european commissionec.europa.eu/transport/sites/transport/files/ses-performance-library... · prb...

PRB Assessment Report of RP2 FAB Revised Performance Targets – FAB Assessment Reports

PRB Assessment of RP2 FAB Revised Performance Targets Vol. 2 - FAB assessment reports

Version 1.0

Edition date: 16/10/2015


COPYRIGHT NOTICE AND DISCLAIMER

© European Union, 2015 This report has been prepared for the European Commission by the Performance Review Body of the Single European Sky, in its capacity as an advisory body to the European Commission. Reproduction is authorised provided the source is acknowledged. However, neither the European Commission, nor any person acting on its behalf, may be held responsible for the use which may be made of the information contained in this publication, or for any errors which may appear, despite careful preparation and checking.


FAB assessment Report of RP2 FAB Revised Performance Targets

Table of Contents

• Blue Med FAB • Danube FAB • FAB CE • FABEC • SWFAB

PRB Assessment Report of RP2 FAB Revised Performance Targets – Blue Med FAB

1

PRB Assessment of RP2 FAB Revised Performance Targets Blue Med FAB

Version 3.1



2




3

Table of Contents 1 INTRODUCTION ................................................................................................................................... 4

2 CONTENT OF THE SUBMISSION ............................................................................................................ 4

3 CAPACITY ............................................................................................................................................. 5

3.1 EN ROUTE DELAY LEVEL ................................................................................................................................ 5 3.2 EN‐ROUTE CAPACITY RECOMMENDATIONS ...................................................................................................... 7 3.3 PRB CONSIDERATIONS ................................................................................................................................ 7 3.4 PRB FINDINGS .......................................................................................................................................... 8

4 COST‐EFFICIENCY ................................................................................................................................. 9

4.1 ITALY: OVERVIEW OF THE EC DECISION (2ND MARCH 2015) ............................................................................... 9

4.2 ITALY: SUMMARY OF CHANGES IN THE REVISED PERFORMANCE PLAN (JULY 2015) ................................................. 9 4.3 ITALY: EN‐ROUTE CHARGING ZONE ASSESSMENT FOLLOWING REVISED PERFORMANCE PLAN SUBMISSION .................. 11 4.4 ITALY: TERMINAL CHARGING ZONES ASSESSMENT FOLLOWING REVISED PERFORMANCE PLAN SUBMISSION ................. 17

ANNEX 1: EN‐ROUTE CAPACITY CONSIDERATIONS ...................................................................................... 20

LEGISLATION ....................................................................................................................................................... 20 REVISION OF EN‐ROUTE CAPACITY TARGETS ............................................................................................................. 20 APPROPRIATE MEASURES FOR REACHING IMPROVED EN‐ROUTE CAPACITY TARGETS ...................................................... 21 ADDITIONAL INFORMATION ................................................................................................................................... 21 NETWORK OPERATIONS PLAN: CAPACITY PLANS ..................................................................................................... 21 REMEDIAL MEASURES .......................................................................................................................................... 21 OTHER CONSIDERATIONS ...................................................................................................................................... 23 ACTUAL CAPACITY PERFORMANCE DURING RP1 ....................................................................................................... 24 CAPACITY PLANNING IN BLUE MED ACCS ............................................................................................................... 26 DOCUMENTS USED FOR CAPACITY ANALYSIS: ........................................................................................................... 30

REFERENCES ............................................................................................................................................... 31

Table of Figures FIGURE 1: EN‐ROUTE COST‐EFFICIENCY TARGETS IN RP2 INITIAL AND REVISED PPS ................................................................. 12

FIGURE 2: EN‐ROUTE TSU FORECASTS OVERVIEW ............................................................................................................ 13

FIGURE 3: TERMINAL ANS COST‐EFFICIENCY TARGETS FOR RP2 INITIAL AND REVISED PPS ....................................................... 17

Table of Tables TABLE 1: COMPARISON OF EN‐ROUTE CAPACITY TARGETS AT LOCAL LEVEL WITH THE FAB REFERENCE VALUES ................................ 5

TABLE 2: COST OF ADDITIONAL DELAY TO AIRSPACE USERS ................................................................................................... 5

TABLE 3: EXTRACT FROM NETWORK OPERATIONS PLAN 2015‐2019 .................................................................................... 6

