Cost-efficiency - Lithuania

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PRB monitoring

▪ The en route 2023 actual unit cost of Lithuania was 46.29 €2017, -1.3% lower than the determined unit cost (46.90 €2017). Lithuania does not have a terminal charging zone.

▪ The en route 2023 actual service units (0.40M) were -2.8% lower than the determined service units (0.42M).

▪ The en route 2023 actual total costs were -0.8 M€2017 (-4.1%) lower than determined. The primary factor contributing to this difference relates to other operating costs (-200 K€2017, or -4.9%). This gap was due to energy costs that were lower than anticipated, as well as delays in the tender process for the maintenance services.

▪ The ANSPs spent 4.0 M€2017 in 2023 related to costs of investments, -9.8% less than determined (4.4 M€2017), driven by delayed investments.

▪ The en route actual unit cost incurred by users in 2023 was 60.27€ (+0.6% above the 2023 DUC).

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 41 22 24 NA
Determined costs 40 22 25 26
Difference costs 1 0 -1 NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 17.9% 8.5% 3.0%
Determined inflation index NA 130.6 141.7 146
Actual inflation rate NA 18.9% 8.7% NA
Actual inflation index NA 131.7 143.2 NA
Difference inflation index (p.p.) NA +1.1 +1.5 NA

AUC vs. DUC

In 2023, the en route AUC was -1.3% (or -0.62 €2017) lower than the planned DUC. This results from the combination of lower than planned en route costs in real terms (-4.1%, or -0.8 M€2017) and lower than planned TSUs (-2.8%).

En route service units

The difference between actual and planned TSUs (-2.8%) 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 -4.1% (-0.8 M€2017) lower than planned. This is the result of lower costs for the main ANSP, Oro Navigacija (-4.6%, or -0.8 M€2017), the MET service provider (-8.0%, or -0.04 M€2017) and the other ANSP (LGS-Ninta Adaxa, -3.3%) and higher costs for the NSA/EUROCONTROL (+1.5%).

En route costs for the main ANSP at charging zone level

Lower than planned en route costs in real terms for Oro Navigacija in 2023 (-4.6%, or -0.8 M€2017) result from:
- Slightly lower staff costs (-0.6%) in real terms, reflecting the impact of the inflation index (+1.5 p.p.) since, in nominal terms, staff costs were slightly above the plan (+0.5%), which is explained by “significantly higher starting salaries [for new staff] – due to continuous pressures and very competitive labour-market and continuous double-digit annual average salaries growth in Lithuania”.
- Significantly lower other operating costs (-14.4%) reflecting lower than planned energy costs as well as delays in tender process for key ATM system’s maintenance services.
- Lower depreciation (-5.5%), due to slight delays in the implementation of investment programme.
- Significantly lower cost of capital (-12.4%) resulting from lower than planned asset base.

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

AUCU components (€/SU) – 2023
Components of the AUCU in 2023 €/SU
DUC 59.90
Inflation adjustment 0.47
Cost exempt from cost-sharing -0.91
Traffic risk sharing adjustment 0.32
Traffic adj. (costs not TRS) 0.18
Finantial incentives 0.54
Modulation of charges 0.00
Cross-financing 0.00
Other revenues -0.17
Application of lower unit rate 0.00
Total adjustments 0.44
AUCU 60.34
AUCU vs. DUC + 0.7%
Cost exempt from cost sharing by item - 2023 €'000 €/SU
New and existing investments -415.8 -1.03
Competent authorities and qualified entities costs -127.0 -0.31
Eurocontrol costs 177.1 0.44
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 -365.8 -0.91

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2023 (60.27 €) is +0.6% higher than the nominal DUC (59.90 €). The difference between these two figures (+0.37 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+0.47 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (-0.98 €/SU);
- the addition of the traffic risk sharing adjustments (+0.32 €/SU);
- the addition of the traffic adjustment (+0.18 €/SU) for the costs not subject to traffic risk sharing; and
- financial incentives (+0.54 €/SU).
- the deduction of the other revenues (-0.17 €/SU).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is 7.2%.

Regulatory result (RR)

Oro Navigacija net gain on activity in the Lithuania en route charging zone in the year 2023

Oro Navigacija reported a net gain of +0.2 M€, as a combination of a gain of +0.5 M€ arising from the cost sharing mechanism, with a loss of -0.5 M€ arising from the traffic risk sharing mechanism and a gain of +0.2 M€ relating to financial incentives.

Oro Navigacija 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 (+0.2 M€) and the actual RoE (+1.4 M€) amounts to +1.6 M€ (7.7% of the en route revenues). The resulting ex-post rate of return on equity is 5.9%, which is higher than the 5.0% planned in the PP.