Cost-efficiency - Poland

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PRB monitoring

▪ The en route 2023 actual unit cost of Poland was 50.73 €2017, +26% higher than the determined unit cost (40.42 €2017). The terminal zone 1 actual unit cost was 110.52 €2017, which is +2.5% higher than the determined unit cost (107.80 €2017), while the terminal zone 2 actual unit cost was 223.23 €2017, -6.2% lower than the determined unit cost (238.06 €2017).

▪ The en route 2023 actual service units (3.5M) were -26% lower than the determined service units (4.8M), mainly due to shifted traffic flows caused by Russia’s war of aggression against Ukraine.

▪ In 2023, the en route actual total costs were -13 M€2017 (-6.8%) lower than determined, mainly due to the difference in other operating costs (-10 M€2017, or -22%). This substantial cost reduction was primarily due to lower expenses in several areas, including training, outsourced IT services, rental expenses, consultancy fees, and maintenance costs.

▪ Poland presented a deviation from the criteria to achieve capacity targets, which was considered justified. Considering that costs are significantly lower and that the 2023 en route capacity targets have not been achieved, the situation raises serious concern.

▪ PANSA spent 46 M€2017 in 2023 related to costs of investments for both en route and terminal charging zones, which is -1.8% lower than determined (47 M€2017).

▪ The en route actual unit cost incurred by users in 2023 was 60.17€ (+42% above the 2023 DUC), while the terminal zone 1 actual unit cost incurred by users was 134.74€ (+18% above the 2023 DUC) and 252.15€ (+0.1% above the 2023 DUC) for terminal zone 2. The difference between the AUCU and the DUC for both charging zones is mainly driven by the inflation adjustment (+33 M€ for the en route charging zone and +2.0 M€ for the terminal charging zone).

▪ 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 Poland 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 Poland 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 330 202 233 NA
Determined costs 377 206 215 223
Difference costs -47 -4 18 NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 2.5% 2.5% 2.5%
Determined inflation index NA 113.4 116.2 119.1
Actual inflation rate NA 13.2% 10.9% NA
Actual inflation index NA 127.6 141.5 NA
Difference inflation index (p.p.) NA +14.2 +25.3 NA

AUC vs. DUC

In 2023, the en route AUC was +25.5% (or +43.9 PLN2017, +10.32 €2017) higher than the planned DUC. This results from the combination of significantly lower than planned TSUs (-25.7%) and lower than planned en route costs in real terms (-6.8%, or -55.6 MPLN2017, -13.1 M€2017). It should be noted that actual inflation index in 2023 was +25.3 p.p. higher than planned.

En route service units

The difference between actual and planned TSUs (-25.7%) falls outside 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 -6.8% (-13.1 M€2017) lower than planned. This is the result of lower costs for the main ANSP, PANSA (-6.1%, or -10.3 M€2017), the NSA/EUROCONTROL (-13.4%, or -2.0 M€2017) and the MET service provider (-9.8%, or -0.8 M€2017).

En route costs for the main ANSP at charging zone level

Lower than planned en route costs in real terms for PANSA in 2023 (-6.1%, or -10.3 M€2017) result from:
- Slightly lower staff costs in real terms (-0.8%) but higher in nominal terms (+ 20.8%); driven by significant increase in inflation rates; these costs reflect mainly obligations of PANSA towards its employees based on the current remuneration scheme reflecting inflation compensation payments calculated for 2022 and 2023;
- Significantly lower other operating costs in real terms (-27.3%) and nominal terms (-11.5%), driven by cost reductions which more than offset the increase in energy costs due to higher energy prices.
- Lower depreciation (-7.3%), mainly due to “uncertainty from global crises and the war in Ukraine, which led to the postponement or review of some projects.”
- Slightly lower cost of capital (-0.5%) mainly due to a lower asset base, despite a higher WACC rate caused by a substantial increase in the annual interest rate on debt and rising WIBOR reference rates.
- Significantly lower deduction for VFR exempted flights in real terms (-19.3%) and nominal terms (-1.8%).

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

AUCU components (€/SU) – 2023
Components of the AUCU in 2023 €/SU
DUC 42.29
Inflation adjustment 9.21
Cost exempt from cost-sharing -1.00
Traffic risk sharing adjustment 10.80
Traffic adj. (costs not TRS) 1.63
Finantial incentives -1.01
Modulation of charges 0.00
Cross-financing 0.00
Other revenues -1.70
Application of lower unit rate 0.00
Total adjustments 17.93
AUCU 60.22
AUCU vs. DUC + 42.4%
Cost exempt from cost sharing by item - 2023 €'000 €/SU
New and existing investments -2,018.9 -0.57
Competent authorities and qualified entities costs 207.5 0.06
Eurocontrol costs -1,926.4 -0.54
Pension costs 0.0 0.00
Interest on loans 206.5 0.06
Changes in law 0.0 0.00
Total cost exempt from cost risk sharing -3,531.3 -1.00

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2023 (273.07 PLN or 60.17 €) is +42.3% higher than the nominal DUC (191.90 PLN or 42.29 €). The difference between these two figures (+81.17 PLN/SU or +17.89 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+41.79 PLN/SU or +9.21 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (-4.73 PLN/SU or -1.04 €/SU);
- the addition of the traffic risk sharing adjustments (+49.03 PLN/SU or +10.80 €/SU);
- the addition of the traffic adjustment (+7.38 PLN/SU or +1.63 €/SU) for the costs not subject to traffic risk sharing;
- financial incentives (-4.60 PLN/SU or -1.01 €/SU); and
- the deduction of the other revenues (-7.71 PLN/SU or -1.70 €/SU).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is 4.8%.

Regulatory result (RR)

PANSA net gain on activity in the Poland en route charging zone in the year 2023

PANSA reported a net loss of -1.5 MPLN, as a combination of a gain of +50.5 MPLN arising from the cost sharing mechanism, with a loss of -35.8 MPLN arising from the traffic risk sharing mechanism and a loss of -16.3 MPLN relating to financial incentives.

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

Ex-post, the overall RR taking into account the net loss from the en route activity mentioned above (-1.5 MPLN) and the actual RoE (+44.8 MPLN) amounts to +43.3 MPLN (4.9% of the en route revenues). The resulting ex-post rate of return on equity is 4.9%, which is lower than the 5.1% planned in the PP.