Cost-efficiency - Hungary

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PRB monitoring

▪ The en route 2023 actual unit cost of Hungary was 26.93 €2017, -30% lower than the determined unit cost (38.32 €2017). The terminal 2023 actual unit cost was 274.94 €2017, -24% lower than the determined unit cost (362.91 €2017).

▪ The en route 2023 actual service units (3.7M) were +29% higher than the determined service units (2.9M).

▪ In 2023, the en route actual total costs were -10 M€2017 lower (-9.1%) compared to determined. The underspend in actual costs was mainly attributable to staff costs (-7.4 M€2017, or -15%), which resulted from lower-than-expected headcount. Additionally, the underspend of other operating costs (-3.9 M€2017, or -11%) was mainly due to savings arising from various rising expenses, such as energy prices and external service charges, that increased at a rate below inflation. The cost of capital was the only cost category to register an increase (+2.6 M€2017, or +35%), mainly due to a significant growth in net current assets (+38 M€2017, or +168%). The NSA attributed the higher-than-planned net current assets to the inclusion of pension-related obligations, a situation that was also reported in 2022.

▪ Hungary presented a deviation from the criteria to achieve capacity targets, which was considered justified. As was the case in 2022, costs have stayed significantly below the determined, while the capacity targets have not been met.

▪ HungaroControl spent 29 M€2017 in 2023 related to costs of investments for both en route and terminal charging zones, -21% less than determined (36 M€2017), mainly due to some investments being scheduled later than determined.

▪ The en route actual unit cost incurred by users in 2023 was 32.94€ (-7.8% below the 2023 DUC), while the terminal actual unit cost incurred by users was 335.29€ (+0.4% above the 2023 DUC).

▪ The en route regulatory result for HungaroControl amounted to +21 M€, or 19% 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 recommends that the NSA of Hungary submits a detailed report of the capacity-related measures implemented during 2024. Should the RP3 planned measures not be implemented by the end of RP3, the PRB recommends Hungary to consider the reimbursement to airspace users of excess funds received by ANSPs for measures not implemented.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 191 117 137 NA
Determined costs 195 124 127 132
Difference costs −4 −7 10 NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 3.5% 3.3% 3.0%
Determined inflation index NA 118 121.9 125.5
Actual inflation rate NA 15.3% 17.0% NA
Actual inflation index NA 133.4 156.1 NA
Difference inflation index (p.p.) NA +15.4 +34.3 NA

AUC vs. DUC

In 2023, the en route AUC was -29.7% (or -3 520.25 HUF2017, -11.39 €2017) lower than the planned DUC. This results from the combination of significantly higher than planned TSUs (+29.3%) and significantly lower than planned en route costs in real terms (-9.1%, or -3 115.7 MHUF2017, -10.1 M€2017). It should be noted that actual inflation index in 2023 was +34.3 p.p. higher than planned.

En route service units

The difference between actual and planned TSUs (+29.3%) 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% (-10.1 M€2017) lower than planned. This is the result of lower costs for the main ANSP, HungaroControl (-9.8%, or -9.4 M€2017), the MET service provider (-14.8%, or -0.5 M€2017) and the NSA/EUROCONTROL (-1.8%, or -0.2 M€2017).

En route costs for the main ANSP at charging zone level

Significantly lower than planned en route costs in real terms for HungaroControl in 2023 (-9.8%, or -9.4 M€2017) result from:
- Significantly lower staff costs in real terms (-14.5%), but higher in nominal terms (+9.6%), due to a higher than expected inflation which led to an increase in ATCO and non-ATCO salaries above the performance plan, albeit partially offset by lower-than-expected headcount;
- Significantly lower other operating costs in real terms (-14.2%), but higher in nominal terms (+10.0%), due to higher energy prices, external service charges, local business taxes and liability insurance premiums;
- Significantly lower depreciation (-8.7%), due to the postponement or delay in the implementation of investments;
- Significantly higher cost of capital (+33.2%), mainly due to the recognition of the pension related obligations towards the ATCO’s in the employed capital.

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

AUCU components (€/SU) – 2023
Components of the AUCU in 2023 €/SU
DUC 35.73
Inflation adjustment 5.65
Cost exempt from cost-sharing −0.70
Traffic risk sharing adjustment −6.07
Traffic adj. (costs not TRS) −0.95
Finantial incentives −0.14
Modulation of charges 0.00
Cross-financing 0.00
Other revenues −0.57
Application of lower unit rate 0.00
Total adjustments −2.79
AUCU 32.94
AUCU vs. DUC −7.8%
Cost exempt from cost sharing by item - 2023 €'000 €/SU
New and existing investments −2,455.5 −0.66
Competent authorities and qualified entities costs −466.0 −0.13
Eurocontrol costs 301.9 0.08
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 −2,619.5 −0.70

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2023 (12 556.95 HUF or 32.94 €) is -7.8% lower than the nominal DUC (13 619.05 HUF or 35.73 €). The difference between these two figures (-1 062.10 HUF/SU or -2.79 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+2 155.31 HUF/SU or +5.65 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (-268.03 HUF/SU or -0.70 €/SU);
- the deduction of the traffic risk sharing adjustments (-2 314.62 HUF/SU or -6.07 €/SU);
- the deduction of the traffic adjustment (-363.26 HUF/SU or -0.95 €/SU) for the costs not subject to traffic risk sharing;
- financial incentives (-52.66 HUF/SU or -0.14 €/SU); and
- the deduction of the other revenues (-218.84 HUF/SU or -0.57 €/SU).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is 17.6%.

Regulatory result (RR)

HungaroControl net gain on activity in the Hungary en route charging zone in the year 2023

HungaroControl reported a net gain of +5 136.4 MHUF, as a combination of a gain of +3 809.3 MHUF arising from the cost sharing mechanism, with a gain of +1 523.3 MHUF arising from the traffic risk sharing mechanism and a loss of -196.2 MHUF relating to financial incentives.

HungaroControl 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 (+5 136.4 MHUF) and the actual RoE (+3 016.7 MHUF) amounts to +8 153.1 MHUF (19.0% of the en route revenues). The resulting ex-post rate of return on equity is 19.3%, which is higher than the 8.0% planned in the PP.