Cost-efficiency - Switzerland

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PRB monitoring

▪ The en route 2023 actual unit cost of Switzerland was 114.13 €2017, +23% higher than the determined unit cost (93.10 €2017). The terminal 2023 actual unit cost was 393.76 €2017, +15% higher than the determined unit cost (343.36 €2017).

▪ The en route 2023 actual service units (1.6M) were -5.6% lower than the determined service units (1.7M).

▪ In 2023, the en route actual total costs were higher (+25 M€2017, or +16%) than determined. The difference is driven by Skyguide’s other operating costs (+11 M€2017, or +32%), where the NSA explained that it is due to higher purchased services and products as a result of increased technical incidents, as well as additional costs to correct compliance issues in many areas (Technical but also buildings/infrastructures). Additionally, an increase of +12 M€2017 relates to the impact of the capitalisation rules, which was included as a negative exceptional item in the determined costs (so as to be excluded from the amounts charged to airspace users), but has not been deducted from the actual costs, as it is reported as being actually incurred.

▪ Skyguide spent 44 M€2017 in 2023 related to costs of investments for both en route and terminal charging zones, +3.2% more than determined (42 M€2017).

▪ The en route actual unit cost incurred by users in 2023 was 116.29€ (+7.1% above the 2023 DUC), while the terminal actual unit cost incurred by users was 412.14€ (+2.9% above the 2023 DUC).

▪ The en route regulatory result for Skyguide amounted to -31 M€, or -19% of the 2023 revenue.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 324 168 192 NA
Determined costs 315 166 160 160
Difference costs 9 2 32 NA
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 0.3% 0.8% 0.9%
Determined inflation index NA 101.7 102.5 103.4
Actual inflation rate NA 2.7% 2.3% NA
Actual inflation index NA 104.6 107 NA
Difference inflation index (p.p.) NA +2.9 +4.5 NA

AUC vs. DUC

In 2023, the en route AUC was +22.6% (or +23.37 CHF2017, +21.03 €2017) higher than the planned DUC. This results from the combination of significantly higher than planned en route costs in real terms (+15.7%, or +27.5 MCHF2017, +24.8 M€2017) and significantly lower than planned TSUs (-5.6%).

En route service units

The difference between actual and planned TSUs (-5.6%) falls outside the ±2% dead band, but does not exceed the ±10% threshold. The resulting loss of revenue is therefore shared between the ANSP and the airspace users .

En route costs by entity

Actual real en route costs are +15.7% (+24.8 M€2017) higher than planned. This is the result of higher costs for the main ANSP, Skyguide (+18.0%, or +24.8 M€2017) and the MET service provider (+1.3%, or +0.1 M€2017), while the NSA/EUROCONTROL costs are lower (-1.0%, or -0.1 M€2017) than planned.

En route costs for the main ANSP at charging zone level

Significantly higher than planned en route costs in real terms for Skyguide in 2023 (+18.0%, or +24.8 M€2017). However, the differences by nature of costs are distorted by two factors:
a) The overall reported costs in each cost item are netted by the financing of the services provided by Skyguide outside the Swiss FIR;
b) Skyguide’s costs include significant amounts linked to the additional costs caused by the change in the capitalisation rule in 2023 (+11.8 M€2017). However, in order for this amount not to be billed to airspace users, it has also been reported as negative exceptional item in the determined costs, but not in the actual costs (-100% of negative exceptional costs, or +11.8 M€2017). Other desviations result from:
- Slightly lower staff costs (-0.3%);
- Significantly higher other operating costs (+52.1%), due to higher purchased services and products than planned, primarily due to Skyguide’s response to a 22% increase in technical incidents over the last three years.
- Significantly higher depreciation (+6.9%);
- Significantly higher cost of capital (+19.5%).

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

AUCU components (€/SU) – 2023
Components of the AUCU in 2023 €/SU
DUC 108.59
Inflation adjustment 3.98
Cost exempt from cost-sharing -0.10
Traffic risk sharing adjustment 2.53
Traffic adj. (costs not TRS) 0.79
Finantial incentives 0.50
Modulation of charges 0.00
Cross-financing 0.00
Other revenues 0.00
Application of lower unit rate 0.00
Total adjustments 7.71
AUCU 116.29
AUCU vs. DUC + 7.1%
Cost exempt from cost sharing by item - 2023 €'000 €/SU
New and existing investments -25.7 -0.02
Competent authorities and qualified entities costs 0.0 0.00
Eurocontrol costs -133.0 -0.08
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 -158.7 -0.10

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2023 (112.96 CHF or 116.29 €) is +7.1% higher than the nominal DUC (105.47 CHF or 108.59 €). The difference between these two figures (+7.49 CHF/SU or +7.71 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+3.87 CHF/SU or +3.98 €/SU);
- the impact of adjustments resulting from the costs exempted from cost-sharing mechanism (-0.10 CHF/SU or -0.10 €/SU);
- the addition of the traffic risk sharing adjustments (+2.45 CHF/SU or +2.53 €/SU);
- the addition of the traffic adjustment (+0.77 CHF/SU or +0.79 €/SU) for the costs not subject to traffic risk sharing; and
- financial incentives (+0.49 CHF/SU or +0.50 €/SU).
The share of the regulatory result in the AUCU (before the deduction of other revenues) is -16.8%.

Regulatory result (RR)

Skyguide net gain on activity in the Switzerland en route charging zone in the year 2023

Skyguide reported a net loss of -33.3 MCHF, as a combination of a loss of -29.3 MCHF arising from the cost sharing mechanism, with a loss of -4.8 MCHF arising from the traffic risk sharing mechanism and a gain of +0.8 MCHF relating to financial incentives.

Skyguide 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 (-33.3 MCHF) and the actual RoE (+3.2 MCHF) amounts to -30.1 MCHF (-19.1% of the en route revenues). The resulting ex-post rate of return on equity is -54.1%.

Note 1: Ex-post RR does not take into account the application of lower unit rates as per Art. 29.6 in 2022 (loss in revenues for Skyguide corresponds to -5.3 MCHF).