Cost-efficiency - Ireland

Download Report

Terminal charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 40 31 31 NA
Determined costs 41 28 31 32
Difference costs -1 3 0 NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.9% 2.0% 2.0%
Determined inflation index NA 105.2 107.3 109.4
Actual inflation rate NA 8.1% 5.2% NA
Actual inflation index NA 112.5 118.3 NA
Difference inflation index (p.p.) NA +7.3 +11 NA

AUC vs. DUC

In 2023, the terminal AUC was -16.1% (or -27.05 €2017) lower than the planned DUC. This results from the combination of significantly higher than planned TNSUs (+10.0%) and significantly lower than planned terminal costs in real terms (-7.7%, or -2.3 M€2017). It should be noted that actual inflation index in 2023 was +11.0 p.p. higher than planned.

Terminal service units

The difference between actual and planned TNSUs (+10.0%) falls outside the ±2% dead band, but does not exceed the ±10% threshold foreseen in the traffic risk sharing mechanism. The resulting gain of additional terminal revenues is therefore shared between the ANSP and the airspace users.

Terminal costs by entity

Actual real terminal costs are -7.7% (-2.3 M€2017) lower than planned. This is the result of lower costs for the main ANSP, AirNav Ireland (-8.2%, or -2.2 M€2017) and the MET service provider (-16.3%, or -0.3 M€2017), while the NSA costs are higher (+13.1%, or +0.2 M€2017) than planned.

Terminal costs for the main ANSP at charging zone level

Significantly lower than planned terminal costs in real terms for AirNav Ireland in 2023 (-8.2%, or -2.2 M€2017) resulting mainly from inflation index impact (+11.0 p.p.) since in nominal terms terminal costs are lower than planned by -1.1%. Other drivers are:
- Slightly higher staff costs (+1.2%) or +11.6% in nominal terms, due to the same drivers described in the en route staff cots;
- Lower other operating costs (-4.0%) or +5.9% in nominal terms, due to higher costs than planned costs of training, systems and equipment maintenances;
- Significantly lower depreciation (-26.7%), reflecting delays in the implementation of the investment programme due to staff shortages as well as knock on impacts from COVID-19 and challenges with sourcing contractors; and
- Significantly lower cost of capital (-14.4%) mainly due to delays in project completions as outlined above.

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

AUCU components (€/SU) – 2023
Components of the AUCU in 2023 €/SU
DUC 175.78
Inflation adjustment 10.53
Cost exempt from cost-sharing -9.80
Traffic risk sharing adjustment -8.03
Traffic adj. (costs not TRS) -1.63
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues -3.51
Application of lower unit rate 0.00
Total adjustments -12.43
AUCU 163.34
AUCU vs. DUC -7.1%
Cost exempt from cost sharing by item - 2023 €'000 €/SU
New and existing investments -2,063.3 -10.70
Competent authorities and qualified entities costs 172.6 0.89
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 -1,890.7 -9.80

The actual terminal unit cost incurred by airspace users (AUCU) in respect of activities performed in 2023 (163.34 €) is -7.1% lower than the nominal DUC (175.78 €). The difference between these two figures (-12.43 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+10.53 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (-9.80 €/SU);
- the deduction of the traffic risk sharing adjustments (-8.03 €/SU);
- the deduction of the traffic adjustment (-1.63 €/SU) for the costs not subject to traffic risk sharing; and
- the deduction of the other revenues (-3.51 €/SU).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is 15.8%.

Regulatory result (RR)

AirNav Ireland net gain on activity in the Ireland terminal charging zone in the year 2023

AirNav Ireland reported a net gain of +1.4 M€, as a combination of a gain of +0.1 M€ arising from the cost sharing mechanism, with a gain of +1.2 M€ arising from the traffic risk sharing mechanism.

AirNav Ireland overall regulatory results (RR) for the terminal activity

Ex-post, the overall RR taking into account the net gain from the terminal activity mentioned above (+1.4 M€) and the actual RoE (+3.4 M€) amounts to +4.8 M€ (16.6% of the terminal revenues). The resulting ex-post rate of return on equity is 7.9%, which is higher than the 5.6% planned in the PP.