Cost-efficiency - Ireland

Download Report

Terminal charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 40 31 31 32
Determined costs 41 28 31 32
Difference costs -1 3 0 0
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 terminal AUC was -11.8% (or -19.24 €2017) lower than the planned DUC. This results from the combination of significantly lower than planned terminal costs in real terms (-6.4%, or -1.9 M€2017) and significantly higher than planned TNSUs (+6.1%). It should be noted that the actual inflation index in 2024 was +10.4 p.p. higher than planned.

Terminal service units

The difference between actual and planned TNSUs (+6.1%) falls outside the ±2% dead-band, but does not exceed the ±10% threshold foreseen in the traffic risk sharing mechanism. The resulting gain of additional terminal revenues is therefore shared between the ANSP and the airspace users (see the main ANSP gain in Box 11).

Terminal costs by entity

Actual real terminal costs are -6.4% (-1.9 M€2017) lower than planned. This is the result of lower costs for the main ANSP, AirNav Ireland (-8.6%, or -2.3 M€2017) and higher costs for the MET service provider (+15.2%, or +0.2 M€2017) and the NSA (+12.2%, or +0.2 M€2017).

Terminal costs for the main ANSP at charging zone level

Significantly lower than planned terminal costs in real terms for AirNav Ireland in 2024 (-8.6%, or -2.3 M€2017) result from:
- Slightly higher staff costs than planned (+0.8% or +10.4% in nominal terms) explained by “higher general wage increases than forecast in the contex of high inflation during RP3. In addition, there were higher costs of overtime partially offset by lower headcount than planned”,
- Slightly lower other operating costs (-0.7% or +8.8% in nominal terms),
- Significantly lower depreciation (-29.9%), 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 (-17.2%), due to a lower actual asset based than planned.

RP3 summary

When considering the whole of RP3 (2020-2024) for Ireland terminal charging zone, actual TNSUs are +5.6% higher than planned, while actual costs in real terms are -2.7% lower than the determined costs (some -3.5 M€2017). As a result, the weighted average actual unit cost over RP3 (175.29 €2017) is -7.9% lower than planned in the PP (190.32 €2017).

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

AUCU components (€/SU) – 2024
Components of the AUCU in 2024 €/SU
DUC 173.17
Inflation adjustment 10.06
Cost exempt from cost-sharing -11.35
Traffic risk sharing adjustment -4.23
Traffic adj. (costs not TRS) -0.97
Finantial incentives -0.74
Modulation of charges 0.00
Cross-financing 0.00
Other revenues -4.46
Application of lower unit rate 0.00
Total adjustments -11.68
AUCU 161.49
AUCU vs. DUC -6.7%
Cost exempt from cost sharing by item - 2024 €'000 €/SU
New and existing investments -2,372.1 -12.20
Competent authorities and qualified entities costs 164.5 0.85
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 -2,207.6 -11.35

The actual terminal unit cost incurred by airspace users (AUCU) in respect of activities performed in 2024 (161.49 €) is -6.7% lower than the nominal DUC (173.17 €). The difference between these two figures (-11.68 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+10.06 €/SU);
- the impact of adjustments resulting from the costs exempted from cost sharing mechanism (-11.35 €/SU);
- the deduction of the traffic risk sharing adjustments (-4.23 €/SU);
- the deduction of the traffic adjustment (-0.97 €/SU) for the costs not subject to traffic risk sharing;
- financial incentives (-0.74 €/SU); and
- the deduction of other revenues (-4.46 €/SU).
The share of the regulatory result (see items 10 to 14) in the AUCU (before the deduction of other revenues) is 11.8%.

Regulatory result (RR)

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

AirNav Ireland reported a net gain of +0.6 M€, as a combination of a loss of -0.1 M€ arising from the cost sharing mechanism, with a gain of +0.9 M€ arising from the traffic risk sharing mechanism and a loss of -0.1 M€ relating to financial incentives.

AirNav Ireland overall regulatory result (RR) for the terminal activity

Ex-post, the overall RR taking into account the net gain from the terminal activity mentioned above (+0.7 M€) and the actual RoE (+3.4 M€) amounts to +4.1 M€ (14.2% of the terminal revenues). The resulting ex-post rate of return on equity is 6.8%, 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 loss in respect of cost sharing of -2.8 M€, as actual total costs for RP3 were higher than planned. The traffic risk sharing mechanism generated a gain of +3.5 M€. Adding the loss of -0.1 M€ to be retained by the ATSP in respect of financial incentives and the actual RoE (+11.8 M€ over RP3) leads to an overall regulatory result of +12.4 M€, which corresponds to an average ex-post rate of return on equity of 5.8% (compared to 5.4% initially planned in the PP).