performance plan but required by law (Law 26/2022 of 19 December), which develops the figure of a Special Active Reserve , solving, among others, the problem of the forced retirement of ATCOs at age 65.” And the “actual increase of salaries for 2022 was +3.5%, following public employees’ salaries decisions adopted by Government, compared to 0%” in the PP.
- Other operating costs are in line with the plan in real terms (-0.03%) mainly due to the inflation impact, but higher in nominal terms (+9.0%), reported to be mainly a result of increasing energy costs.
- Lower than planned depreciation costs (-1.8%),
- Lower than planned cost of capital (-7.2%, or -1.6 M€2017), mainly due to a lower asset base and slightly lower WACC rate (4.4% vs. 4.7% in the PP).

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

AUCU components (€/SU) – 2022
Components of the AUCU in 2022 €/SU
DUC 55.60
Inflation adjustment 3.82
Cost exempt from cost-sharing 8.09
Traffic risk sharing adjustment 0.00
Traffic adj. (costs not TRS) 0.09
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 3.03
Other revenues −0.44
Application of lower unit rate 0.00
Total adjustments 14.60
AUCU 70.20
AUCU vs. DUC +26.3%
Cost exempt from cost sharing by item - 2022 €'000 €/SU
New and existing investments 2,343.4 0.21
Competent authorities and qualified entities costs 580.4 0.05
Eurocontrol costs 513.0 0.05
Pension costs 0.0 0.00
Interest on loans 0.0 0.00
Changes in law 86,180.8 7.78
Total cost exempt from cost risk sharing 89,617.6 8.09

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2022 (70.16 €) is +26.2% higher than the nominal DUC (55.60 €). The difference between these two figures (+14.56 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+3.82 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (+8.05 €/SU);
- the addition of the traffic adjustment (+0.09 €/SU) for the costs not subject to traffic risk sharing;
- cross-financing (+3.03 €/SU); and
- the deduction of other revenues (-0.44 €/SU).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is 7.1%.

Regulatory result (RR)

ENAIRE net gain on activity in the Spain Continental en route charging zone in the year 2022

ENAIRE reported a net gain of +29.2 M€, a combination of a gain of +34.5 M€ arising from the cost sharing mechanism with a loss of -5.2 M€ arising from the traffic risk sharing mechanism.

ENAIRE 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 (+29.2 M€) and the actual RoE (+19.7 M€) amounts to +49.0 M€ (7.6% of the en route revenues). The resulting ex-post rate of return on equity is 18.0%, which is higher than the 7.2% planned in the PP. It should be noted that an amount of +83.3 M€ is submitted as costs exempt from cost-sharing, reported to be mainly due to the unforeseen change in law and significantly impacting the staff costs.