Cost-efficiency - Switzerland

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Terminal charging zone

Unit cost (KPI#1)

Actual and determined data
Total costs - nominal (M€) 2020-2021 2022 2023 2024
Actual costs 180 88 111 116
Determined costs 188 95 94 95
Difference costs -8 -6 17 21
Inflation assumptions 2020-2021 2022 2023 2024
Determined inflation rate NA 0.3% 0.8% 0.9%
Determined inflation index NA 101.7 102.5 103.4
Actual inflation rate NA 2.7% 2.3% 1.1%
Actual inflation index NA 104.6 107 108.1
Difference inflation index (p.p.) NA +2.9 +4.5 +4.8

AUC vs. DUC

In 2024, the terminal AUC was +14.7% (or +54.07 CHF2017, +48.66 €2017) higher than the planned DUC. This results from the combination of significantly higher than planned terminal costs in real terms (+17.1%, or +17.6 MCHF2017, +15.8 M€2017) and higher than planned TNSUs (+2.1%). It should be noted that the actual inflation index in 2024 was +4.8 p.p. higher than planned.

Terminal service units

The difference between actual and planned TNSUs (+2.1%) 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 +17.1% (+15.8 M€2017) higher than planned. This is the result of higher costs for the main ANSP, Skyguide (+19.0%, or +16.6 M€2017) and the NSA (+11.8%, or +0.1 M€2017) and lower costs for the MET service provider (-21.2%, or -0.9 M€2017).

Terminal costs for the main ANSP at charging zone level

Terminal costs in real terms for Skyguide in 2024 are significantly higher than planned (+19.0%, or +16.6 M€2017). However, the differences by nature of costs are distorted by two factors:
a) The overall reported costs in each cost item are netted by the financing of the services provided by Skyguide outside the Swiss FIR.
b) Skyguide’s costs include significant amounts linked to the additional costs caused by the change in the capitalisation rule in 2024 (+3.1M€2017). However, in order for this amount not to be billed to airspace users, it has also been reported as negative exceptional item in the determined costs, but not in the actual costs (-100% of negative exceptional costs, or +3.1M€2017). Other deviations result from:
- Significantly higher staff costs (+17.0%), due to an increase in the number of FTEs to address a technical crisis and system instability resulting from previous cuts in maintenance and training,
- Significantly higher other operating costs (+44.7%), due to increased use of external resources to cope with the technical crisis and system instability described above,
- Significantly lower depreciation (-18.0%),
- Significantly lower cost of capital (-15.0%).

RP3 summary

When considering the whole of RP3 (2020-2024) for Switzerland terminal charging zone , actual TNSUs are -1.1% lower than planned, while actual costs in real terms are +2.7% higher than the determined costs (some +13.9 MCHF2017 or +12.5 M€2017). As a result, the weighted average actual unit cost over RP3 (518.65 CHF2017 or 466.73 €2017) is +3.9% higher than planned in the PP (499.39 CHF2017 or 449.40 €2017).

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

AUCU components (€/SU) – 2024
Components of the AUCU in 2024 €/SU
DUC 395.39
Inflation adjustment 13.97
Cost exempt from cost-sharing -14.27
Traffic risk sharing adjustment -0.15
Traffic adj. (costs not TRS) -0.40
Finantial incentives -1.84
Modulation of charges 0.00
Cross-financing 0.00
Other revenues 0.00
Application of lower unit rate 0.00
Total adjustments -2.69
AUCU 392.69
AUCU vs. DUC -0.7%
Cost exempt from cost sharing by item - 2024 €'000 €/SU
New and existing investments -4,136.3 -14.49
Competent authorities and qualified entities costs 63.0 0.22
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 -4,073.3 -14.27

The actual terminal unit cost incurred by airspace users (AUCU) in respect of activities performed in 2024 (373.93 CHF or 392.69 €) is -0.7% lower than the nominal DUC (376.49 CHF or 395.39 €). The difference between these two figures (-2.56 CHF/SU or -2.69 €/SU) is due to:
- the positive inflation adjustment resulting from higher than planned inflation (+13.30 CHF/SU or +13.97 €/SU);
- the impact of adjustments resulting from the costs exempted from cost sharing mechanism (-13.58 CHF/SU or -14.27 €/SU);
- the deduction of the traffic risk sharing adjustments (-0.14 CHF/SU or -0.15 €/SU);
- the deduction of the traffic adjustment (-0.38 CHF/SU or -0.40 €/SU) for the costs not subject to traffic risk sharing; and
- financial incentives (-1.75 CHF/SU or -1.84 €/SU).
The share of the regulatory result (see items 10 to 14) in the AUCU (before the deduction of other revenues) is -18.1%.

Regulatory result (RR)

Skyguide net gain/loss on activity in the Switzerland terminal charging zone in the year 2024

Skyguide reported a net loss of -22.7 MCHF, as a combination of a loss of -24.2 MCHF arising from the cost sharing mechanism, with a gain of +2.0 MCHF arising from the traffic risk sharing mechanism and a loss of -0.5 MCHF relating to financial incentives.

Skyguide overall regulatory result (RR) for the terminal activity

Ex-post, the overall RR taking into account the net loss from the terminal activity mentioned above (-22.7 MCHF) and the actual RoE (+2.4 MCHF) amounts to -20.3 MCHF (-20.0% of the terminal revenues). The resulting ex-post rate of return on equity is -52.1%, which is lower than the 8.1% planned in the PP.

RP3 summary

When considering the whole of RP3 (2020-2024), Skyguide generated a cumulative loss in respect of cost sharing of -24.5 MCHF, as actual total costs for RP3 were higher than planned. The traffic risk sharing mechanism generated loss of -1.5 MCHF. Adding the loss of -0.5 MCHF to be retained by the ATSP in respect of financial incentives and the actual RoE (+12.0 MCHF over RP3) leads to an overall regulatory result of -14.5 MCHF, which corresponds to an average ex-post return on equity of -5.8% (compared to 6.6% initially planned in the PP).

Note 2: Ex-post RR does not take into account the application of lower unit rates as per Art. 29.6 in 2022 (loss in revenues for Skyguide corresponds to -0.8 MCHF).