TABLE 4: INDIVIDUAL ANSP CONTRIBUTIONS TO THE FAB REFERENCE VALUE .......................................................................... 6

TABLE 5: INITIAL AND REVISED EN‐ROUTE COST‐EFFICIENCY TARGETS FOR RP2 ...................................................................... 11

TABLE 6: EN‐ROUTE TSU FORECASTS – INCLUDING STATFOR FEB. 2015 ........................................................................... 13

TABLE 7: ECONOMIC ASSUMPTIONS .............................................................................................................................. 14

TABLE 8: INITIAL AND REVISED TERMINAL COST‐EFFICIENCY TARGETS FOR RP2 ....................................................................... 18


4

1 INTRODUCTION 1.1.1 Pursuant to Commission Implementing Regulation (EU) No 390/2013i, the Blue Med

FAB delivered its Performance Plan on 1 July 2014.

1.1.2 The PRB submitted an initial assessment report to the Commission on 6 October 2014.

1.1.3 Further on, the Commission Implementing Decision (EU) 2015/347ii established that targets in the key performance areas of capacity and cost-efficiency (for Italy) submitted by the Blue Med FAB are not consistent with the relevant Union-wide performance targets.

1.1.4 The Commission therefore asked the Blue Med FAB States to revise their capacity targets downwards. As a minimum, those targets should be in accordance with the respective FAB reference values set out in the Network Operations Plan (NOP).

1.1.5 In addition, Italy should also revise their en route determined unit costs downwards.

1.1.6 The Blue Med FAB submitted revised targets on 9 July 2015. The PRB has assessed these revised targets including all other relevant information provided and presented its conclusions on the new targets in this report.

1.1.7 This report is an integral part of the PRB assessment deliverables.

2 CONTENT OF THE SUBMISSION 2.1.1 The Blue Med FAB submitted a revised Performance Plan on 9 July 2015.

2.1.2 The submission included:

The body of the plan, including only those parts which were changed;

2.1.3 Changes were identified in the new submission (new text in red colour)

2.1.4 The following references to the PRB observations / recommendations were included on the following items:

3.1.(a).(ii) - Safety KPI #2: Application of the severity classification based on the Risk Analysis Tool (RAT) methodology;

3.1.(a).(iii) - Safety KPI #3: Just Culture;

3.1.(a).(iii) - Optional section - Additional Environment KPI(s).

2.1.5 The PRB notes that the Blue Med FAB has provided updates on the following points:

HANSP contribution to FAB targets;

Statement from the Republic of Cyprus on the RP2 capacity KPA;

Investment plan for Cyprus;

Targets for Terminal and airport ANS ATFM arrival delay per flight (Italy and Greece);

Additional Capacity KPI(s) for Italy;

Incentive schemes for the capacity targets (Italy, Cyprus and Malta). ;

Military dimension of the plan.

2.1.6 No Annex A was provided with the submission. The PRB notes that a meeting on "Italy - RP2 Cost Efficiency Consultation meeting" was held on 26 June 2015.


5

3 CAPACITY 3.1 En route delay level 3.1.1 The EC Decision 2015/347 published on the 2nd March 2015 (see Article 3) states

that: "The performance targets in the key performance area of capacity submitted by Greece, Italy, Cyprus and Malta as regards Blue Med FAB […] should be revised downwards. As a minimum, those targets should be in accordance with the respective FAB reference values set out in the Network Operations Plan. Where the Network Operations Plan specifies remediation or mitigation measures, account should be taken of those measures when revising the performance targets."

2015 2016 2017 2018 2019

Blue Med reference value (NOP June 2014) 0.17 0.18 0.18 0.18 0.18

FAB Target 0.35 0.36 0.37 0.37 0.38

Revised FAB Target 0.35 0.36 0.37 0.37 0.38

Shortfall 0.18 0.18 0.19 0.19 0.20

Consistency check

Table 1: Comparison of en-route capacity targets at local level with the FAB reference values

Primary check:

For en-route capacity, are the FAB targets consistent with the respective FAB reference values (Annex IV section 4(a))?

3.1.2 The Blue Med FAB targets have not been revised and are therefore not consistent with the respective FAB reference values for the years 2015-2019. The additional cost to airspace users, due to the capacity shortfall is expected to be approximately €199 million during RP2, as shown in Table 2.

