Cost-efficiency - Slovakia

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PRB monitoring

▪ The en route 2024 actual unit cost of Slovakia was 47.67€2017, -8.1% lower than the determined unit cost (51.88€2017). Slovakia does not have a terminal charging zone.

▪ The en route 2024 actual service units of Slovakia (1.2M) were +13% higher than the determined service units (1.1M).

▪ The en route 2024 actual total costs were +2.1M€2017, (+3.7%) higher than determined. This difference is mainly driven by higher staff costs and depreciation costs. The staff costs for LPS SR were +1.5M€2017, (+4.3%) higher than the determined costs mainly due to inflation adjustments negotiated with the unions, as well as staff recruitment.

▪ LPS SR costs of investments were 9.7M€2017 in 2024, +21% higher than determined (8.0M€2017). The NSA stated that this is due to higher depreciation, as determined depreciation costs were lowered to account for unrealised investments in RP2. In addition, cost of capital increase is due to higher values of the asset base and the interest rate of loan.

▪ The en route actual unit cost incurred by users in 2024 was 62.56€ (+7.8% higher than the 2024 DUC). The difference between the AUCU and the DUC is driven by the positive inflation adjustment.

▪ Slovakia’s RP3 performance plan included justifications for a deviation to achieve the RP3 capacity targets. The main measures included recruiting of new ATCOs. Slovakia has not submit-ted 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. Slovakia should reimburse to airspace users the excess funds received by ANSPs 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 85 58 72 77
Determined costs 93 59 62 64
Difference costs -7 -1 10 14
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 1.9% 2.0% 2.1%
Determined inflation index NA 110.9 113.1 115.5
Actual inflation rate NA 12.1% 11.0% 3.2%
Actual inflation index NA 123.9 137.5 141.9
Difference inflation index (p.p.) NA +13 +24.4 +26.4

AUC vs. DUC

In 2024, the en route AUC was -8.1% (or -4.22 €2017) lower than the planned DUC. This results from the combination of significantly higher than planned TSUs (+12.9%) and higher than planned en route costs in real terms (+3.7%, or +2.1 M€2017). It should be noted that the actual inflation index in 2024 was +26.4 p.p. higher than planned.

En route service units

The difference between actual and planned TSUs (+12.9%) 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

Actual real en route costs are +3.7% (+2.1 M€2017) higher than planned. This is the result of higher costs for the main ANSP, LPS (+4.1%, or +2.1 M€2017) and the MET service provider (+9.8%, or +0.2 M€2017) and lower costs for the NSA/EUROCONTROL (-2.7%, or -0.1 M€2017).

En route costs for the main ANSP at charging zone level

Higher than planned en route costs in real terms for LPS in 2024 (+4.1%, or +2.1 M€2017) result from:
- Higher staff costs (+4.3%) which are reported to result from “inflation adjustments as negotiated with the Unions as a consequence of high inflation recorded both in 2022 and 2023”,
- Significantly lower other operating costs (-12.8%) in real terms due to higher than planned inflation index (+26.4 p.p.) since, in nominal terms, other operating costs exceeded the plan (+7.1%) reflecting “higher than forecasted inflation rates”,
- Significantly higher depreciation (+17.7%), reflecting mainly the fact that determined depreciation costs were reduced by -1.3 M€ to account for unrealized investments in the RP2, and
- Significantly higher cost of capital (+26.6%) reflecting the higher “value of the asset base and also the increase in the interest rate of loans”.

RP3 summary

When considering the whole of RP3 (2020-2024) for Slovakia en route charging zone, actual TSUs are +11.4% higher than planned, while actual costs in real terms are -4.1% lower than the determined costs (some -10.4 M€2017). As a result, the weighted average actual unit cost over RP3 (55.88 €2017) is -13.9% lower than planned in the PP (64.91 €2017).

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

AUCU components (€/SU) – 2024
Components of the AUCU in 2024 €/SU
DUC 58.03
Inflation adjustment 9.31
Cost exempt from cost-sharing -0.14
Traffic risk sharing adjustment -3.87
Traffic adj. (costs not TRS) -0.74
Finantial incentives 0.00
Modulation of charges 0.00
Cross-financing 0.00
Other revenues -0.04
Application of lower unit rate 0.00
Total adjustments 4.53
AUCU 62.56
AUCU vs. DUC + 7.8%
Cost exempt from cost sharing by item - 2024 €'000 €/SU
New and existing investments 0.0 0.00
Competent authorities and qualified entities costs 191.8 0.16
Eurocontrol costs -324.0 -0.26
Pension costs 0.0 0.00
Interest on loans -34.7 -0.03
Changes in law 0.0 0.00
Total cost exempt from cost risk sharing -166.8 -0.14

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2024 (62.56 €) is +7.8% higher than the nominal DUC (58.03 €). The difference between these two figures (+4.53 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+9.31 €/SU);
- the impact of adjustments resulting from the costs exempted from cost sharing mechanism (-0.14 €/SU);
- the deduction of the traffic risk sharing adjustments (-3.87 €/SU);
- the deduction of the traffic adjustment (-0.74 €/SU) for the costs not subject to traffic risk sharing; and
- the deduction of other revenues (-0.04 €/SU).
The share of the regulatory result (see items 10 to 14) in the AUCU (before the deduction of other revenues) is 3.0%.

Regulatory result (RR)

LPS net gain/loss on activity in the Slovakia en route charging zone in the year 2024

LPS reported a net gain of +0.2 M€, as a combination of a loss of -2.3 M€ arising from the cost sharing mechanism, with a gain of +2.5 M€ arising from the traffic risk sharing mechanism.

LPS 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 (+0.2 M€) and the actual RoE (+2.3 M€) amounts to +2.6 M€ (3.7% of the en route revenues). The resulting ex-post rate of return on equity is 5.2%, which is higher than the 4.7% planned in the PP.

RP3 summary

When considering the whole of RP3 (2020-2024), LPS generated a cumulative gain in respect of cost sharing of +11.1 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 (+10.8 M€ over RP3) leads to an overall regulatory result of +29.4 M€, which corresponds to an average ex-post rate of return on equity of 13.0% (compared to 4.8% initially planned in the PP).