Cost-efficiency - Sweden

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Terminal charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 46 21 NA NA
Determined costs 46 21 21 22
Difference costs 0 0 NA NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 4.8% 2.2% 1.7%
Determined inflation index NA 112.4 114.9 116.9
Actual inflation rate NA 8.1% NA NA
Actual inflation index NA 116 NA NA
Difference inflation index (p.p.) NA +3.5 NA NA

AUC vs. DUC

In 2022, the terminal AUC was -7.0% (or -120.96 SEK2017, -12.56 €2017) lower than the planned DUC. This results from the combination of lower than planned terminal costs in real terms (-3.8%, or -6.9 MSEK2017, -0.7 M€2017) and higher than planned TNSUs (+3.4%). It should be noted that actual inflation index in 2022 was +3.5 p.p. higher than planned.

Terminal service units

The difference between actual and planned TNSUs (+3.4%) falls outside the ±2% dead band, but does not exceed the ±10% threshold foreseen in the traffic risk sharing mechanism. The resulting gain of additional terminal revenues is therefore shared between the ANSPs and the airspace users, with the main ANSP (LFV) retaining an amount of +0.3 M€2017.

Terminal costs by entity

Actual real terminal costs are -3.8% (-0.7 M€2017) lower than planned. This is the result of lower costs for the main ANSP, LFV (-5.2%, or -0.7 M€2017), the other ANSP (Swedavia, -0.4%, or -0.02 M€2017) and the MET service provider (-3.6%, or -0.01 M€2017). The NSA costs are slightly higher than planned (+0.3%).

Terminal costs for the main ANSP at charging zone level

Lower than planned terminal costs in real terms for LFV in 2022 (-5.2%, or -0.7 M€2017) result from the combination of:
- Significantly lower staff costs (-7.2%), driven by lower than planned pension costs. In addition, “staff costs were reduced with the revenues for staff participating in projects”;
- Slightly lower other operating costs (-1.4%) mainly due to the inflation index impact (+3.5 p.p.) since in nominal terms other operating costs were slightly higher than planned (+1.7%); and,
- Significantly higher cost of capital (+167.8%) “as an effect of the high inflation that affects the valuation of the pension debt (that is used for financing instead of loans).”

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

AUCU components (€/SU) – 2022
Components of the AUCU in 2022 €/SU
DUC 181.17
Inflation adjustment 5.24
Cost exempt from cost-sharing -2.47
Traffic risk sharing adjustment -1.71
Traffic adj. (costs not TRS) -0.14
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues -1.75
Application of lower unit rate 0.00
Total adjustments -0.83
AUCU 180.34
AUCU vs. DUC -0.5%
Cost exempt from cost sharing by item - 2022 €'000 €/SU
New and existing investments -89.1 -0.83
Competent authorities and qualified entities costs 0.1 0.00
Eurocontrol costs 0.0 0.00
Pension costs -176.2 -1.64
Interest on loans 0.0 0.00
Changes in law 0.0 0.00
Total cost exempt from cost risk sharing -265.2 -2.47

The actual terminal unit cost incurred by airspace users (AUCU) in respect of activities performed in 2022 (1 915.88 SEK or 180.34 €) is -0.5% lower than the nominal DUC (1 924.74 SEK or 181.17 €). The difference between these two figures (-8.86 SEK/SU or -0.83 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+55.71 SEK/SU or +5.24 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (-26.19 SEK/SU or -2.47 €/SU);
- the deduction of the traffic risk sharing adjustments (-18.21 SEK/SU or -1.71 €/SU);
- the deduction of the traffic adjustment (-1.53 SEK/SU or -0.14 €/SU) for the costs not subject to traffic risk sharing; and,
- the deduction of the other revenues (-18.63 SEK/SU or -1.75 €/SU).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is 6.0%.

Regulatory result (RR)

LFV net gain on activity in the Sweden terminal charging zone in the year 2022

LFV reported a net gain of +9.3 MSEK, as a combination of a gain of +5.9 MSEK arising from the cost sharing mechanism and a gain of +3.4 MSEK arising from the traffic risk sharing mechanism.

LFV overall regulatory results (RR) for the terminal activity

Ex-post, the overall RR is equal to the net gain from the terminal activity mentioned above and amounts to +9.3 MSEK (6.4% of the terminal revenues). The resulting ex-post rate of return on equity is 56.3%, which is significantly higher than the 0.0% RoE planned in the PP.

Note 1: LFV reports a financing of asset base at the level of some 78% of debt in 2022, corresponding to its pension liabilities, which are remunerated at the inflation rate.