2015 2016 2017 2018 2019

Capacity shortfall 0.18 0.18 0.19 0.19 0.20

Expected FAB Traffic (000’s) 2,374 2,475 2,550 2,634 2,717

Additional minutes of delay (000’s) 427.3 445.5 484.5 500.5 543.4

Cost of additional delay (€ Million) 35.5 37 40.2 41.5 45.1

Table 2: Cost of additional delay to airspace users

Secondary check:

The PRB will consider the Performance Plans of other FABs and the Network Performance Plan (To see if the Union-wide target can still be met due to more demanding targets being adopted by other FABs.)

3.1.3 No other FAB has adopted capacity targets that will make up for the capacity shortfall from Blue Med FAB.


6

Additional information:

Existing, and previous, ANSP capacity plans (Annex II, 3.1c(iii));

3.1.4 The Network Operations Plan 2015-2019 (June 2015 edition) provides a delay forecast for Blue Med FAB, based on existing capacity plans together with STATFOR baseline traffic forecast (February 2015). It is important to note that the delay forecast does not include delays for disruptions such as industrial action or technical failures.

Extract from Network Operations Plan 2015-2019

Year 2015 2016 2017 2018 2019

Annual reference value 0.17 0.18 0.18 0.18 0.18

Delay forecast full year 1.04 1.46 1.78 1.79 1.78

Table 3: Extract from Network Operations Plan 2015-2019

3.1.5 Both the Commission and the PRB raised concerns about capacity planning in Blue Med FAB as far back as 2011. Despite repeated requests to ensure that the Blue Med ANSPs develop and implement suitable capacity plans, capacity plans were continuously downgraded and/or postponed.

3.1.6 According to the Network Operations Plan 2015-2019, three of the seven ACCs in Blue Med FAB are expected to experience capacity shortfalls for the entire reference period, 2015-2019: Nicosia ACC, Makedonia ACC and Athens ACC.

3.1.7 The Network Manager has highlighted remedial actions that can be taken to improve capacity plans at the three ACCs mentioned above, in section 10.2 of the Network operations Plan 2015-2019.

3.1.8 No capacity problems are foreseen in the remaining four ACCs in Blue Med FAB: Brindisi ACC, Malta ACC, Milan ACC, Padua ACC and Roma ACC.


Contribution of individual ANSPs to FAB performance (Annex II, 3.4)

2015 2016 2017 2018 2019

FAB reference value 0.17 0.18 0.18 0.18 0.18

ANSP

contribution

Cyprus 1.50 1.50 1.50 1.50 1.50

ENAV 0.09 0.10 0.11 0.11 0.11

HANSP 0.70 1.40 1.00 0.60 0.50

MATS 0.01 0.02 0.02 0.02 0.02

Aggregated performance 0.49 0.73 0.61 0.49 0.46

Table 4: Individual ANSP contributions to the FAB reference value


7

3.1.9 The aggregated contribution expected from the individual ANSPs is not consistent with either the FAB reference value or the proposed FAB targets. In comparison with the FAB reference value, airspace users will incur a capacity related additional cost of €387 million over the course of RP2.


Civil-military cooperation and coordination arrangements (Annex II, 5)

3.1.10 Section 5 of the Blue Med performance plan has been updated listing several ongoing initiatives involving civil military coordination and cooperation. However, the performance plan does not provide any details of how this will translate into badly needed additional capacity, especially in Cyprus and Greece.

3.2 En-route Capacity Recommendations 3.2.1 In accordance with Regulation (EU) No 390/2013 Article 15 (3): since the en-route

capacity part of the revised performance plans for Blue Med FAB are not consistent with the union-wide targets for en-route capacity, the PRB recommends that the Commission decides that Cyprus, Greece, Italy and Malta as members of Blue Med FAB, should take corrective measures.

3.2.2 In accordance with Regulation (EU) No 390/2013 Article 15 (4), the PRB recommends that the FAB en-route capacity targets for Blue Med FAB are revised to meet the respective reference values as published in the Network Operations Plan (2014-2018/2019) June 2014 edition. The rationale for this recommendation is that the binding union-wide targets for en-route capacity cannot be achieved unless FABs adopt binding en-route capacity targets consistent with their respective reference values.

