Cost-efficiency - Netherlands

Terminal charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 142 74 85 NA
Determined costs 143 75 78 80
Difference costs −2 −1 7 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 terminal AUC was -0.3% (or -0.59 €2017) lower than the planned DUC. This results from the combination of lower than planned terminal costs in real terms (-2.1%, or -1.5 M€2017) and lower than planned TNSUs (-1.8%). It should be noted that actual inflation index in 2023 was +15.7 p.p. higher than planned.

Terminal service units

The difference between actual and planned TNSUs (-1.8%) falls inside the ±2% dead band. Hence loss of terminal revenues is borne by the ANSPs.

Terminal costs by entity

Actual real terminal costs are -2.1% (-1.5 M€2017) lower than planned. This is the result of lower costs for the main ANSP, LVNL (-1.9%, or -1.3 M€2017) and the MET service provider (-9.1%, or -0.2 M€2017).

Terminal costs for the main ANSP at charging zone level

Slightly lower than planned terminal costs in real terms for LVNL in 2023 (-1.9%, or -1.3 M€2017) result from:
- Significantly lower staff costs (-6.2%), due to inflation index impact (-15.7 p.p.) since in nominal terms staff costs are higher than planned by +7.1%; mainly due to summer 2023, wages increased. However, due to the tight labour market, the number of staff on LVNL’s payroll was below the performance plan’s assumptions. Pension costs were lower than expected due to a reduced pension premium;
- Significantly lower other operating costs (-6.4%) ,due to inflation index impact (-15.7 p.p.) since in nominal terms staff costs are higher than planned by +6.8%, mainly due to higher energy costs than expected and the costs of hiring external staff;
- Slightly lower depreciation (-1.3%); and,
- Significantly higher cost of capital (+673.9%) due to the higher interest rates.

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

AUCU components (€/SU) – 2023
Components of the AUCU in 2023 €/SU
DUC 207.09
Inflation adjustment 26.96
Cost exempt from cost-sharing 1.22
Traffic risk sharing adjustment 0.00
Traffic adj. (costs not TRS) 0.13
Finantial incentives 1.02
Modulation of charges 0.00
Cross-financing 0.00
Other revenues −1.96
Application of lower unit rate 0.00
Total adjustments 27.36
AUCU 234.45
AUCU vs. DUC +13.2%
Cost exempt from cost sharing by item - 2023 €'000 €/SU
New and existing investments −144.7 −0.39
Competent authorities and qualified entities costs 0.0 0.00
Eurocontrol costs 0.0 0.00
Pension costs −878.0 −2.38
Interest on loans 1,386.0 3.76
Changes in law 86.0 0.23
Total cost exempt from cost risk sharing 449.3 1.22

The actual terminal unit cost incurred by airspace users (AUCU) in respect of activities performed in 2023 (234.45 €) is +13.2% higher than the nominal DUC (207.09 €). The difference between these two figures (+27.36 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+26.96 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (+1.22 €/SU);
- the addition of the traffic adjustment (+0.13 €/SU) for the costs not subject to traffic risk sharing;
- financial incentives (+1.02 €/SU); and
- the deduction of the other revenues (-1.96 €/SU).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is 2.3%.

Regulatory result (RR)

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

LVNL reported a net gain of +1.8 M€, as a combination of a gain of +2.8 M€ arising from the cost sharing mechanism, with a loss of -1.4 M€ arising from the traffic risk sharing mechanism and a gain of +0.4 M€ relating to financial incentives.

LVNL overall regulatory results (RR) for the terminal 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 gain from the terminal activity mentioned above (+1.8 M€) and corresponds to 2.1% of the en route revenues.