Cost-efficiency - Switzerland

Download Report

PRB monitoring

▪ The en route 2022 actual unit cost of Switzerland was 105.23 €2017, +2.1% higher than the determined unit cost (103.11 €2017). The terminal 2022 actual unit cost was 372.26 €2017, -2.1% lower than the determined unit cost (380.28 €2017).

▪ The en route 2022 actual service units (1,545K) were -3.1% lower than the determined service units (1,594K).

▪ In 2022, the en route actual total costs were slightly lower (-1.8 M€2017, or-1.1%) than determined. The decrease is driven by reduced staff cost (-17 M€2017, or -14%), the NSA explained that it is due to the reimbursement by pension fund, although partially offset by the provision for ATCO retirement age transition costs.

▪ However, the variations within cost categories were not transparent as it included the non-invoicing of the financing of the delegated airspace, that was initially determined as negative exceptional items. As mentioned last year, Switzerland should improve clarity in the reporting.

▪ Skyguide spent 41 M€2017 in 2022 related to costs of investments, -8.7% less than determined (45 M€2017), mainly due to lower net book value of fixed assets than planned.

▪ The en route actual unit cost incurred by users in 2022 was 107.89€, while the terminal actual unit cost incurred by users was 430.65€.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 324 168 NA NA
Determined costs 315 166 160 160
Difference costs 9 2 NA NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 0.3% 0.8% 0.9%
Determined inflation index NA 101.7 102.5 103.4
Actual inflation rate NA 2.7% NA NA
Actual inflation index NA 104.6 NA NA
Difference inflation index (p.p.) NA +2.9 NA NA

AUC vs. DUC

In 2022, the en route AUC was +2.1% (or +2.36 CHF2017, +2.12 €2017) higher than the planned DUC. This results from the combination of lower than planned TSUs (-3.1%) and lower than planned en route costs in real terms (-1.1%, or -2.0 MCHF2017, -1.8 M€2017). It should be noted that actual inflation index in 2022 was +2.9 p.p. higher than planned.

En route service units

The difference between actual and planned TSUs (-3.1%) falls outside the ±2% dead band, but does not exceed the ±10% threshold foreseen in the traffic risk sharing mechanism. The resulting loss of en route revenues is therefore shared between the ANSP and the airspace users, with the ANSP (Skyguide) bearing a loss of -3.3 M€2017.

En route costs by entity

Actual real en route costs are -1.1% (-1.8 M€2017) lower than planned. This is the result of lower costs for the main ANSP, Skyguide (-1.9%, or -2.8 M€2017) and higher costs for the MET service provider (+2.7%, or +0.2 M€2017), and the NSA/EUROCONTROL (+6.8%, or +0.8 M€2017).

En route costs for the main ANSP at charging zone level

Actual en route costs in real terms are lower than planned for Skyguide in 2022 (-1.9%, or -2.8 M€2017). However, the differences by nature of costs are distorted by two factors:
a) The overall reported costs in each cost item are netted by the financing of the services provided by Skyguide outside the Swiss FIR;
b) Skyguide’s costs include significant amounts linked to the additional costs caused by the change in the capitalisation rule in 2022 (+14.9 M€2017). However, in order for this amount not to be billed to airspace users, it has also been reported as negative exceptional item in the determined costs, but not in the actual costs (-100% of negative exceptional costs, or +14.9 M€2017).
- the significant difference in staff costs (which is overall of -€17.5 M€2017 or -14.7%), can be mainly explained by the evolution of the FTEs and salary assumptions, but it is also due to a reimbursement from the pension fund, although partially offset by the provision for ATCO retirement age transition costs.

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

AUCU components (€/SU) – 2022
Components of the AUCU in 2022 €/SU
DUC 115.51
Inflation adjustment 2.65
Cost exempt from cost-sharing -1.42
Traffic risk sharing adjustment 0.80
Traffic adj. (costs not TRS) 0.43
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues 0.00
Application of lower unit rate -10.10
Total adjustments -7.63
AUCU 107.88
AUCU vs. DUC -6.6%
Cost exempt from cost sharing by item - 2022 €'000 €/SU
New and existing investments -3,055.8 -1.98
Competent authorities and qualified entities costs 0.0 0.00
Eurocontrol costs 867.8 0.56
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 -2,188.0 -1.42

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2022 (108.42 CHF or 107.89 €) is -6.6% lower than the nominal DUC (116.08 CHF or 115.51 €). The difference between these two figures (-7.66 CHF/SU or -7.62 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+2.66 CHF/SU or +2.65 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (-1.42 CHF/SU or -1.41 €/SU);
- the addition of the traffic risk sharing adjustments (+0.81 CHF/SU or +0.80 €/SU);
- the addition of the traffic adjustment (+0.44 CHF/SU or +0.43 €/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 (-10.15 CHF/SU or -10.10 €/SU).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is -0.7%.

Regulatory result (RR)

Skyguide net gain on activity in the Switzerland en route charging zone in the year 2022

Skyguide reported a net loss of -3.8 MCHF, as a combination of a gain of +0.04 MCHF arising from the cost sharing mechanism, with a loss of -3.8 MCHF arising from the traffic risk sharing mechanism.

Skyguide overall regulatory results (RR) for the en route activity

Ex-post, the overall RR taking into account the net loss from the en route activity mentioned above (-3.8 MCHF) and the actual RoE (+2.8 MCHF) amounts to -1.0 MCHF (-0.6% of the en route revenues). The resulting ex-post rate of return on equity is -2.4%. See also Note 1 above.

Note 1: Ex-post RR does not take into account the application of the lower unit rate as per Art. 29.6 in 2022. This application generated losses of -15.7 MCHF for entities providing services in the en route charging zone (-5.3 MCHF for skyguide and -10.3 MCHF for MET SP).