3.2.3 In accordance with Regulation (EU) No 390/2013 Article 15 (4), the PRB recommends that the level of performance, for en-route capacity, expected for Cyprus, Greece, Italy and Malta, as members of Blue Med FAB, should be, as a minimum, the Blue Med FAB reference values as published in the Network Operations Plan (2014-2018/2019) June 2014 edition. Adoption of such targets will allow the States concerned to take the appropriate corrective measures.

3.2.4 In accordance with Regulation (EU) No 390/2013 Article 15 (4), the PRB suggests that Cyprus, Greece, Italy and Malta, as members of Blue Med FAB, should implement the remedial measures listed by the Network Manager in section 10.2 of the Network Operations Plan (2015-2019). The PRB suggests that those Member States should agree with the Network Manager, as a matter of priority, an action plan to resolve any outstanding capacity issues. The PRB recommends that the implementation of these local actions plans should be closely monitored by the NSAs of the relevant FABs.

3.3 PRB Considerations 3.3.1 In preparation for the PRB to present findings to the Commission, the PRB reviewed

any additional information that was submitted beyond the FAB performance plan.

3.3.2 For the Blue Med FAB, no direct supplementary information was provided to the Commission, or the PRB, save the proposed en-route capacity incentive scheme from Italy.

3.3.3 The PRB considered the remedial measures presented by the Network Manager in the NOP 2015-2019, at the Blue Med ACCs that were identified as having capacity constraints during RP2.


8

3.3.4 The PRB considered the en-route capacity incentive schemes presented in the FAB performance plan, and how they propose to function.

3.3.5 Finally, the PRB considered the actual capacity performance during RP1 and the evolution of capacity planning at Blue Med ACCs.

3.3.6 More information on these considerations can be found in annex to this report.

3.4 PRB Findings 3.4.1 The PRB finds that the performance plan of Blue Med FAB, as regards capacity,

does not contribute adequately to the overall EU wide target and therefore fails.

3.4.2 The Commission should invite:

3.4.3 :

Greece and Cyprus to correct the conflicting information and capacity plans without clear milestones in particular the non-alignment with the capacity plans and the NOP.

Blue Med FAB to provide a FAB wide consolidated capacity plan with clear milestones and a firm commitment to deliver improved en-route capacity performance to airspace users over RP2. Blue Med FAB could be asked to coordinate internally, and with the Network Manager, to ensure that the delivery of en-route capacity is coordinated for the benefit of the airspace users over RP2. The RP2 performance plan shall be updated to include the revised capacity plans.

3.4.4 Moreover, in order to provide reassurance that Blue Med FAB is committed to delivering the best possible capacity performance during RP2, Blue MED FAB could be asked to adopt a FAB en-route capacity incentive scheme with the following characteristics:

(i) All delay reasons considered;

(ii) Dead-band between Blue Med FAB reference values and Blue Med FAB Targets.

(iii) Bonuses paid when Blue Med FAB capacity performance is better than respective Blue Med FAB reference value;

(iv) Penalties paid when Blue Med FAB capacity performance is worse than proposed Blue Med FAB Targets.


9

4 COST-EFFICIENCY 4.1 Italy: Overview of the EC Decision (2nd March 2015) 4.1.1 The assessment carried out by the EC assisted by the PRB has shown that the RP2

cost-efficiency targets submitted by the BLUE MED FAB for Italy in its initial Performance Plan (PP) (July 2014) are not consistent with the relevant Union-wide performance targets.

4.1.2 The Commission Implementing Decision (EU) No 2015/347 published on the 2nd March 2015 (Whereas (6) refers) indicates that: "Concerning the key performance area of cost-efficiency, the targets expressed in en route determined unit costs submitted by Member States have been assessed, in accordance with the principles laid down in point 5, in conjunction with point 1, of Annex IV to the Implementing Regulation (EU) No 390/2013, by taking account of the trend of en route determined unit costs over the second reference period and the combined period of the first and the second reference period (2012-19), the number of service units (traffic forecast) and the level of en route determined unit costs in comparison to Member States having a similar operational and economic environment. (…)"

4.1.3 The Commission Decision (see Whereas 13) further specifies the reasons for assessing Italy’s cost-efficiency targets as not consistent with the relevant Union-wide performance targets and indicates that: “As regard Italy, its target are based on a planned reduction of its en route determined unit costs over the second reference period by 2,8% per year on average. This is not in line with the targeted reduction of the average Union-wide en route determined unit costs over the second reference period (–3,3% per year). Also over the combined period of the first and the second reference period the planned en route determined unit costs of Italy do not decrease in line with the Union-wide trend (–1,4%, compared to –1,7%). In addition, the target for 2019 is based on planned en route determined unit costs that are substantially above (+16,6%) the average en route determined unit costs of the Member States having a similar operational and economic environment to the one of Italy and around 25% above the Union-wide performance target in 2019.”

