Cost-efficiency - Sweden

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PRB monitoring

▪ The en route 2024 actual unit cost of Sweden was 17.15€2017, -72% lower than the determined unit cost (61.00€2017). The terminal 2024 actual unit cost was 19.90€2017, -85% lower than the determined unit cost (131.71€2017).

▪ The en route 2024 actual service units of Sweden (2.9M) were -15% lower than the determined service units (3.4M), mainly due to shifted traffic flows caused by Russia’s war of aggression against Ukraine.

▪ The en route 2024 actual total costs were -156M€2017 (-76%) lower than the determined. This difference is driven by negative exceptional costs for LFV. Although no exceptional costs had been planned, the actual exceptional costs were -185M€2017, which was due to a one-time effect on pension costs resulting from increased interest rates that reduced the pension debt. When excluding this item, the en route 2024 actual total costs for Sweden are +28M€2017 (+14%) higher than planned.

▪ LFV spent 20M€2017 in 2024 related to costs of investments for both en route and terminal charging zones, +11% higher than determined (18M€2017). The difference is driven by higher depreciation costs under the RTS-Swedavia program, resulting from a combination of higher total investment and depreciation period shorter than originally planned.

▪ The en route actual unit cost incurred by users in 2024 was 10.25€ (-82% lower than the 2024 DUC), while the terminal actual unit cost incurred by users in 2024 was 18.30€ (-86% lower than the 2024 DUC). The difference between the AUCU and the DUC is mostly resulting from the cost risk sharing adjustment for both en route and terminal charging zones.

▪ Sweden should take additional measures to manage the cost-risk associated with pensions for RP4 in view of wide fluctuations in actual pension costs observed during RP3.

En route charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 496 246 292 48
Determined costs 502 240 245 232
Difference costs -6 7 48 -184
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 4.8% 2.2% 1.7%
Determined inflation index NA 112.4 114.9 116.9
Actual inflation rate NA 8.1% 5.9% 2.0%
Actual inflation index NA 116 122.8 125.3
Difference inflation index (p.p.) NA +3.5 +7.9 +8.4

AUC vs. DUC

In 2024, the en route AUC was -71.9% (or -422.37 SEK2017, -43.85 €2017) lower than the planned DUC. This results from the combination of significantly lower than planned en route costs in real terms (-76.0%, or -1 503.5 MSEK2017, -156.1 M€2017) and significantly lower than planned TSUs (-14.6%). If exceptional items were excluded, the AUC in 2024 would equal to 783.66 SEK2017 and exceed planned DUC by +33.4%.

En route service units

The difference between actual and planned TSUs (-14.6%) falls outside the ±10% threshold foreseen in the traffic risk sharing mechanism. The resulting loss of en route revenues is shared between the ANSP and the airspace users (see the main ANSP loss in Box 11).

En route costs by entity

Because of the reporting of these significant negative exceptional costs, LFV actual costs are much lower than planned (-105.6%, or -159.8 M€2017). Costs are also lower than planned for the other ANSPs (ACR, ARV and SDATS, -1.2%, or -0.3 M€2017) but higher than planned for the MET SP (+13.1%, or +0.6 M€2017) and the NSA/EUROCONTROL (+12.6%, or +3.4 M€2017). Overall, actual Sweden real en route costs are -76.0% (-156.1 M€2017) lower than planned but would be +13.9% (+28.5 M€2017) higher if exceptional costs were excluded.

En route costs for the main ANSP at charging zone level

Actual real en route costs for LFV are negative (-8.5 M€2017) due to the reporting of exceptional item costs as described above. If these costs were excluded, actual 2024 costs for LFV would exceed the plan by +16.3% (+24.7 M€2017).

RP3 summary

When considering the whole of RP3 (2020-2024) for Sweden en route charging zone, actual TSUs are -9.9% lower than planned, while actual costs in real terms are -11.7% lower than the determined costs (-1 271.4 MSEK2017 or -132.0 M€2017). As a result, the weighted average actual unit cost over RP3 (833.69 SEK2017 or 86.54 €2017) is -2.0% lower than planned in the PP (850.76 SEK2017 or 88.32 €2017). However, if negative exceptional item costs were excluded, the actual costs would be +4.7% above determined (+52.5 M€2017) while resulting weighted average actual unit cost (988.49 SEK2017) would exceed the plan by +16.2%.

