Cost-efficiency - Spain

PRB monitoring

▪ The en route 2023 actual unit cost of Spain Continental was 49.12 €2017, -5.0% lower than the determined unit cost (51.69 €2017). The en route 2023 actual unit cost of Spain Canarias was 49.61 €2017, -16% lower than the determined unit cost (58.97 €2017). The terminal 2023 actual unit cost of Spain was 101.63 €2017, -9.8% lower than the determined unit cost (112.71 €2017).

▪ The en route 2023 actual service units of Spain Continental (12.5M) were +7.0% higher than the determined service units (11.6M). The en route 2023 actual service units of Spain Canarias (2.0M) were +24% higher than the determined (1.6M).

▪ In 2023, Spain Continental increased en route total cost by +10 M€2017 (+1.7%) compared to determined. The primary factor behind this difference was a significant overspend in the cost of capital for ENAIRE (+9.3 M€2017, or +37%). This gap mainly stemmed from the average interest rates exceeding the planned levels (from 0.8% to 3.3%).

▪ In 2023, Spain Canarias increased en route total cost by +3.8 M€2017 (+4.0%) compared to determined. The main contributor to this difference was an overspend in other operating costs (+2.6 M€2017, or +17%), which is primarily due to energy costs that were significantly higher than planned.

▪ ENAIRE spent 141 M€2017 in 2023 related to costs of investments for both en route and terminal charging zones, +6.4% more than determined (132 M€2017). The increase is attributed to the cost of capital, which was primarily driven by a significant rise in average interest rates, from 0.8% to 3.3%.

▪ The en route Spain Continental actual unit cost incurred by users in 2023 was 59.21€ (+9.4% above the 2023 DUC), while the en route Spain Canarias actual unit cost incurred by users was 38.20€ (-38% below the 2023 DUC). The terminal actual unit cost incurred by users was 34.16€ (-71% below the 2023 DUC). The difference between the AUCU and the DUC in en route charging zones is primarily attributed to the cross-financing adjustment that transferred 36 M€ from Spain Canarias to Spain Continental. In terminal charging zone, the difference between the AUCU and the DUC is primarily attributed to adjustment of other revenues (-80 M€).

En route charging zone - Spain Continental

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 1,180 717 691 NA
Determined costs 1,191 622 630 634
Difference costs −11 95 61 NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.3% 1.5% 1.6%
Determined inflation index NA 104.9 106.5 108.2
Actual inflation rate NA 8.3% 3.4% NA
Actual inflation index NA 114.4 118.2 NA
Difference inflation index (p.p.) NA +9.5 +11.8 NA

AUC vs. DUC

In 2023, the en route AUC was -5.0% (or -2.56 €2017) lower than the planned DUC. This results from the combination of significantly higher than planned TSUs (+7.0%) and higher than planned en route costs in real terms (+1.7%, or +10.2 M€2017). It should be noted that actual inflation index in 2023 was +11.8 p.p. higher than planned.

En route service units

The difference between actual and planned TSUs (+7.0%) falls outside the ±2% dead band, but does not exceed the ±10% threshold foreseen in the traffic risk sharing mechanism. The resulting gain of additional en route revenues is therefore shared between the ANSPs and the airspace users .

En route costs by entity

Actual real en route costs are +1.7% (+10.2 M€2017) higher than planned. This is the result of higher costs, in real terms, for the main ANSP, ENAIRE (+2.3%, or +11.8 M€2017) and the NSA/EUROCONTROL (+2.7%, or +1.1 M€2017) and lower costs for the MET service provider (-3.1%, or -0.9 M€2017) and the other ANSP (EA, -7.0%, or -1.8 M€2017).

En route costs for the main ANSP at charging zone level

Higher than planned en route costs in real terms for ENAIRE in 2023 (+2.3%, or +11.8 M€2017) result from:
- Slightly higher staff costs (+0.8%), which reflects a combination of increases driven by changes in national laws on Public Employees salary and on Social Security Scheme National Law as well as the introduction of Special Active Reserve (through Law 26/2022 of 19 December), which, among others, solves the problem of forced retirement of ATCOs at the age of 65.
- Lower other operating costs (-1.7%) in real terms reflecting the impact of inflation index (+11.8 p.p.) since, in nominal terms, other operating costs were above planned (+9.2%) reflecting higher energy costs.
- Higher depreciation costs (+1.5%), and
- Significantly higher cost of capital (+35.9%), primarily reflecting the use of much higher average interest rate on debts to calculate WACC (3.3% vs 0.8% planned).

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

AUCU components (€/SU) – 2023
Components of the AUCU in 2023 €/SU
DUC 54.12
Inflation adjustment 4.12
Cost exempt from cost-sharing 0.98
Traffic risk sharing adjustment −1.50
Traffic adj. (costs not TRS) −0.55
Finantial incentives −0.21
Modulation of charges 0.00
Cross-financing 2.91
Other revenues −0.67
Application of lower unit rate 0.00
Total adjustments 5.09
AUCU 59.21
AUCU vs. DUC +9.4%
Cost exempt from cost sharing by item - 2023 €'000 €/SU
New and existing investments 11,091.7 0.89
Competent authorities and qualified entities costs −290.7 −0.02
Eurocontrol costs 1,383.8 0.11
Pension costs 0.0 0.00
Interest on loans 0.0 0.00
Changes in law 0.0 0.00
Total cost exempt from cost risk sharing 12,184.8 0.98

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2023 (59.21 €) is +9.4% higher than the nominal DUC (54.12 €). The difference between these two figures (+5.09 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+4.12 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (+0.98 €/SU);
- the deduction of the traffic risk sharing adjustments (-1.50 €/SU);
- the deduction of the traffic adjustment (-0.55 €/SU) for the costs not subject to traffic risk sharing;
- financial incentives (-0.21 €/SU);
- cross-financing between Spain Continental and Spain Canarias charging zones (+2.91 €/SU); and
- the deduction of the other revenues (-0.67 €/SU).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is 5.9%.

Regulatory result (RR)

ENAIRE net gain on activity in the Spain Continental en route charging zone in the year 2023

ENAIRE reported a net gain of +13.2 M€, as a combination of a loss of -2.7 M€ arising from the cost sharing mechanism, with a gain of +18.6 M€ arising from the traffic risk sharing mechanism and a loss of -2.7 M€ relating to financial incentives.

ENAIRE 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 (+13.2 M€) and the actual RoE (+22.3 M€) amounts to +35.5 M€ (5.9% of the en route revenues). The resulting ex-post rate of return on equity is 13.1%, which is higher than the 8.2% planned in the PP.