4.1.4 The PRB analysis focuses on the changes made to the initial RP2 PP and on the elements that were specifically identified in the Whereas 6 and 13 of the Commission Decision No 2015/347 and which are listed in §4.1.2 and §4.1.3 above. Namely, this analysis is focused, in a first step, on whether the en-route DUC trend is equal or better than −1.7% p.a. over the first and second reference periods combined and −3.3% p.a. over the second reference period. Should the en-route cost-efficiency targets not pass this first step, a second step looks at if the en-route DUC level planned for 2019 is markedly lower than the comparator group average.

4.2 Italy: Summary of changes in the revised Performance Plan (July 2015) Remark: the cost-efficiency analysis does not yet reflect the data submitted by Italy on 5 October 2015 (i.e. 2014 actual costs data). However, as the total 2014 actual costs level does not significantly vary from the total 2014 provisional cost considered in the cost-efficiency analysis, the PRB conclusions remain valid.

It is noted that ENAV actual 2014 costs include a rate of return on equity (5.0%) which is not calculated on the basis of the determined RoE rate (2.9%) as agreed in the RP1 PP. The 2014 cost of capital computed by ENAV is therefore around +18M€ higher than would be with the determined RoE rate.

Pour mémoire, Italy corrected the value for the 2011 actual costs (625.2 M€ instead of 599.1 M€ in nominal terms) with the following note:”Please note that


10

total determined costs for 2011 have been adjusted in order to reflect the correct actual amount. Therefore, the efficiency calculated in the combined period is now correct.”

4.2.1 The main differences between the RP2 revised (July 2015) and initial (June 2014) PPs are as follows:

A higher starting point for 2014 in terms of DUC, although this was still based on provisional cost data for 2014;

A downward revision of the DCs provided for each year of RP2 (2015-2019);

An update of the inflation rate for 2014 in line with the published actual 2014 inflation;

A significant downward revision of the en-route total service units (TSUs) forecast for all years of RP2 (2015-2019); and

Overall TSUs and DCs revisions provide an upward revision of the DUC targets over RP2 (except for year 2019).


11

4.3 Italy: En-route charging zone assessment following revised Performance Plan submission

The updates shown in this section do not reflect Italy’s most recent updates to their final actual costs 2014 data.

4.3.1 The revised summary results of each check following the revised PP submission are presented below, alongside the headline results of the original assessment.

Overview

The tables below show three sets of data for Italy:

Initial RP2 performance plan (June 2014): showing the initial RP2 performance plan data as published in the PRB Assessment Report of RP2 Performance Plans on 6 October 2014;

Commission Decision (2 March 2015): showing the performance plan data as included in the EC Decision. For a number of States, the Decision data included updates to the data provided in the initial performance plan (e.g. revision of EUROCONTROL costs, revision of the data to lower the 2015 unit rate, etc.); and,

Revised RP2 performance plan (July 2015): showing the data provided in the RP2 revised performance plan.

Table 5: Initial and revised en-route cost-efficiency targets for RP2

In real terms, Italy revised en-route DCs over RP2 are significantly lower than in the initial

Initial Performance Plan (June 2014)Key figures: en-route

2014F 2015D 2016D 2017D 2018D 2019D2011-19

CAGR2014-19

CAGR2015-19

CAGR

Determined costs EUR m (nom) 667.0 696.2 712.2 731.5 750.9 765.9 2.6% 2.8% 2.4%Inflation rate annual % change 0.7% 1.0% 1.1% 1.3% 1.5% 1.6%Inflation index 2009=100 110.2 111.3 112.5 114.0 115.7 117.5 1.5% 1.3% 1.4%Determined costs EUR m (2009) 605.5 625.5 633.0 641.7 649.0 651.6 1.1% 1.5% 1.0%Service units '000s 8 579 9 014 9 447 9 824 10 209 10 630 3.0% 4.4% 4.2%Determined unit cost EUR (2009) 70.58 69.39 67.00 65.32 63.58 61.30 -1.9% -2.8% -3.1%Exchange rate (2009) EUR:EUR 1.00 Determined unit cost EUR (2009) 70.58 69.39 67.00 65.32 63.58 61.30 -1.9% -2.8% -3.1%

