Cost-efficiency - Hungary

Download Report

PRB monitoring

▪ The en route 2024 actual unit cost of Hungary was 29.55€2017, -17% lower than the determined unit cost (35.42€2017). The terminal 2024 actual unit cost was 281.17€2017, -16% lower than the determined unit cost (335.29€2017).

▪ The en route 2024 actual service units (3.9M) were +22% higher than the determined service units (3.2M).

▪ The en route 2024 actual total costs were 2.3M€2017 (+2.0%) higher than determined. The largest difference was a higher than determined staff costs for HungaroControl (+3.5M €2017, or +7.2%), due to salary increases for both ATCO and non-ATCO positions resulting from high inflation, partly offset by lower than planned staff numbers . This difference is partially compensated by lower other operating costs in real terms (-3.1M€2017, or -12%), due to the effect of inflation.

▪ HungaroControl costs of investments were 32M€2017 in 2024 for both en route and terminal charging zones, -21% less than determined (40M€2017). The difference is mainly due to underspend of -23% (-5.8M €2017) in depreciation. The NSA explained that the lower than planned depreciation is due to delays in the implementation of the investment plan accumulated during RP3.

▪ The en route actual unit cost incurred by users in 2024 was 32.04€ (-1.5% below the 2024 DUC), while the terminal actual unit cost incurred by users was 288.25€ (-4.2% below the 2024 DUC).

▪ Hungary’s RP3 performance plan included justifications for a deviation to achieve the RP3 capacity targets. The main measures included the recruitment and training of new ATCOs and a number of investments to increase capacity. Hungary has not submitted a detailed report of the capacity-related measures implemented. However, the number of ATCOs in operation at the end of RP3 is below the plan, and costs for new major investments are significantly lower than determined. Hungary should reimburse to airspace users the excess funds received by the ANSP for measures not implemented.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 191 117 137 162
Determined costs 195 124 127 132
Difference costs -4 -7 10 30
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 3.5% 3.3% 3.0%
Determined inflation index NA 118 121.9 125.5
Actual inflation rate NA 15.3% 17.0% 3.7%
Actual inflation index NA 133.4 156.1 161.9
Difference inflation index (p.p.) NA +15.4 +34.3 +36.4

AUC vs. DUC

In 2024, the en route AUC was -16.6% (or -1 814.01 HUF2017, -5.87 €2017) lower than the planned DUC. This results from the combination of significantly higher than planned TSUs (+22.3%) and higher than planned en route costs in real terms (+2.0%, or +713.4 MHUF2017, +2.3 M€2017). It should be noted that the actual inflation index in 2024 was +36.4 p.p. higher than planned.

En route service units

The difference between actual and planned TSUs (+22.3%) 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 are +2.0% (+2.3 M€2017) higher than planned. This is the result of higher than planned costs for the main ANSP, HungaroControl (+2.0%, or +2.0 M€2017) and the NSA/EUROCONTROL (+7.6%, or +0.9 M€2017) and lower costs for the MET service provider (-18.1%, or -0.6 M€2017).

En route costs for the main ANSP at charging zone level

The actual real en route costs for HungaroControl are higher than planned in 2024 (+2.0%, or +2.0 M€2017), and result from:
- Significantly higher than planned staff costs (+7.2%), mainly due to “pay rises (….) for both ATCO and non-ATCO positions”,
- Significantly lower than planned other operating costs (-11.9%), but higher in nominal terms (+13.7%) mainly due to “extra payment to the government (…), energy price (…), local business tax (…), supplier charges (…), aviation liability insurance premiums.”
- Lower than planned depreciation costs (-3.4%), “caused by investment (…) behind schedule, (…) and certain assets put into operation later than planned”,
- Significantly higher than planned cost of capital (+30.2%), mainly due to “the recognition of the pension related obligations in the employed capital”.

RP3 summary

When considering the whole of RP3 (2020-2024) for Hungary en route charging zone, actual TSUs are +19.9% higher than planned, while actual costs in real terms are -5.1% lower than the determined costs (some -8 051.1 MHUF2017 or -26.1 M€2017). As a result, the weighted average actual unit cost over RP3 (10 794.32 HUF2017 or 34.93 €2017) is -20.9% lower than planned in the PP (13 638.76 HUF2017 or 44.14 €2017).

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

AUCU components (€/SU) – 2024
Components of the AUCU in 2024 €/SU
DUC 32.52
Inflation adjustment 5.60
Cost exempt from cost-sharing -0.35
Traffic risk sharing adjustment -4.21
Traffic adj. (costs not TRS) -0.69
Finantial incentives -0.13
Modulation of charges 0.00
Cross-financing 0.00
Other revenues -0.69
Application of lower unit rate 0.00
Total adjustments -0.48
AUCU 32.04
AUCU vs. DUC -1.5%
Cost exempt from cost sharing by item - 2024 €'000 €/SU
New and existing investments -2,066.7 -0.53
Competent authorities and qualified entities costs 677.4 0.17
Eurocontrol costs 16.0 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 -1,373.3 -0.35

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2024 (12 660.20 HUF or 32.04 €) is -1.5% lower than the nominal DUC (12 847.98 HUF or 32.52 €). The difference between these two figures (-187.78 HUF/SU or -0.48 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+2212.63 HUF/SU or +5.60 €/SU);
- the impact of adjustments resulting from the costs exempted from cost sharing mechanism (-139.42 HUF/SU or -0.35 €/SU);
- the deduction of the traffic risk sharing adjustments (-1662.01 HUF/SU or -4.21 €/SU);
- the deduction of the traffic adjustment (-274.28 HUF/SU or -0.69 €/SU) for the costs not subject to traffic risk sharing;
- the financial incentives (-52.52 HUF/SU or -0.13 €/SU); and
- the deduction of other revenues (-272.18 HUF/SU or -0.69 €/SU).
The share of the regulatory result (see items 10 to 14) in the AUCU (before the deduction of other revenues) is 6.1%.

Regulatory result (RR)

HungaroControl net loss on activity in the Hungary en route charging zone in the year 2024

HungaroControl reported a net loss of -57.0 MHUF, as a combination of a loss of -1 440.7 MHUF arising from the cost sharing mechanism, with a gain of +1 588.2 MHUF arising from the traffic risk sharing mechanism and a loss of -204.4 MHUF relating to financial incentives.

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

Ex-post, the overall RR taking into account the net loss from the en route activity mentioned above (-57.0 MHUF) and the actual RoE (+2 917.3 MHUF) amounts to +2860.4 MHUF (6.3% of the en route revenues). The resulting ex-post rate of return on equity is 7.0%, which is lower than the 7.7% planned in the PP.

RP3 summary

When considering the whole of RP3 (2020-2024), HungaroControl generated a cumulative gain in respect of cost sharing of +9 371.0 MHUF, as actual total costs for RP3 were lower than planned. The traffic risk sharing mechanism generated a gain of +4 600.2 MHUF. Adding the loss of -400.6 MHUF to be retained by the ATSP in respect of financial incentives and the actual RoE (+11 186.3 MHUF over RP3) leads to an overall regulatory result of +24 756.9 MHUF, which corresponds to an average ex-post rate of return on equity of 14.6% (compared to 6.9% initially planned in the PP).