Cost-efficiency - Finland

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PRB monitoring

▪ The en route 2024 actual unit cost of Finland was 52.99€2017, +32% higher than the determined unit cost (40.22€2017). The terminal 2024 actual unit cost of Finland was 154.63€2017, +8.1% higher than the determined unit cost (143.03€2017).

▪ The en route 2024 actual service units (0.7M) were -36% lower than the determined service units (1.2M) mainly due to shifted traffic flows caused by Russia’s war of aggression against Ukraine.

▪ The en route 2024 actual total costs were -7.3M€2017 (-15%) lower than determined, with all cost categories registering lower-than-planned costs. This reduction is mainly driven by lower staff costs for Fintraffic ANS (-4.7M€2017, or -21%), which, as reported by the NSA, resulted mainly from lower staff numbers than planned and other costs saving measures due to the traffic loss. Other operating costs were lower than planned by -1.3M€2017 (or -11%) due to several cost savings, such as group service fees (like HR, accounting, ICT), travel cost, and leasing costs.

▪ Fintraffic ANS costs of investments were 7.0M€2017 in 2024 for both en route and terminal charging zones, -16% less than determined (8.3M€2017). According to the NSA, this reduction is due to the postponement of investments.

▪ The en route actual unit cost incurred by users in 2024 was 56.90€ (+32% above the 2024 DUC), while the terminal actual unit cost incurred by users was 212.59€ (+36% above the 2024 DUC). The difference between the AUCU and the DUC is driven by the difference between the determined and actual service units for both the en route and terminal charging zones.

▪ The en route regulatory result for Fintraffic ANS amounted to +5.9M€, or 13% of the 2024 revenue.

▪ Finland 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 75 40 42 45
Determined costs 79 45 48 50
Difference costs -4 -6 -6 -5
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.5% 1.6% 1.8%
Determined inflation index NA 105.7 107.4 109.3
Actual inflation rate NA 7.2% 4.3% 1.0%
Actual inflation index NA 112.4 117.3 118.4
Difference inflation index (p.p.) NA +6.7 +9.8 +9.1

AUC vs. DUC

In 2024, the en route AUC was +31.7% (or +12.77 €2017) higher than the planned DUC. This results from the combination of significantly lower than planned TSUs (-35.8%) and significantly lower than planned en route costs in real terms (-15.4%, or -7.3 M€2017). It should be noted that the actual inflation index in 2024 was +9.1 p.p. higher than planned.

En route service units

The difference between actual and planned TSUs (-35.8%) falls outside the ±10% threshold foreseen in the traffic risk sharing mechanism. The resulting loss of en route revenues is therefore shared between the ANSP and the airspace users (see the main ANSP loss in Box 11).

En route costs by entity

Actual real en route costs are -15.4% (-7.3 M€2017) lower than planned. This is the result of lower costs for the main ANSP, Fintraffic ANS (-17.0%, or -6.9 M€2017), the NSA/EUROCONTROL (-5.0%, or -0.2 M€2017) and the MET service provider (-6.1%, or -0.1 M€2017).

En route costs for the main ANSP at charging zone level

Significantly lower than planned en route costs in real terms for Fintraffic ANS in 2024 (-17.0%, or -6.9 M€2017) result from:
- Significantly lower staff costs (-20.9%), reflecting “lower head count (postponing recruiting), […] lower annual leave pay, lower pension and social security costs, lower bonuses and other savings in staff costs”,
- Significantly lower other operating costs (-10.8%), reflecting savings on “Group service fees (HR, Accounting, ICT etc), voluntary staff costs (health cost, training, parking) and travel costs due to remote work, less payments to airport operator (Finavia), lower leasing costs, less purchases of equipment and spare parts, purchases from military (ATCO) and LFV (ATCO service for Kvarken flights) were lower”,
- Significantly lower depreciation (-12.1%) and cost of capital (-26.5%) reported to be mainly due to “postponing investments”, and
- Significantly lower deduction for VFR exempted flights (-7.7%).

RP3 summary

When considering the whole of RP3 (2020-2024) for Finland en route charging zone, actual TSUs are -27.6% lower than planned, while actual costs in real terms are -12.4% lower than the determined costs (some -26.3 M€2017). As a result, the weighted average actual unit cost over RP3 (62.75 €2017) is +21.0% higher than planned in the PP (51.88 €2017).

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

AUCU components (€/SU) – 2024
Components of the AUCU in 2024 €/SU
DUC 43.19
Inflation adjustment 4.52
Cost exempt from cost-sharing -1.83
Traffic risk sharing adjustment 18.42
Traffic adj. (costs not TRS) 3.10
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues -10.51
Application of lower unit rate 0.00
Total adjustments 13.71
AUCU 56.90
AUCU vs. DUC + 31.7%
Cost exempt from cost sharing by item - 2024 €'000 €/SU
New and existing investments -1,052.0 -1.40
Competent authorities and qualified entities costs 0.0 0.00
Eurocontrol costs -198.9 -0.27
Pension costs -116.0 -0.15
Interest on loans 0.0 0.00
Changes in law 0.0 0.00
Total cost exempt from cost risk sharing -1,366.9 -1.83

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2024 (56.90 €) is +31.7% higher than the nominal DUC (43.19 €). The difference between these two figures (+13.71 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+4.52 €/SU);
- the impact of adjustments resulting from the costs exempted from cost sharing mechanism (-1.83 €/SU);
- the addition of the traffic risk sharing adjustments (+18.42 €/SU);
- the addition of the traffic adjustment (+3.10 €/SU) for the costs not subject to traffic risk sharing; and
- the deduction of other revenues (-10.51 €/SU).
The share of the regulatory result (see items 10 to 14) in the AUCU (before the deduction of other revenues) is 12.0%.

Regulatory result (RR)

Fintraffic ANS net gain/loss on activity in the Finland en route charging zone in the year 2024

Fintraffic ANS reported a net gain of +4.9 M€, as a combination of a gain of +6.8 M€ arising from the cost sharing mechanism, with a loss of -1.9 M€ arising from the traffic risk sharing mechanism.

Fintraffic ANS 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 (+4.9 M€) and the actual RoE (+1.0 M€) amounts to +5.9 M€ (13.4% of the en route revenues). The resulting ex-post rate of return on equity is 25.5%, which is much higher than the 4.3% planned in the PP.

RP3 summary

When considering the whole of RP3 (2020-2024), Fintraffic ANS generated a cumulative gain in respect of cost sharing of +23.0 M€, as actual total costs for RP3 were lower than planned. The traffic risk sharing mechanism generated a loss of -4.5 M€. Adding the actual RoE (+3.7 M€ over RP3) leads to an overall regulatory result of +22.2 M€, which corresponds to an average ex-post rate of return on equity of 26.1% (compared to 4.3% initially planned in the PP).