Cost-efficiency - Croatia

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PRB monitoring

▪ The en route 2023 actual unit cost of Croatia was 31.65 €2017, -31% lower than the determined unit cost (45.84 €2017). Croatia does not have a terminal charging zone.

▪ The en route 2023 actual service units (2.6M) were +32% higher than the determined service units (1.9M).

▪ The en route 2023 actual total costs were -8.1 M€2017 (-9.1%) lower than determined, as all categories registered lower-than-planned costs. This was mainly attributable to lower other operating costs (-4.4 M€2017, or -21%). The NSA attributed this mainly to the deferral of investment projects, which resulted in lower maintenance and third-party services costs, as well as to the lower-than-expected expenditures on licenses and leases of intangible assets. The PRB highlights that the actual number of ATCOs in OPS FTEs for Croatia Control were -13% below plan.

▪ Croatia Control spent 11 M€2017 in 2023 related to costs of investments, -8.9% less than determined (12 M€2017), mainly due to the postponement of investment projects

▪ The en route actual unit cost incurred by users in 2023 was 40.10€ (-17% below the 2023 DUC), mainly affected by higher than planned SUs.

▪ The en route regulatory result for Croatia Control amounted to +16 M€, or 16% of the 2023 revenue. This may indicate that the airspace users are charged for costs which have not materialised in 2023.

▪ The PRB will take into consideration the implementation of the RP3 performance plans when assessing the RP4 cost-efficiency targets and urges Croatia to take immediate, adequate, and proportionate action to implement the relevant ATCO and investment plans committed to in the RP3 performance plan.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 162 87 97 NA
Determined costs 171 86 94 97
Difference costs −9 0 4 NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.1% 1.9% 2.2%
Determined inflation index NA 104.3 106.3 108.7
Actual inflation rate NA 10.7% 8.4% NA
Actual inflation index NA 116.4 126.2 NA
Difference inflation index (p.p.) NA +12.1 +19.9 NA

AUC vs. DUC

In 2023, the en route AUC was -31.0% (or -14.19 €2017) lower than the planned DUC. This results from the combination of significantly higher than planned TSUs (+31.7%) and significantly lower than planned en route costs in real terms (-9.1%, or -8.1 M€2017). It should be noted that actual inflation index in 2023 was +19.9 p.p. higher than planned.

En route service units

The difference between actual and planned TSUs (+31.7%) 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.

En route costs by entity

Actual real en route costs are -9.1% (-8.1 M€2017) lower than planned. This is the result of lower costs for the main ANSP, Croatia Control (-10.2%, or -8.4 M€2017) and higher costs for the NSA/EUROCONTROL (+5.4%, or +0.3 M€2017).

En route costs for the main ANSP at charging zone level

Significantly lower than planned en route costs in real terms for Croatia Control in 2023 (-10.2%, or -8.4 M€2017) result from:
- Significantly lower staff costs in real terms (-6.2%) but higher costs in nominal terms (+11.3%), “predominantly driven by a new CCL collective agreement and the adjustment of labour expenses to partially align with inflation trends”;
- Significantly lower other operating costs (-22.7%), “due to the slowdown of CAPEX-driven operational costs as a result of the postponement of CAPEX projects and to lower-than-planned expenditures on licenses and leases of intangible assets (SaaS)”;
- Significantly lower depreciation (-10.9%), influenced by the decommissioning of assets at the end of their useful life and delays in implementing new CAPEX projects;
- Significantly lower cost of capital (-10.7%), mainly due to the reduction of average value of fixed assets;
- Significantly lower deduction for VFR exempted flights (-28.6%).

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

AUCU components (€/SU) – 2023
Components of the AUCU in 2023 €/SU
DUC 48.05
Inflation adjustment 5.32
Cost exempt from cost-sharing −0.28
Traffic risk sharing adjustment −8.63
Traffic adj. (costs not TRS) −1.54
Finantial incentives −0.37
Modulation of charges 0.00
Cross-financing 0.00
Other revenues −2.44
Application of lower unit rate 0.00
Total adjustments −7.95
AUCU 40.10
AUCU vs. DUC −16.5%
Cost exempt from cost sharing by item - 2023 €'000 €/SU
New and existing investments −1,062.4 −0.41
Competent authorities and qualified entities costs 109.1 0.04
Eurocontrol costs 229.8 0.09
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 −723.5 −0.28

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2023 (40.10 €) is -16.5% lower than the nominal DUC (48.05 €). The difference between these two figures (-7.95 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+5.32 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (-0.28 €/SU);
- the deduction of the traffic risk sharing adjustments (-8.63 €/SU);
- the deduction of the traffic adjustment (-1.54 €/SU) for the costs not subject to traffic risk sharing;
- financial incentives (-0.37 €/SU); and
- the deduction of the other revenues (-2.44 €/SU).
The share of the regulatory result (see items 10 to 13) in the AUCU (before the deduction of other revenues) is 14.9%.

Regulatory result (RR)

Croatia Control net gain on activity in the Croatia en route charging zone in the year 2023

Croatia Control reported a net gain of +11.8 M€, as a combination of a gain of +9.2 M€ arising from the cost sharing mechanism, with a gain of +3.6 M€ arising from the traffic risk sharing mechanism and a loss of -1.0 M€ relating to financial incentives.

Croatia Control 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 (+11.8 M€) and the actual RoE (+4.5 M€) amounts to +16.3 M€ (15.9% of the en route revenues). The resulting ex-post rate of return on equity is 25.5%, which is higher than the 7.0% planned in the PP.

Note: Croatia joined the euro area on 1 January 2023. On that date the euro replaced the Croatian kuna at the fixed exchange rate of €1 = HRK 7.53450. This may result in slight differences in determined and actual costs comparing to previous monitoring reports.