Cost-efficiency - Portugal

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PRB monitoring

▪ The en route 2023 actual unit cost of Portugal was 35.38 €2017, -12% lower than the determined unit cost (40.37 €2017). The terminal 2023 actual unit cost was 121.66 €2017, -19% lower than the determined unit cost (149.81 €2017).

▪ The en route 2023 actual service units (4.1M) were +15% higher than the determined service units (3.6M).

▪ The en route 2023 actual total costs were +1.3 M€2017 (+0.9%) higher than determined. This difference was predominantly due to an overspend in depreciation costs (+1.2 M€2017, or +7.5%), which resulted from the increase of investment in the new ATM system TOPSKY during 2023 after being postponed in the initial years of RP3. The PRB highlights that the actual number of ACC ATCOs in OPS FTEs for NAV Portugal were -12% below plan.

▪ Portugal presented a deviation from the criteria to achieve capacity targets, which was considered justified. Considering that actual number of ATCOs have been lower than planned, and that the 2023 en route capacity targets have not been achieved, the situation raises serious concern.

▪ NAV Portugal spent 23 M€2017 in 2023 related to costs of investments for both en route and terminal charging zones, +3.5% more than determined (22 M€2017).

▪ The en route actual unit cost incurred by users in 2023 was 39.55€ (-5.7% below the 2023 DUC), while the terminal actual unit cost incurred by users was 143.65€ (-8.1% below the 2023 DUC).

▪ 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 Portugal 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 Portugal to consider the reimbursement to airspace users of excess funds received by ANSPs for measures not implemented during RP3.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 234 130 165 NA
Determined costs 233 139 150 155
Difference costs 1 -9 15 NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.2% 1.3% 1.4%
Determined inflation index NA 103.6 104.9 106.4
Actual inflation rate NA 8.1% 5.3% NA
Actual inflation index NA 110.7 116.6 NA
Difference inflation index (p.p.) NA +7.1 +11.7 NA

AUC vs. DUC

In 2023, the en route AUC was -12.4% (or -4.99 €2017) lower than the planned DUC. This results from the combination of significantly higher than planned TSUs (+15.1%) and slightly higher than planned en route costs in real terms (+0.9%, or +1.3 M€2017). It should be noted that actual inflation index in 2023 was +11.7 p.p. higher than planned.

En route service units

The difference between actual and planned TSUs (+15.1%) falls outside the ±10% threshold foreseen in the traffic risk sharing mechanism. The resulting gain of additional en route revenues is therefore shared between the ANSP and the airspace users .

En route costs by entity

Actual real en route costs are +0.9% (+1.3 M€2017) higher than planned. This is the result of higher costs for the main ANSP, NAV Portugal (+1.8%, or +2.3 M€2017) and the other ANSP (SAR provider, +0.1%, or +0.01 M€2017) and lower costs for the NSA/EUROCONTROL (-3.4%, or -0.3 M€2017) and the MET service provider (-12.8%, or -0.7 M€2017).

En route costs for the main ANSP at charging zone level

Higher than planned en route costs in real terms for NAV Portugal in 2023 (+1.8%, or +2.3 M€2017) result from:
- Higher staff costs (+1.1% in real terms and +12.3% in nominal terms), primarily due to necessary overtime to manage a 15.1% increase in traffic compared to the plan;
- Slightly lower other operating costs by -2.8% in real terms (higher in nominal terms +8.1%);
- Significantly higher depreciation costs (+11.7% in real terms), reflecting the implementation of investments that had been deferred in the early years of the reference period, mainly related to the new ATM system (TOPSKY);
- Significantly lower cost of capital (-6.7% in real terms), due to lower net book value of fixed assets.

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

AUCU components (€/SU) – 2023
Components of the AUCU in 2023 €/SU
DUC 41.95
Inflation adjustment 3.27
Cost exempt from cost-sharing -1.43
Traffic risk sharing adjustment -3.50
Traffic adj. (costs not TRS) -0.57
Finantial incentives -0.16
Modulation of charges 0.00
Cross-financing 0.00
Other revenues 0.00
Application of lower unit rate 0.00
Total adjustments -2.38
AUCU 39.57
AUCU vs. DUC -5.7%
Cost exempt from cost sharing by item - 2023 €'000 €/SU
New and existing investments 527.5 0.13
Competent authorities and qualified entities costs -82.9 -0.02
Eurocontrol costs -111.4 -0.03
Pension costs -6,237.6 -1.51
Interest on loans 0.0 0.00
Changes in law 0.0 0.00
Total cost exempt from cost risk sharing -5,904.4 -1.43

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2023 (39.55 €) is -5.7% lower than the nominal DUC (41.95 €). The difference between these two figures (-2.40 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+3.27 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (-1.46 €/SU);
- the deduction of the traffic risk sharing adjustments (-3.50 €/SU);
- the deduction of the traffic adjustment (-0.57 €/SU) for the costs not subject to traffic risk sharing; and
- financial incentives (-0.16 €/SU).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is 0.5%.

Regulatory result (RR)

NAV Portugal net gain on activity in the Portugal Continental en route charging zone in the year 2023

NAV Portugal reported a net loss of -2.3 M€, as a combination of a loss of -7.4 M€ arising from the cost sharing mechanism, with a gain of +5.7 M€ arising from the traffic risk sharing mechanism and a loss of -0.6 M€ relating to financial incentives.

NAV Portugal 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 (-2.3 M€) and the actual RoE (+2.8 M€) amounts to +0.4 M€ (0.3% of the en route revenues). The resulting ex-post rate of return on equity is 0.6%, which is lower than the 4.2% planned in the PP.