Cost-efficiency - Ireland

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PRB monitoring

▪ The en route 2024 actual unit cost of Ireland was 24.25€2017, -1.7% lower than the determined unit cost (24.66€2017). The terminal 2024 actual unit cost was 144.25€2017, -12% lower than the determined unit cost (163.49€2017).

▪ The en route 2024 actual service units (5.0M€) were +1.9% higher than the determined service units (4.9M).

▪ The en route 2024 actual total costs were almost equal to the determined ones (+0.3M€2017 or -0.2%). The largest contributor was a higher than determined staff cost (3.6M€ or +5.4%), mainly due to higher general wages and costs for overtime . This was compensated by noticeably lower depreciation costs (-2.3M€ or -27%).

▪ AirNav Ireland costs of investments were 15M€2017 in 2024 for both en route and terminal charging zones, -27% less than determined (-5.6M€2017). According to the NSA, this reduction is due to delayed completion dates for projects, reflecting resource shortages and changes in the regulatory environment.

▪ The en route actual unit cost incurred by users in 2024 was 27.63€ (+4.3% above the 2024 DUC), while the terminal actual unit cost incurred by users was 160.75€ (-7.2% below the 2024 DUC). The difference between the AUCU and the DUC for the en route charging zone is primarily attributed to inflation adjustment. For the terminal charging zone, the difference can be attributed to the cost risk sharing adjustment, partially compensated by the inflation adjustment.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 205 119 136 140
Determined costs 207 124 129 130
Difference costs -2 -5 7 11
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.9% 2.0% 2.0%
Determined inflation index NA 105.2 107.3 109.4
Actual inflation rate NA 8.1% 5.2% 1.3%
Actual inflation index NA 112.5 118.3 119.9
Difference inflation index (p.p.) NA +7.3 +11 +10.4

AUC vs. DUC

In 2024, the en route AUC was -1.7% (or -0.42 €2017) lower than the planned DUC. This results from the combination of higher than planned TSUs (+1.9%) and slightly higher than planned en route costs in real terms (+0.2%, or +0.3 M€2017). It should be noted that the actual inflation index in 2024 was +10.4 p.p. higher than planned.

En route service units

The difference between actual and planned TSUs (+1.9%) 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 +0.2% (+0.3 M€2017) higher than planned. This is the result of higher costs for the NSA/EUROCONTROL (+7.9%, or +1.2 M€2017) and the MET service provider (+15.2%, or +1.0 M€2017) and lower costs for the main ANSP, AirNav Ireland (-1.9%, or -1.9 M€2017).

En route costs for the main ANSP at charging zone level

Lower than planned en route costs in real terms for AirNav Ireland in 2024 (-1.9%, or -1.9 M€2017) result from:
- Significantly higher staff costs than planned (+5.0%), explained by “higher general wage increases due to the high inflation during RP3. In addition, there were higher costs of overtime partially offset by lower headcount than planned”,
- Significantly lower other operating costs (-6.4%) due to the impact of the inflation index (+10.4 p.p.) since in nominal terms staff costs were +2.5% above the planned,
- Significantly lower depreciation (-27.8%), due to delays in project completion caused by resource shortages in engineering and operations, leading to prioritisation of ongoing operations over investments. Project delivery was also hindered by regulatory changes (Commission Implementing Regulation (EU) 2019/317),
- Significantly lower cost of capital (-30.8%), due to a lower actual asset base than planned,
- Significantly lower deduction for VFR exempted flights (-8.7%).

RP3 summary

When considering the whole of RP3 (2020-2024) for Ireland en route charging zone, actual TSUs are +2.1% higher than planned, while actual costs in real terms are -2.8% lower than the determined costs (some -16.0 M€2017). As a result, the weighted average actual unit cost over RP3 (29.77 €2017) is -4.8% lower than planned in the PP (31.28 €2017).

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

AUCU components (€/SU) – 2024
Components of the AUCU in 2024 €/SU
DUC 26.48
Inflation adjustment 1.97
Cost exempt from cost-sharing -0.41
Traffic risk sharing adjustment 0.00
Traffic adj. (costs not TRS) -0.08
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues -0.33
Application of lower unit rate 0.00
Total adjustments 1.15
AUCU 27.63
AUCU vs. DUC + 4.3%
Cost exempt from cost sharing by item - 2024 €'000 €/SU
New and existing investments -3,188.6 -0.64
Competent authorities and qualified entities costs 700.8 0.14
Eurocontrol costs 456.4 0.09
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 -2,031.4 -0.41

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2024 (27.63 €) is +4.3% higher than the nominal DUC (26.48 €). The difference between these two figures (+1.15 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+1.97 €/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; and
- the deduction of other revenues (-0.33 €/SU).
The share of the regulatory result (see items 10 to 14) in the AUCU (before the deduction of other revenues) is 1.1%.

Regulatory result (RR)

AirNav Ireland net gain/loss on activity in the Ireland en route charging zone in the year 2024

AirNav Ireland reported a net gain of +0.5 M€, as a combination of a loss of -1.6 M€ arising from the cost sharing mechanism, with a gain of +2.1 M€ arising from the traffic risk sharing mechanism.

AirNav Ireland 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 (+0.5 M€) and the actual RoE (+2.3 M€) amounts to +2.8 M€ (2.4% of the en route revenues). The resulting ex-post rate of return on equity is 6.9%, which is higher than the 5.6% planned in the PP.

RP3 summary

When considering the whole of RP3 (2020-2024), AirNav Ireland generated a cumulative gain in respect of cost sharing of +13.0 M€, as actual total costs for RP3 were lower than planned. The traffic risk sharing mechanism generated a gain of +7.5 M€. Adding the actual RoE (+10.9 M€ over RP3) leads to an overall regulatory result of +31.4 M€, which corresponds to an average ex-post rate of return on equity of 15.6% (compared to 5.1% initially planned in the PP).