Cost-efficiency - Bulgaria

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PRB monitoring

▪ The en route 2024 actual unit cost of Bulgaria was 22.54€2017, -21% lower than the determined unit cost (28.44€2017). Bulgaria does not have a terminal charging zone.

▪ The en route 2024 actual service units (5.0M) were +22% higher than the determined service units (4.1M).

▪ The en route 2024 actual total costs were -4.3M€2017 (-3.7%) lower than determined. This is mainly due to lower other operating costs (-1.6M€2017, or -14%) for BULATSA. However, in nominal terms, actual costs are +14M€ (or +11%) higher than determined. The difference is mainly attributable to the impact of inflation.

▪ BULATSA costs of investments were 21M€2017 in 2024, -8.7% less than determined (23M€2017). According to the NSA, this reduction is due to revenue from liquidated damages on investment projects, which is being deducted from the depreciation costs, and slight delay of one of the major projects due to unforeseen administrative issues.

▪ The en route actual unit cost incurred by users in 2024 was 29.45€ (-5.7% below the 2024 DUC).

▪ The en route regulatory result for BULATSA amounted to +18M€, representing 13% of the 2024 revenue.

▪ Bulgaria should ensure that any excessive regulatory result, including excess funds received by the ANSP due to the inflation mechanism, is either reinvested to improve the quality of services delivered to airspace users or reimbursed to them.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 200 116 132 143
Determined costs 205 115 126 129
Difference costs -5 2 6 14
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 2.0% 2.0% 2.0%
Determined inflation index NA 109.6 111.8 114
Actual inflation rate NA 13.0% 8.6% 2.6%
Actual inflation index NA 123.6 134.3 137.8
Difference inflation index (p.p.) NA +14.1 +22.5 +23.7

AUC vs. DUC

In 2024, the en route AUC was -20.8% (or -11.54 BGN2017, -5.9 €2017) lower than the planned DUC. This results from the combination of significantly higher than planned TSUs (+21.5%) and lower than planned en route costs in real terms (-3.7%, or -8.5 MBGN2017, -4.3 M€2017). It should be noted that the actual inflation index in 2024 was +23.7 p.p. higher than planned. This high inflation significantly affects the results of analysis expressed in real terms below.

En route service units

The difference between actual and planned TSUs (+21.5%) 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 (see the main ANSP gain in Box 11).

En route costs by entity

The 2024 actual real en route costs for the charging zone are -3.7% (-4.3 M€2017) lower than planned. This is the result of lower costs than planned for the main ANSP, BULATSA (-3.2%, or -3.5 M€2017) and the NSA/EUROCONTROL (-9.6%, or -0.9 M€2017).

En route costs for the main ANSP at charging zone level

In 2024, BULATSA actual real en route costs are lower than planned (-3.2%, or some -3.5 M€2017), mainly due to a higher than planned inflation index (+23.7 p.p.) and resulting from:
- Lower than planned staff costs in real terms (-2.4%), but higher in nominal terms (+17.9%), mainly due to “(…) normalising levels of payment in line with traffic levels and (…) inflation over 2022/2023 followed by an additional increase in 2024… (…) higher staff numbers (…) increase in social security costs (…) impacted by the (…) government …”
- Significantly lower than planned other operating costs in real terms (-14.2%), but higher in nominal terms (+3.7%), mainly due to “(…) costs for procured general external services due to salaries increases (…), external specialised services (…)”,
- Lower than planned depreciation costs (-4.9%), mainly due to”revenue from liquidated damages on investment projects (…) slight delay of one major BULATSA projects (…)“.
- Higher than planned cost of capital (+3.8%).

RP3 summary

When considering the whole of RP3 (2020-2024) for Bulgaria en route charging zone, actual TSUs are +17.7% higher than planned, while actual costs in real terms are -5.1% lower than the determined costs (some -53.6 MBGN2017 or -27.4 M€2017). As a result, the weighted average actual unit cost over RP3 (56.62 BGN2017 or 28.95 €2017) is -19.4% lower than planned in the PP (70.24 BGN2017 or 35.92 €2017).

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

AUCU components (€/SU) – 2024
Components of the AUCU in 2024 €/SU
DUC 31.23
Inflation adjustment 3.89
Cost exempt from cost-sharing -1.05
Traffic risk sharing adjustment -3.89
Traffic adj. (costs not TRS) -0.64
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues -0.09
Application of lower unit rate 0.00
Total adjustments -1.78
AUCU 29.45
AUCU vs. DUC -5.7%
Cost exempt from cost sharing by item - 2024 €'000 €/SU
New and existing investments -1,998.5 -0.40
Competent authorities and qualified entities costs -728.3 -0.15
Eurocontrol costs -118.9 -0.02
Pension costs -2,408.0 -0.48
Interest on loans 0.0 0.00
Changes in law 0.0 0.00
Total cost exempt from cost risk sharing -5,253.7 -1.05

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2024 (57.58 BGN or 29.45 €) is -5.7% lower than the nominal DUC (61.07 BGN or 31.23 €). The difference between these two figures (-3.49 BGN/SU or -1.78 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+7.60 BGN/SU or +3.89 €/SU);
- the impact of adjustments resulting from the costs exempted from cost sharing mechanism (-2.05 BGN/SU or -1.05 €/SU);
- the deduction of the traffic risk sharing adjustments (-7.62 BGN/SU or -3.89 €/SU);
- the deduction of the traffic adjustment (-1.25 BGN/SU or -0.64 €/SU) for the costs not subject to traffic risk sharing; and
- the deduction of other revenues (-0.18 BGN/SU or -0.09 €/SU).
The share of the regulatory result (see items 10 to 13) in the AUCU (before the deduction of other revenues) is 12.5%.

Regulatory result (RR)

BULATSA net gain on activity in Bulgaria en route charging zone in the year 2024

BULATSA reported a net gain of +10.4 MBGN, as a combination of a gain of +0.6 MBGN arising from the cost sharing mechanism, with a gain of +9.8 MBGN arising from the traffic risk sharing mechanism.

BULATSA overall regulatory result (RR) for the en route activity

Ex-post, the overall RR taking into account the net gain from the en route activity mentioned above (+10.4 MBGN) and the actual RoE (+25.7 MBGN) amounts to +36.1 MBGN (13.2% of the en route revenues). The resulting ex-post rate of return on equity is 9.8%, which is higher than the 7.0% planned in the PP.

RP3 summary

When considering the whole of RP3 (2020-2024), BULATSA generated a cumulative gain in respect of cost sharing of +52.1 MBGN, as actual total costs for RP3 were lower than planned. The traffic risk sharing mechanism generated gain of +31.5 MBGN. Adding the actual RoE (+123.6 MBGN over RP3) leads to an overall regulatory result of +207.2 MBGN, which corresponds to an average ex-post return on equity of 11.7% (compared to 7.0% initially planned in the PP).