Cost-efficiency - Finland

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PRB monitoring

▪ The en route 2023 actual unit cost of Finland was 55.84 €2017, +35% higher than the determined unit cost (41.43 €2017). The terminal 2023 actual unit cost was 164.57 €2017, +13% higher than the determined unit cost (145.92 €2017).

▪ The en route 2023 actual service units (0.7M) were -39% lower than determined (1.1M) mainly due to shifted traffic flows caused by the Russia’s war of aggression against Ukraine.

▪ The en route 2023 actual total costs were -8.2 M€2017 lower (-18%) compared to determined, as all categories registered lower-than-planned costs. The main reason for the reduction was the lower staff costs (-4.3 M€2017, or -19%) which resulted from various measures including temporary layoffs, a reduction in headcount, the elimination of bonuses, lowered pension costs, deferred recruitment, and other staff-related savings. Other operating costs registered an underspend (-2.0 M€2017, or -12%) due to savings across several categories such as group service fees, voluntary staff costs, and travel expenses.

▪ Fintraffic ANS spent 5.4 M€2017 in 2023 related to costs of investments for both en route and terminal charging zones, -26% lower than determined (7.2 M€2017) due to the postponement of investments.

▪ The en route actual unit cost incurred by users in 2023 was 71.48€ (+63% above the 2023 DUC), while the terminal actual unit cost incurred by users was 220.02€ (+41% above the 2023 DUC). The difference between the AUCU and the DUC is strongly affected by the difference between the determined and actual SU for both the en route and terminal charging zones.

▪ The en route regulatory result for Fintraffic ANS amounted to +5.9 M€, or 14% 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 plan when assessing the RP4 cost-efficiency targets.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 75 40 42 NA
Determined costs 79 45 48 50
Difference costs −4 −6 −6 NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.5% 1.6% 1.8%
Determined inflation index NA 105.7 107.4 109.3
Actual inflation rate NA 7.2% 4.3% NA
Actual inflation index NA 112.4 117.3 NA
Difference inflation index (p.p.) NA +6.7 +9.8 NA

AUC vs. DUC

In 2023, the en route AUC was +34.8% (or +14.41 €2017) higher than the planned DUC. This results from the combination of significantly lower than planned TSUs (-39.4%) and significantly lower than planned en route costs in real terms (-18.3%, or -8.2 M€2017). It should be noted that actual inflation index in 2023 was +9.8 p.p. higher than planned.

En route service units

The difference between the 2023 actual and planned TSUs (-39.4%) falls outside the ±10% threshold foreseen in the traffic risk sharing mechanism. It is reported that “the sanctions due to the war in Ukraine, (….) had a significant impact on traffic”. The resulting loss of en route revenues is therefore shared between the ANSP and the airspace users.

En route costs by entity

The 2023 actual real en route costs are -18.3% (-8.2 M€2017) lower than planned. This is the result of lower than planned costs for the main ANSP, Fintraffic ANS (-20.5%, or -7.9 M€2017) and the MET service provider (-17.0%, or -0.4 M€2017), while for the NSA/EUROCONTROL costs are higher (+2.7%, or +0.1 M€2017) than planned.

En route costs for the main ANSP at charging zone level

The 2023 actual real en route costs for Fintraffic ANS are significantly lower than planned (-20.5%, or -7.9 M€2017), partially due to a higher than planned inflation index and resulting from:
- Significantly lower than planned staff costs in real terms (-21.3%), reported to be mainly due to “ANSP temporary lay-offs, lowered head count, abandoned bonuses, lowered pension costs, postponed recruiting and other savings in staff costs.”,
- Significantly lower than planned other operating costs in real terms (-11.6%), reported to be mainly driven by “lower service fees (HR, Accounting ICT), remote work with less travel costs, less payments to airport operator (Finavia), lower telecom costs, less equipment and spare parts, purchases from military (ATCO) and LFV (ATCO service for Kvarken flights)”,
- Significantly lower than planned depreciation costs (-37.6%) and cost of capital (-41.0%), reported to be mainly “due to postponing investments”.
- Significantly lower than planned deduction for VFR exempted flights (-8.4%).

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

AUCU components (€/SU) – 2023
Components of the AUCU in 2023 €/SU
DUC 43.91
Inflation adjustment 5.39
Cost exempt from cost-sharing −2.91
Traffic risk sharing adjustment 21.86
Traffic adj. (costs not TRS) 3.90
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues −0.65
Application of lower unit rate 0.00
Total adjustments 27.58
AUCU 71.48
AUCU vs. DUC +62.8%
Cost exempt from cost sharing by item - 2023 €'000 €/SU
New and existing investments −1,850.9 −2.81
Competent authorities and qualified entities costs 0.0 0.00
Eurocontrol costs 106.6 0.16
Pension costs −174.7 −0.27
Interest on loans 0.0 0.00
Changes in law 0.0 0.00
Total cost exempt from cost risk sharing −1,919.1 −2.91

The actual en route unit cost incurred by airspace users (AUCU) in respect of the activities performed in 2023 (71.48 €) is +62.8% higher than the 2023 nominal DUC (43.91 €). The difference between these two figures (+27.58 €/SU) is due to:
- the inflation adjustment resulting from higher than planned inflation (+5.39 €/SU);
- the impact of the adjustments resulting from the costs exempted from cost-sharing mechanism (-2.91 €/SU);
- the addition of the traffic risk sharing adjustments (+21.86 €/SU);
- the addition of the traffic adjustment (+3.90 €/SU) for the costs not subject to traffic risk sharing; and
- the deduction of the other revenues (-0.65 €/SU).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is 13.4%.

Regulatory result (RR)

Fintraffic ANS net gain on activity in Finland en route charging zone in the year 2023

Fintraffic ANS reported a net gain of +5.1 M€, as a combination of a gain of +6.9 M€ arising from the cost sharing mechanism, with a loss of -1.8 M€ arising from the traffic risk sharing mechanism.

Fintraffic ANS 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 above mentioned (+5.1 M€) and the actual RoE (+0.7 M€) amounts to +5.9 M€ (14.4% of the en route revenues). The resulting ex-post rate of return on equity is 34.2%, which is higher than the 4.3% planned in the PP.