Cost-efficiency - Netherlands

PRB monitoring

▪ The en route 2023 actual unit cost of the Netherlands was 82.08 €2017, +8.4% higher than the determined unit cost (75.73 €2017). The terminal 2023 actual unit cost was 189.10 €2017, -0.3% lower than the determined unit cost (189.69 €2017).

▪ The en route 2023 actual service units (2.8M) were -8.0% lower than the determined service units (3.1M).

▪ In 2023, the en route actual total costs were -0.7 M€2017 lower (-0.3%) than the determined costs. The reduction was mainly due to lower-than-planned staff costs (-18 M€2017, or -12%). This reduction was influenced by the impact of the inflation as, in nominal terms, there was a slight increase in actual staff costs of +0.4% when compared to the determined figures. On the other hand, Netherlands registered higher actual other operating costs (+11.0 M€2017, or +17%) and cost of capital (+5.9 M€2017 or +621%) when compared to determined costs. The difference in cost of capital is primarily attributed to the rising interest rates (from 0.28% to 2.53%).

▪ LVNL spent 27 M€2017 in 2023 related to costs of investments for both en route and terminal charging zones, which is +2.2% higher than determined.

▪ The en route actual unit cost incurred by users in 2023 was 96.69€ (+18% above the 2023 DUC), while the terminal actual unit cost incurred by users was 234.45€ (+13% above the 2023 DUC). The difference between the AUCU and the DUC for both charging zones is mainly driven by the inflation adjustment (+31 M€ for the en route charging zone and +9.9 M€ for the terminal charging zone).

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 474 245 281 NA
Determined costs 478 246 253 259
Difference costs −4 −1 28 NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.5% 1.6% 1.6%
Determined inflation index NA 108.6 110.3 112.1
Actual inflation rate NA 11.6% 4.1% NA
Actual inflation index NA 121 126 NA
Difference inflation index (p.p.) NA +12.5 +15.7 NA

AUC vs. DUC

In 2023, the en route AUC was +8.4% (or +6.35 €2017) higher than the planned DUC. This results from the combination of significantly lower than planned TSUs (-8.0%) and slightly lower than planned en route costs in real terms (-0.3%, or -0.7 M€2017). It should be noted that actual inflation index in 2023 was +15.7 p.p. higher than planned.

En route service units

The difference between actual and planned TSUs (-8.0%) 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 -0.3% (-0.7 M€2017) lower than planned. This is the result of lower costs for the other ANSP (MUAC (Netherlands), -12.7%, or -5.3 M€2017) and the MET service provider (-9.8%, or -1.0 M€2017) and higher costs for the NSA/EUROCONTROL (+6.9%, or +1.2 M€2017) and the main ANSP, LVNL (+2.7%, or +4.4 M€2017).

En route costs for the main ANSP at charging zone level

Higher than planned en route costs in real terms for LVNL in 2023 (+2.7%, or +4.4 M€2017) result from:
- Significantly lower staff costs (-11.8%), due to inflation index impact (-15.7 p.p.) since in nominal terms staff costs are slightly higher than planned by +0.7%; mainly because a combination of opposite factors, “in summer 2023 the wages increased. The number of staff on LVNLs payroll is below the assumed number of staff in the performance plan due to the tight labour market conditions. Pension costs were lower than expected due to a reduced pension premium compared to the performance plan’:
- Significantly higher other operating costs (+31.0%), mainly due to energy costs higher than expected and the costs of hiring external staff;
- Higher depreciation (+3.9%), non specific driver information has been provided;
- Significantly higher cost of capital (+666.0%), due to the higher interest rates; and
- Significantly lower deduction for VFR exempted flights (-8.2%).

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

AUCU components (€/SU) – 2023
Components of the AUCU in 2023 €/SU
DUC 82.26
Inflation adjustment 10.79
Cost exempt from cost-sharing −0.45
Traffic risk sharing adjustment 3.34
Traffic adj. (costs not TRS) 0.83
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues −2.54
Application of lower unit rate 0.00
Total adjustments 11.97
AUCU 94.22
AUCU vs. DUC +14.6%
Cost exempt from cost sharing by item - 2023 €'000 €/SU
New and existing investments −602.8 −0.21
Competent authorities and qualified entities costs −373.5 −0.13
Eurocontrol costs 1,595.0 0.56
Pension costs −1,978.0 −0.70
Interest on loans 0.0 0.00
Changes in law 86.0 0.03
Total cost exempt from cost risk sharing −1,273.3 −0.45

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2023 (99.69 €) is +17.6% higher than the nominal DUC (82.26 €). The difference between these two figures (+14.44 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+10.79 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (+2.02 €/SU);
- the addition of the traffic risk sharing adjustments (+3.34 €/SU);
- the addition of the traffic adjustment (+0.83 €/SU) for the costs not subject to traffic risk sharing; and
- the deduction of the other revenues (-2.54 €/SU).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is 0.02%.

Regulatory result (RR)

LVNL net gain on activity in the Netherlands en route charging zone in the year 2023

LVNL reported a net loss of -5.8 M€, as a combination of a gain of +0.9 M€ arising from the cost sharing mechanism, with a loss of -6.8 M€ arising from the traffic risk sharing mechanism.

LVNL overall regulatory results (RR) for the en route activity

LVNL has no return on equity, as its assets are entirely financed through debt, no ex-ante estimated surplus was embedded in the cost of capital provided in the PP for RP3. Therefore, ex-post, the overall RR is equal to the net loss from the en route activity mentioned above (-5.8 M€) and corresponds to -2.9% of the en route revenues.