Cost-efficiency - Sweden

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Terminal charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 46 21 26 NA
Determined costs 46 21 21 22
Difference costs 0 0 5 NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 4.8% 2.2% 1.7%
Determined inflation index NA 112.4 114.9 116.9
Actual inflation rate NA 8.1% 5.9% NA
Actual inflation index NA 116 122.8 NA
Difference inflation index (p.p.) NA +3.5 +7.9 NA

AUC vs. DUC

In 2023, the terminal AUC was +31.7% (or +418.42 SEK2017, +43.44 €2017) higher than the planned DUC. This results from the combination of significantly higher than planned terminal costs in real terms (+14.8%, or +26.8 MSEK2017, +2.8 M€2017) and significantly lower than planned TNSUs (-12.8%). It should be noted that actual inflation index in 2023 was +7.9 p.p. higher than planned.

Terminal service units

The difference between actual and planned TNSUs (-12.8%) falls outside the ±10% threshold foreseen in the traffic risk sharing mechanism. The resulting loss of terminal revenues is therefore shared between the ANSPs and the airspace users.

Terminal costs by entity

Actual real terminal costs are +14.8% (+2.8 M€2017) higher than planned. This is the result of higher costs for the main ANSP, LFV (+25.7%, or +3.3 M€2017), the MET service provider (+44.6%, or +0.2 M€2017) and the NSA (+0.1% M€2017) and lower costs for the other ANSP (SWEDAVIA, -12.3%, or -0.7 M€2017).

Terminal costs for the main ANSP at charging zone level

Significantly higher than planned terminal costs in real terms for LFV in 2023 (+25.7%, or +3.3 M€2017) result from:
- Significantly higher staff costs (+30.0%), reflecting much higher pension costs.
- Lower other operating costs (-3.4%) in real terms, reflecting entirely the impact of the inflation index (+7.9 p.p.) since, in nominal terms, the costs are above the plan (+3.2%), which is explained by “higher inflation leading to higher costs”.
- Significantly higher cost of capital (+80.7%), which is explained by “an effect of the high inflation that affects the valuation of the pension debt (that is used for financing instead of loans)”.

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

AUCU components (€/SU) – 2023
Components of the AUCU in 2023 €/SU
DUC 130.95
Inflation adjustment 9.70
Cost exempt from cost-sharing 31.18
Traffic risk sharing adjustment 12.40
Traffic adj. (costs not TRS) 0.45
Finantial incentives -3.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues -0.43
Application of lower unit rate 0.00
Total adjustments 50.30
AUCU 181.26
AUCU vs. DUC + 38.4%
Cost exempt from cost sharing by item - 2023 €'000 €/SU
New and existing investments -295.8 -2.48
Competent authorities and qualified entities costs 0.0 0.00
Eurocontrol costs 0.0 0.00
Pension costs 4,018.9 33.66
Interest on loans 0.0 0.00
Changes in law 0.0 0.00
Total cost exempt from cost risk sharing 3,723.2 31.18

The actual terminal unit cost incurred by airspace users (AUCU) in respect of activities performed in 2023 (2077.60 SEK or 181.26 €) is +38.4% higher than the nominal DUC (1501.01 SEK or 130.95 €). The difference between these two figures (+576.59 SEK/SU or +50.30 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+111.18 SEK/SU or +9.70 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (+357.43 SEK/SU or +31.18 €/SU);
- the addition of the traffic risk sharing adjustments (+142.13 SEK/SU or +12.40 €/SU);
- the addition of the traffic adjustment (+5.14 SEK/SU or +0.45 €/SU) for the costs not subject to traffic risk sharing;
- financial incentives (-34.37 SEK/SU or -3.00 €/SU); and
- the deduction of the other revenues (-4.91 SEK/SU or -0.43 €/SU).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is -0.5%.

Regulatory result (RR)

LFV net gain on activity in the Sweden terminal charging zone in the year 2023

LFV reported a net loss of -1.7 MSEK, as a combination of a gain of +7.4 MSEK arising from the cost sharing mechanism, with a loss of -6.2 MSEK arising from the traffic risk sharing mechanism and a loss of -2.9 MSEK relating to financial incentives.

LFV overall regulatory results (RR) for the terminal activity

Ex-post, the overall RR taking into account the net loss from the terminal activity mentioned above (-1.7 MSEK) amounts to -1.7 MSEK (-1.2% of the terminal revenues), as the RoE for LFV has been set to zero. The resulting ex-post rate of return on equity is negative (-11.1%).

Note 1: LFV reports a financing of asset base at the level of some 78% of debt in 2023, corresponding to its pension liabilities, which are remunerated at the inflation rate.