Cost-efficiency - Estonia

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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 5 3 3 4
Determined costs 5 2 3 3
Difference costs 0 0 1 2
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 2.5% 2.1% 1.9%
Determined inflation index NA 110.4 112.7 114.8
Actual inflation rate NA 19.4% 9.1% 3.7%
Actual inflation index NA 132 144 149.3
Difference inflation index (p.p.) NA +21.6 +31.3 +34.5

AUC vs. DUC

In 2024, the terminal AUC was +37.7% (or +46.30 €2017) higher than the planned DUC. This results from the combination of significantly higher than planned terminal costs in real terms (+39.4%, or +1.0 M€2017) and higher than planned TNSUs (+1.2%). It should be noted that the actual inflation index in 2024 was +34.5 p.p. higher than planned.

Terminal service units

The difference between actual and planned TNSUs (+1.2%) falls inside the ±2% dead-band. Hence, the gain of additional terminal revenues is kept by the ANSPs (see items 10 to 14).

Terminal costs by entity

Actual real terminal costs are +39.4% (+1.0 M€2017) higher than planned. This is the result of higher costs for the main ANSP, EANS (+43.6%, or +0.9 M€2017) and the NSA (+14.6%, or +0.1 M€2017).

Terminal costs for the main ANSP at charging zone level

Significantly higher than planned terminal costs in real terms for EANS in 2024 (+43.6%, or +0.9 M€2017) result from:
- Significantly higher staff costs (+19.3%), which, based on the information provided by Estonia, is due to the fact that a “higher proportion of actual costs was allocated to terminal costs” due to significantly lower en route traffic.
- Significantly higher other operating costs (+28.4%), which, as already detailed above, is also explained by the changes in the allocation of actual costs.
- Significantly higher depreciation (+96.2%), reflecting continuation of the investment programme, including projects which had been postponed in previous years.
- Significantly higher cost of capital (+57.0%) reflecting a combination of higher than planned interest rate on debt and a much lower proportion of financing through equity.

RP3 summary

When considering the whole of RP3 (2020-2024) for Estonia terminal charging zone , actual TNSUs are -0.3% lower than planned, while actual costs in real terms are +11.2% higher than the determined costs (some +1.3 M€2017). As a result, the weighted average actual unit cost over RP3 (179.86 €2017) is +11.5% higher than planned in the PP (161.27 €2017).

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

AUCU components (€/SU) – 2024
Components of the AUCU in 2024 €/SU
DUC 133.17
Inflation adjustment 24.03
Cost exempt from cost-sharing 4.09
Traffic risk sharing adjustment 0.00
Traffic adj. (costs not TRS) -0.33
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues -30.56
Application of lower unit rate 0.00
Total adjustments -2.78
AUCU 130.40
AUCU vs. DUC -2.1%
Cost exempt from cost sharing by item - 2024 €'000 €/SU
New and existing investments 31.1 1.55
Competent authorities and qualified entities costs 51.1 2.54
Eurocontrol costs 0.0 0.00
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 82.2 4.09

The actual terminal unit cost incurred by airspace users (AUCU) in respect of activities performed in 2024 (130.40 €) is -2.1% lower than the nominal DUC (133.17 €). The difference between these two figures (-2.78 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+24.03 €/SU);
- the impact of adjustments resulting from the costs exempted from cost sharing mechanism (+4.09 €/SU);
- the deduction of the traffic adjustment (-0.33 €/SU) for the costs not subject to traffic risk sharing; and
- the deduction of other revenues (-30.56 €/SU).
The share of the regulatory result (see items 10 to 13) in the AUCU (before the deduction of other revenues) is -24.6%.

Regulatory result (RR)

EANS net gain/loss on activity in the Estonia terminal charging zone in the year 2024

EANS reported a net loss of -1.0 M€, as a combination of a loss of -1.0 M€ arising from the cost sharing mechanism, with a gain of +0.03 M€ arising from the traffic risk sharing mechanism.

EANS overall regulatory result (RR) for the terminal activity

Ex-post, the overall RR taking into account the net loss from the terminal activity mentioned above (-1.0 M€) and the actual RoE (+0.2 M€) amounts to -0.8 M€ (-28.1% of the terminal revenues). The resulting ex-post rate of return on equity is -26.5%, which is lower than the 7.3% planned in the PP.

RP3 summary

When considering the whole of RP3 (2020-2024), EANS generated a cumulative loss in respect of cost sharing of -1.3 M€, as actual total costs for RP3 were higher than planned. The traffic risk sharing mechanism generated gain of +0.1 M€. Adding the actual RoE (+0.9 M€ over RP3) leads to an overall regulatory result of -0.3 M€, which corresponds to an average ex-post return on equity of -2.2% (compared to 7.3% initially planned in the PP).