Cost-efficiency - Germany

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PRB monitoring

▪ The en route 2023 actual unit cost of Germany was 62.96 €2017, -0.5% lower than the determined unit cost (63.29 €2017). The terminal 2023 actual unit cost was 227.93 €2017, +15% higher than the determined unit cost (198.63 €2017).

▪ The en route 2023 actual service units (14M) were -8.8% lower than the determined service units (15M).

▪ In 2023, the en route actual total costs were -83 M€2017 lower (-8.8%) than determined. This substantial reduction was primarily due to the reduction in staff costs (-79 M€2017, or -11%). This reduction was influenced by the impact of the inflation as, in nominal terms, there was a slight increase in actual staff costs of +0.6% when compared to the determined figures. The PRB highlights that the actual number of ATCOs in OPS FTEs for DFS were -16% below plan.

▪ DFS spent 93 M€2017 in 2023 related to costs of investments for both en route and terminal charging zones, -16% less than determined (111 M€2017). This reduction was a result of a significant underspend in the cost of capital (-59%), which is largely due to lower interest rates, affected by the pension scheme’s interest balance and the ANSP’s net interest income. Additionally, there is a gap in depreciation costs (-13%), mainly as a result of the decision not to proceed with the implementation of iCAS in Langen.

▪ The en route actual unit cost incurred by users in 2023 was 78.59€ (+16% above the 2023 DUC), while the terminal actual unit cost incurred by users was 276.30€ (+29% above the 2023 DUC). The difference between the AUCU and the DUC for the en route charging zone is primarily attributed to the inflation adjustment (+114 M€), while for the terminal charging zone, it is mainly due to lower than planned SUs (-18%).

▪ The PRB will take into consideration the implementation of the RP3 performance plans when assessing the RP4 cost-efficiency targets and urges Germany 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 1,877 1,000 1,024 NA
Determined costs 1,935 977 1,010 1,034
Difference costs −59 23 14 NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.1% 1.5% 1.7%
Determined inflation index NA 107.2 108.8 110.6
Actual inflation rate NA 8.7% 6.0% NA
Actual inflation index NA 116.4 123.4 NA
Difference inflation index (p.p.) NA +9.1 +14.5 NA

AUC vs. DUC

In 2023, the en route AUC was -0.5% (or -0.33 €2017) lower than the planned DUC. This results from the combination of significantly lower than planned en route costs in real terms (-8.8%, or -83.2 M€2017) and significantly lower than planned TSUs (-8.4%). It should be noted that actual inflation index in 2023 was +14.5 p.p. higher than planned.

En route service units

The difference between actual and planned TSUs (-8.4%) 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.

En route costs by entity

Actual real en route costs are -8.8% (-83.2 M€2017) lower than planned. This is the result of lower costs for the main ANSP, DFS (-9.2%, or -70.9 M€2017), the other ANSP (MUAC (Germany), -12.5%, or -12.9 M€2017) and the MET service provider (-38.6%, or -4.4 M€2017) and higher costs for the NSA/EUROCONTROL (+8.8%, or +5.0 M€2017).

En route costs for the main ANSP at charging zone level

Significantly lower than planned en route costs for DFS (-9.2%, or -70.9 M€2017) result from:
- Significantly lower staff costs (-10.5%), mainly due to inflation index impact as in nominal terms staff costs are higher than planned by +1.5%, due to new wage collective agreement, compensation for the inflation and extraordinary payments for additional shifts and overtime.
- Significantly higher other operating costs (+9.4%), as a result of inflation, higher prices of gas, more external staff employed than expected and intensification of the recruiting and training activities related to operational staff.
- Significantly lower depreciation (-10.2%), mainly due to “the decision not to implement iCAS in Langen, including the dedicated projects. Additionally, some maintenance actions such as iCAS product management, transmission paths and LAN for ATS Components lead to the reduction”.
- Significantly lower cost of capital (-46.2%), mainly due to the coverage gap for interest on pensions, which is recalculated annually based on differences between planned and actual interest rates. The 2023 cost of capital exclude the income of commercial papers, which had previously been included in the actual costs of 2021 and 2022.

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

AUCU components (€/SU) – 2023
Components of the AUCU in 2023 €/SU
DUC 67.96
Inflation adjustment 8.39
Cost exempt from cost-sharing −0.26
Traffic risk sharing adjustment 3.08
Traffic adj. (costs not TRS) 0.43
Finantial incentives −0.30
Modulation of charges 0.00
Cross-financing 0.00
Other revenues −0.69
Application of lower unit rate 0.00
Total adjustments 10.63
AUCU 78.59
AUCU vs. DUC +15.6%
Cost exempt from cost sharing by item - 2023 €'000 €/SU
New and existing investments −8,031.3 −0.59
Competent authorities and qualified entities costs −1,611.9 −0.12
Eurocontrol costs 6,650.6 0.49
Pension costs −1,595.4 −0.12
Interest on loans 0.0 0.00
Changes in law 1,016.1 0.07
Total cost exempt from cost risk sharing −3,571.9 −0.26

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2023 (78.59 €) is +15.6% higher than the nominal DUC (67.96 €). The difference between these two figures (+10.63 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+8.39 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (-0.26 €/SU);
- the addition of the traffic risk sharing adjustments (+3.08 €/SU);
- the addition of the traffic adjustment (+0.43 €/SU) for the costs not subject to traffic risk sharing;
- financial incentives (-0.30 €/SU); and
- the deduction of the other revenues (-0.69 €/SU).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is 5.1%.

Regulatory result (RR)

DFS net gain on activity in the Germany en route charging zone in the year 2023

DFS reported a net gain of +39.2 M€, as a combination of a gain of +75.7 M€ arising from the cost sharing mechanism, with a loss of -32.4 M€ arising from the traffic risk sharing mechanism and a loss of -4.1 M€ relating to financial incentives.

DFS 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 (+39.2 M€) amounts to +39.2 M€ (4.4% of the en route revenues), as the RoE for DFS has been set to zero. The resulting ex-post rate of return on equity is 3.4%.