Cost-efficiency - Slovakia

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PRB monitoring

▪ The en route 2023 actual unit cost of Slovakia was 51.54 €2017, -13% lower than the determined unit cost (59.12 €2017). Slovakia does not have a terminal charging zone.

▪ The en route 2023 actual service units (1.1M) were +14% higher than the determined service units (1.0M).

▪ The en route 2023 actual total costs were -0.5 M€2017 (-0.9%) lower than determined. This was mainly due to an underspend in other operating costs (-2.2 M€2017 or -17%). However, the NSA did not provide explanations for this underspend.

▪ LPS SR spent 9.7 M€2017 in 2023 related to costs of investments, +31% more than determined (7.5 M€2017), primarily due to the higher prices for new assets, which have been affected by inflation.

▪ The en route actual unit cost incurred by users in 2023 was 69.92€ (+7.3% 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 85 58 71 NA
Determined costs 93 59 62 64
Difference costs −7 −1 9 NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.9% 2.0% 2.1%
Determined inflation index NA 110.9 113.1 115.5
Actual inflation rate NA 12.1% 11.0% NA
Actual inflation index NA 123.9 137.5 NA
Difference inflation index (p.p.) NA +13 +24.4 NA

AUC vs. DUC

In 2023, the en route AUC was -12.8% (or -7.57 €2017) lower than the planned DUC. This results from the combination of significantly higher than planned TSUs (+13.7%) and slightly lower than planned en route costs in real terms (-0.9%, or -0.5 M€2017). It should be noted that actual inflation index in 2023 was +24.4 p.p. higher than planned.

En route service units

The difference between actual and planned TSUs (+13.7%) 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% (-0.5 M€2017) lower than planned. This is the result of lower costs for the NSA/EUROCONTROL (-8.4%, or -0.4 M€2017), the main ANSP, LPS (-0.1%, or -0.1 M€2017) and the MET service provider (-1.6%, or 0.03 M€2017).

En route costs for the main ANSP at charging zone level

Consistent with planned en route costs in real terms for LPS in 2023 (-0.1%, or -0.1 M€2017) result from:
- Lower staff costs in real terms (-3.7%), but higher in nominal terms (+17.1%) due to inflation, which was negotiated in the union contract;
- Significantly lower other operating costs in real terms (-15.2%), but higher in nominal terms (+3.1%);
- Significantly higher depreciation costs (+31.4%) due to a €1.3M reduction for the 2023 unit rate calculation resulted from RP2 carry-over, but also higher inflation that impacted the pricess of the new assets;
- Significantly higher cost of capital (+32.7%) due to a higher value of the asset base and a higher than expected interest rate on the loan (EURIBOR 3M);
- Significantly higher deduction for VFR exempted flights (+54.7%).

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

AUCU components (€/SU) – 2023
Components of the AUCU in 2023 €/SU
DUC 65.14
Inflation adjustment 9.85
Cost exempt from cost-sharing 0.59
Traffic risk sharing adjustment −4.73
Traffic adj. (costs not TRS) −0.86
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues −0.07
Application of lower unit rate 0.00
Total adjustments 4.78
AUCU 69.92
AUCU vs. DUC +7.3%
Cost exempt from cost sharing by item - 2023 €'000 €/SU
New and existing investments 1,012.0 0.93
Competent authorities and qualified entities costs 305.2 0.28
Eurocontrol costs −715.4 −0.66
Pension costs 0.0 0.00
Interest on loans 34.7 0.03
Changes in law 0.0 0.00
Total cost exempt from cost risk sharing 636.4 0.59

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2023 (69.92 €) is +7.3% higher than the nominal DUC (65.14 €). The difference between these two figures (+4.78 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+9.85 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (+0.59 €/SU);
- the deduction of the traffic risk sharing adjustments (-4.73 €/SU);
- the deduction of the traffic adjustment (-0.86 €/SU) for the costs not subject to traffic risk sharing; and
- the deduction of the other revenues (-0.07 €/SU).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is 9.1%.

Regulatory result (RR)

LPS net gain on activity in the Slovakia en route charging zone in the year 2023

LPS reported a net gain of +4.5 M€, as a combination of a gain of +2.0 M€ arising from the cost sharing mechanism, with a gain of +2.4 M€ arising from the traffic risk sharing mechanism.

LPS 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 (+4.5 M€) and the actual RoE (+2.4 M€) amounts to +6.9 M€ (10.0% of the en route revenues). The resulting ex-post rate of return on equity is 14.0%, which is higher than the 4.9% planned in the PP.