Cost-efficiency - Belgium

Download Report

PRB monitoring

▪ The en route 2023 actual unit cost of Belgium-Luxembourg was 88.09 €2017, -2.5% lower than the determined unit cost (90.34 €2017). The terminal actual unit cost of Belgium was 234.71 €2017, -2.1% lower than the determined unit cost (239.73 €2017). The terminal actual unit cost of Luxembourg was 263.82 €2017, +14% higher than the determined unit cost (231.72 €2017).

▪ The en route 2023 actual service units (2.45M) were +1.8% higher than the determined service units (2.40M).

▪ The en route 2023 actual total costs were -1.7 M€2017 (-0.8%) lower compared to determined. The gap was mainly attributable to lower other operating costs (-4.6 M€2017, or -10%). The NSA explained that the lower other operating costs resulted from utility expenses decreasing more rapidly than anticipated in 2023, following a steep increase in the previous year.

▪ skeyes spent 12 M€2017 in 2023 related to costs of investments for en route charging zone, which was more than determined (+0.4 M€2017, or +3.4%). According to the NSA, this overspend is due to the “decommissioning of equipment (ISAAC SR4, old WAN)” which was not foreseen in the performance plan, resulting in an overspent of depreciation costs (+0.4 M€2017, or +4.8%).

▪ The en route actual unit cost incurred by users of Belgium-Luxembourg in 2023 was 106.60€ (-2.2% below the 2023 DUC), while the terminal actual unit cost incurred by users was 214.99€ (-26% below the 2023 DUC) for Belgium and 236.97€ (-12% below the 2023 DUC) for Luxembourg. The difference between the AUCU and the DUC for the Belgium EBBR charging zone is strongly affected by the adjustment of other revenues (-11 M€).

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 432 240 255 NA
Determined costs 442 250 262 252
Difference costs −10 −10 −8 NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 7.8% 4.7% 2.1%
Determined inflation index NA 115.6 123.9 126.5
Actual inflation rate NA 10.3% 2.3% NA
Actual inflation index NA 118.3 121 NA
Difference inflation index (p.p.) NA +2.7 -2.8 NA

AUC vs. DUC

In 2023, the en route AUC was -2.5% (or -2.25 €2017) lower than the planned DUC. This results from the combination of higher than planned TSUs (+1.8%) and slightly lower than planned en route costs in real terms (-0.8%, or -1.7 M€2017).

En route service units

The difference between actual and planned TSUs (+1.8%) falls inside the ±2% dead band. Hence gain of additional en route revenues is kept by the ANSPs.

En route costs by entity

Actual real en route costs are -0.8% (-1.7 M€2017) lower than planned. This is the result of lower costs for the main ANSP, skeyes (-3.2%, or -4.2 M€2017) and higher costs for the NSA/EUROCONTROL (+7.1%, or +1.1 M€2017) and the other ANSPs (ANA and MUAC, +2.1%, or +1.5 M€2017).

En route costs for the main ANSP at charging zone level

Lower than planned en route costs in real terms for skeyes in 2023 (-3.2%, or -4.2 M€2017) result from:
- Slightly higher staff costs (+0.8%) due to inflation index impact (-2.8 p.p.) since in nominal terms staff costs are lower than planned by -1.5%;
- Significantly lower other operating costs (-23.0%), primarily due to lower utility costs. Energy costs, which had risen sharply in 2022 due to the economic crisis and the war in Ukraine, decreased more quickly than expected in 2023. Additionally, some revenues were deducted from the 2023 actual cost base, including financial revenues, a SESAR subsidy, and a reversed provision for a legal dispute that was no longer necessary (these costs were not originally included in the plan);
- Higher depreciation (+4.8%), “mainly due to additional depreciation costs after decommissioning of equipment (ISAAC SR4, old WAN), which was not foreseen in the performance plan”; and,
- Significantly lower cost of capital (-12.6%), mainly due to a lower fixed asset base.

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

AUCU components (€/SU) – 2023
Components of the AUCU in 2023 €/SU
DUC 109.02
Inflation adjustment −2.17
Cost exempt from cost-sharing 0.55
Traffic risk sharing adjustment 0.00
Traffic adj. (costs not TRS) −0.17
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues −0.64
Application of lower unit rate 0.00
Total adjustments −2.43
AUCU 106.60
AUCU vs. DUC −2.2%
Cost exempt from cost sharing by item - 2023 €'000 €/SU
New and existing investments 327.6 0.13
Competent authorities and qualified entities costs 28.8 0.01
Eurocontrol costs 1,016.6 0.42
Pension costs −24.9 −0.01
Interest on loans 0.0 0.00
Changes in law 0.0 0.00
Total cost exempt from cost risk sharing 1,348.2 0.55

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2023 (106.60 €) is -2.2% lower than the nominal DUC (109.02 €). The difference between these two figures (-2.43 €/SU) is due to:
- the negative inflation adjustment resulting from lower than planned inflation (-2.17 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (+0.55 €/SU);
- the deduction of the traffic adjustment (-0.17 €/SU) for the costs not subject to traffic risk sharing; and
- the deduction of the other revenues (-0.64 €/SU).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is 3.7%.
It is to be noted that Belgian State did not charge a part of 2023 Eurocontrol costs (0.5 M€2017) to airspace users but covered it through “State intervention”.

Regulatory result (RR)

skeyes net gain on activity in the Belgium-Luxembourg en route charging zone in the year 2023

skeyes reported a net gain of +8.2 M€, as a combination of a gain of +5.5 M€ arising from the cost sharing mechanism, with a gain of +2.7 M€ arising from the traffic risk sharing mechanism.

skeyes 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 (+1.9 M€) amounts to +10.1 M€ (6.4% of the en route revenues). The resulting ex-post rate of return on equity is 19.9%, which is higher than the 3.8% planned in the PP.