Cost-efficiency - France

Download Report

PRB monitoring

▪ The en route 2024 actual unit cost of France was 56.98€2017, -2.7% lower than the determined unit cost (58.56€2017). The terminal zone 1 2024 actual unit cost was 88.82€2017, -9.2% lower than the determined unit cost (97.81€2017), while the terminal zone 2 2024 actual unit cost was 350.46€2017, +9.7% higher than the determined unit cost (319.52€2017).

▪ The en route 2024 actual service units (22.7M) were +1.2% higher than the determined service units (22.5M).

▪ The en route 2024 actual total costs were -20M€2017 (-1.5%) lower than determined. The lower costs are mainly driven by staff costs for DSNA (-18M€2017, or -2.6%). However, in nominal terms, the actual staff costs show an increase of +8.3% compared to the determined figures. The NSA explains that this increase is mainly due to salary indexations and some additional bonuses, as well as to the implementation of a new social agreement.

▪ DSNA costs of investment were 247M€2017 in 2024 for both en route and terminal charging zones, -1.2% less than determined (250M€2017).

▪ The en route actual unit cost incurred by users in 2024 was 66.99€ (+6.9% above the 2024 DUC), while the terminal actual unit cost incurred by users was 175.77€ (+69% above the 2024 DUC) for the terminal zone 1, and 208.90€ (-39% below the 2024 DUC) for the terminal zone 2. The difference between the AUCU and the DUC in terminal charging zones is primarily attributed to the cross-financing adjustment that transferred 45M€ between terminal zones.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 2,650 1,355 1,430 1,505
Determined costs 2,668 1,357 1,382 1,407
Difference costs -18 -1 48 98
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.2% 1.3% 1.4%
Determined inflation index NA 106.3 107.7 109.3
Actual inflation rate NA 5.9% 5.7% 2.3%
Actual inflation index NA 112.4 118.8 121.5
Difference inflation index (p.p.) NA +6.1 +11.1 +12.3

AUC vs. DUC

In 2024, the en route AUC was -2.7% (or -1.58 €2017) lower than the planned DUC. This results from the combination of lower than planned en route costs in real terms (-1.5%, or -20.0 M€2017) and higher than planned TSUs (+1.2%). It should be noted that the actual inflation index in 2024 was +12.3 p.p. higher than planned.

En route service units

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

En route costs by entity

Actual real en route costs are -1.5% (-20.0 M€2017) lower than planned. This is the result of lower costs for the main ANSP, DSNA (-1.0%, or -11.8 M€2017), the MET service provider (-8.7%, or -5.6 M€2017) and the NSA/EUROCONTROL (-3.1%, or -2.6 M€2017).

En route costs for the main ANSP at charging zone level

Slightly lower than planned en route costs in real terms for DSNA in 2024 (-1.0%, or -11.8 M€2017), and higher in nominal terms (+8.1% or 101.4 M€), result from:
- Lower staff costs (-2.6%), mainly due to the inflation index impact (+12.3 p.p.) since in nominal terms the costs are higher than planned by +8.3%, mainly from past wage increases, bonuses, and the 2024 social agreement introducing a more flexible rostering,
- Higher other operating costs (+2.0%), “due to the post-crisis inflation (energy prices)”,
- Lower depreciation (-1.8%),
- Significantly higher cost of capital (+5.6%), due to an increase of the total asset base (+6.6%) and an increase of the cost of capital rate, mainly due to an increase of the average cost of debt,
- Significantly lower deduction for VFR exempted flights (-9.9%).
Note: It is understood that DSNA operating costs include costs of investments that are not capitalised (T3 TECH).

RP3 summary

When considering the whole of RP3 (2020-2024) for France en route charging zone, actual TSUs are +3.1% higher than planned, while actual costs in real terms are -2.4% lower than the determined costs (some -158.9 M€2017). As a result, the weighted average actual unit cost over RP3 (76.81 €2017) is -5.4% lower than planned in the PP (81.15 €2017).

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

AUCU components (€/SU) – 2024
Components of the AUCU in 2024 €/SU
DUC 62.65
Inflation adjustment 5.36
Cost exempt from cost-sharing 0.41
Traffic risk sharing adjustment 0.00
Traffic adj. (costs not TRS) -0.08
Finantial incentives -0.28
Modulation of charges 0.00
Cross-financing 0.00
Other revenues -1.08
Application of lower unit rate 0.00
Total adjustments 4.33
AUCU 66.99
AUCU vs. DUC + 6.9%
Cost exempt from cost sharing by item - 2024 €'000 €/SU
New and existing investments 8,250.8 0.36
Competent authorities and qualified entities costs 607.1 0.03
Eurocontrol costs -3,227.1 -0.14
Pension costs 0.0 0.00
Interest on loans 3,614.1 0.16
Changes in law 0.0 0.00
Total cost exempt from cost risk sharing 9,244.8 0.41

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2024 (66.99 €) is +6.9% higher than the nominal DUC (62.65 €). The difference between these two figures (+4.33 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+5.36 €/SU);
- the impact of adjustments resulting from the costs exempted from cost sharing mechanism (+0.41 €/SU);
- the deduction of the traffic adjustment (-0.08 €/SU) for the costs not subject to traffic risk sharing;
- financial incentives (-0.28 €/SU); and
- the deduction of other revenues (-1.08 €/SU).
The share of the regulatory result (see items 10 to 14) in the AUCU (before the deduction of other revenues) is 5.1%.

Regulatory result (RR)

DSNA net gain/loss on activity in the France en route charging zone in the year 2024

DSNA reported a net gain of +34.9 M€, as a combination of a gain of +26.1 M€ arising from the cost sharing mechanism, with a gain of +15.1 M€ arising from the traffic risk sharing mechanism and a loss of -6.3 M€ relating to financial incentives.

DSNA 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 (+34.9 M€) and the actual RoE (+36.2 M€) amounts to +71.1 M€ (5.1% of the en route revenues). The resulting ex-post rate of return on equity is 23.4%, which is higher than the 11.9% planned in the PP.

RP3 summary

When considering the whole of RP3 (2020-2024), DSNA generated a cumulative gain in respect of cost sharing of +142.7 M€, as actual total costs for RP3 were lower than planned. The traffic risk sharing mechanism generated a gain of +97.7 M€. Adding the loss of -12.4 M€ to be retained by the ATSP in respect of financial incentives and the actual RoE (+164.9 M€ over RP3) leads to an overall regulatory result of +392.8 M€, which corresponds to an average ex-post rate of return on equity of 35.1% (compared to 14.6% initially planned in the PP).