Note 1: actual 2024 en-route costs for LFV are significantly affected by the reporting of negative exceptional item costs totalling -2.2 billion SEK reflecting a “one-time effect on pension costs as a result of higher interest”, which will be reimbursed to airspace users through the costs exempt mechanism. Due to their magnitude, these exceptional costs significantly affect the calculations and analysis presented in this monitoring report for 2024 and the RP3 summary. For this reason, analysis in the text is also presented without considering these exceptional costs.

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

AUCU components (€/SU) – 2024
Components of the AUCU in 2024 €/SU
DUC 58.08
Inflation adjustment 3.88
Cost exempt from cost-sharing -58.47
Traffic risk sharing adjustment 5.93
Traffic adj. (costs not TRS) 1.47
Finantial incentives 0.49
Modulation of charges 0.00
Cross-financing 0.00
Other revenues -1.14
Application of lower unit rate 0.00
Total adjustments -47.84
AUCU 10.25
AUCU vs. DUC -82.4%
Cost exempt from cost sharing by item - 2024 €'000 €/SU
New and existing investments 735.2 0.26
Competent authorities and qualified entities costs 1,833.9 0.64
Eurocontrol costs 1,022.5 0.36
Pension costs -171,832.3 -59.78
Interest on loans 172.9 0.06
Changes in law 0.0 0.00
Total cost exempt from cost risk sharing -168,067.8 -58.47

The actual en route unit cost incurred by airspace users (AUCU) in respect of activities performed in 2024 (117.04 SEK or 10.25 €) is -82.4% lower than the nominal DUC (663.53 SEK or 58.08 €). The difference between these two figures (-546.49 SEK/SU or -47.84 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+44.37 SEK/SU or +3.88 €/SU);
- the impact of adjustments resulting from the costs exempted from cost sharing mechanism (-667.94 SEK/SU or -58.47 €/SU);
- the addition of the traffic risk sharing adjustments (+67.78 SEK/SU or +5.93 €/SU);
- the addition of the traffic adjustment (+16.75 SEK/SU or +1.47 €/SU) for the costs not subject to traffic risk sharing;
- financial incentives (+5.55 SEK/SU or +0.49 €/SU); and
- the deduction of other revenues (-13.00 SEK/SU or -1.14 €/SU).
The share of the regulatory result (see items 10 to 14) in the AUCU (before the deduction of other revenues) is -21.9%.
The calculation of AUCU is significantly affected by reporting of exceptional pension costs to be returned to the airspace users through the cost exempt mechanism (see Note 1 in Box 4 for details). Should these costs be excluded from the calculation, the AUCU in 2024 would equal to 891.71 SEK or 78.06 € and would be +34.4% higher than the nominal DUC while the share of the regulatory result would amount to -3.1%.

Regulatory result (RR)

LFV net gain/loss on activity in the Sweden en route charging zone in the year 2024

LFV reported a net loss of -71.4 MSEK, as a combination of a loss of -14.5 MSEK arising from the cost sharing mechanism, with a loss of -72.8 MSEK arising from the traffic risk sharing mechanism and a gain of +16.0 MSEK relating to financial incentives.

LFV 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 (-71.4 MSEK) and the actual RoE (+5.2 MSEK) amounts to -66.2 MSEK (29.4% of the en route revenues). The resulting ex-post rate of return on equity is negative (-9.7%).

RP3 summary

When considering the whole of RP3 (2020-2024), LFV generated a cumulative gain in respect of cost sharing of +43.2 MSEK, as actual total costs for RP3 were lower than planned. The traffic risk sharing mechanism generated a loss of -153.0 MSEK. Adding the gain of +33.1 MSEK to be retained by the ATSP in respect of financial incentives and the actual RoE (+14.9 MSEK over RP3) leads to an overall regulatory result of -61.7 MSEK, which corresponds to an average ex-post rate of return on equity of -2.2% (compared to 0.5% initially planned in the PP).

Note 2: Information reported in the en route reporting tables for LFV also includes the costs for CNS infrastructure owned by the airport operators.