Cost-efficiency - Denmark

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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 48 24 26 NA
Determined costs 48 24 25 25
Difference costs 0 0 1 NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.4% 1.5% 1.6%
Determined inflation index NA 104.2 105.7 107.4
Actual inflation rate NA 8.5% 3.4% NA
Actual inflation index NA 112.5 116.3 NA
Difference inflation index (p.p.) NA +8.2 +10.5 NA

AUC vs. DUC

In 2023, the terminal AUC was +4.1% (or +45.53 DKK2017, +6.12 €2017) higher than the planned DUC. This results from the combination of significantly lower than planned TNSUs (-6.6%) and lower than planned terminal costs in real terms (-2.8%, or -4.8 MDKK2017, -0.7 M€2017). Actual inflation index in 2023 was +10.5 p.p. higher than planned.

Terminal service units

The difference between actual and planned TNSUs (-6.6%) falls outside the ±2% dead band, but does not exceed the ±10% threshold foreseen in the traffic risk sharing mechanism. The resulting loss of terminal revenues is therefore shared between the ANSP and the airspace users.

Terminal costs by entity

Actual real terminal costs are -2.8% (-0.7 M€2017) lower than planned. This is the result of lower costs for the main ANSP, NAVIAIR (-2.9%, or -0.7 M€2017) and higher costs for the MET service provider (+15.5%, or +0.03 M€2017).

Terminal costs for the main ANSP at charging zone level

Lower than planned terminal costs in real terms for NAVIAIR in 2023 (-2.9%, or -0.7 M€2017) result from:
- Slightly lower staff costs (-1.5%), in real terms due to the inflation index impact (+10.5 p.p.). In nominal terms staff costs are above the plan (+8.3%), explained by “high level of extra shifts, and not realised effects from the implementation of the Strategy”.
- Significantly lower other operating costs (-6.4%) in real terms due to the impact of inflation index. In nominal terms other operating costs are above the plan (+2.9%), which result from higher energy and training costs.
- Significantly lower depreciation (-9.9%), reflecting “fewer and delayed investments and later deployment”;
- Significantly higher cost of capital (+15.8%), reflecting “higher interest rate on loan and increased asset base”;
- No deduction through exceptional costs which was included in the PP to reduce the level of terminal cost-base.

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

AUCU components (€/SU) – 2023
Components of the AUCU in 2023 €/SU
DUC 155.05
Inflation adjustment 13.89
Cost exempt from cost-sharing -1.11
Traffic risk sharing adjustment 5.32
Traffic adj. (costs not TRS) 0.09
Finantial incentives -0.82
Modulation of charges 0.00
Cross-financing 0.00
Other revenues -0.95
Application of lower unit rate 0.00
Total adjustments 16.42
AUCU 171.47
AUCU vs. DUC + 10.6%
Cost exempt from cost sharing by item - 2023 €'000 €/SU
New and existing investments -165.0 -1.11
Competent authorities and qualified entities costs 0.0 0.00
Eurocontrol costs 0.0 0.00
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 -165.0 -1.11

The actual terminal unit cost incurred by airspace users (AUCU) in respect of activities performed in 2023 (1277.26 DKK or 171.47 €) is +10.6% higher than the nominal DUC (1154.95 DKK or 155.05 €). The difference between these two figures (+122.31 DKK/SU or +16.42 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+103.50 DKK/SU or +13.89 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (-8.25 DKK/SU or -1.11 €/SU);
- the addition of the traffic risk sharing adjustments (+39.61 DKK/SU or +5.32 €/SU);
- the addition of the traffic adjustment (+0.67 DKK/SU or +0.09 €/SU) for the costs not subject to traffic risk sharing;
- financial incentives (-6.13 DKK/SU or -0.82 €/SU); and
- the deduction of the other revenues (-7.08 DKK/SU or -0.95 €/SU).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is 4.1%.

Regulatory result (RR)

NAVIAIR net gain on activity in the Denmark terminal charging zone in the year 2023

NAVIAIR reported a net loss of -2.4 MDKK, as a combination of a gain of +4.7 MDKK arising from the cost sharing mechanism, with a loss of -6.2 MDKK arising from the traffic risk sharing mechanism and a loss of -0.9 MDKK relating to financial incentives.

NAVIAIR overall regulatory results (RR) for the terminal activity

Ex-post, the overall RR taking into account the net loss from the terminal activity mentioned above (-2.4 MDKK) and the actual RoE (+10.4 MDKK) amounts to +8.1 MDKK (4.3% of the terminal revenues). The resulting ex-post rate of return on equity is 3.9%, which is lower than the 5.0% planned in the PP.