EC Decision (March 2015) on non-compliance of the RP2 cost-efficiency targetKey figures: en-route

2014F 2015D 2016D 2017D 2018D 2019D2011-19

CAGR2014-19

CAGR2015-19

CAGR

Determined costs EUR m (nom) 696.2 712.2 731.5 750.9 765.9 2.4%Inflation rate annual % change 1.0% 1.1% 1.3% 1.5% 1.6% 1.4%Inflation index 2009=100 111.3 112.5 114.0 115.7 117.5 Determined costs EUR m (2009) 625.5 633.0 641.7 649.0 651.6 1.0%Service units '000s 9 014 9 447 9 824 10 209 10 630 4.2%Determined unit cost EUR (2009) 69.39 67.00 65.32 63.58 61.30 -3.1%Exchange rate (2009) EUR:EUR 1.00 Determined unit cost EUR (2009) 69.39 67.00 65.32 63.58 61.30 -3.1%

Revised Performance Plan (July 2015) 2014A 2015D 2016D 2017D 2018D 2019D 2011-19 2014-19 2015-19Determined costs EUR m (nom) 657.1 674.7 693.6 712.0 710.9 707.0 1.5% 1.5% 1.2%Inflation rate annual % change 0.2% 1.0% 1.1% 1.3% 1.5% 1.6%Inflation index 2009=100 109.7 110.8 112.0 113.5 115.2 117.0 1.4% 1.3% 1.4%Determined costs EUR m (2009) 599.2 609.0 619.2 627.5 617.2 604.2 0.1% 0.2% -0.2%Service units '000s 8 314 8 558 8 866 9 207 9 554 9 898 2.1% 3.5% 3.7%Determined unit cost EUR (2009) 72.07 71.16 69.84 68.15 64.61 61.05 -1.9% -3.3% -3.8%Exchange rate (2009) EUR:EUR 1.00 Determined unit cost EUR (2009) 72.07 71.16 69.84 68.15 64.61 61.05 -1.9% -3.3% -3.8%

Total RP2Difference between revised and initial en-route DUC % 2.5% 4.2% 4.3% 1.6% -0.4%Difference between revised and initial en-route DUC EUR (2009) 1.77 2.84 2.82 1.03 0.25- Revised en-route TSUs '000s 8 558 8 866 9 207 9 554 9 898 Assessed monetised contribution EUR m (2009) 15.1 25.1 26.0 9.9 2.5- 73.7

DC effect EUR (2009) 16.5- 13.8- 14.3- 31.8- 47.4- -123.7Traffic effect EUR (2009) 31.6 38.9 40.3 41.7 44.9 197.4


12

PP (a cumulative amount of -123.7 M€2009). On the other hand, the en-route TSUs forecast are significantly revised downwards, and therefore contribute to an increase in the gap (+197.4 M€2009) with the RP2 Union-wide targets. Overall, Italy’s revised en-route cost-efficiency targets for RP2 contribute to increasing the gap with the RP2 Union-wide targets by an amount of +73.7 M€2009.

Figure 1: En-route cost-efficiency targets in RP2 initial and revised PPs

Starting point based on 2014 data:

The revised en-route unit cost for 2014 is still provisional (72.07 €2009) and is 2.1% higherthan the figure provided in the initial RP2 PP (70.58 €2009). The PRB notes that this higherstarting point does not reflect all actual data in terms of en-route costs for Italy (See remark in Section §4.2).

Indeed, the en-route revised costs reported for the year 2014 (599.2 M€2009) are not final.These revised costs are lower (by -1%) than the estimated figure that was provided in the initial PP (605.5 M€2009).

In addition, it is noted that Italy has reported the 2014 actual TSUs (8 313 546), a figure significantly lower (-3.1%) than the estimate provided in the initial PP (8 579 000).

Important note:

At the time of performing this assessment, the 2014 costs and traffic (en-route SUs) known at Union-wide level and the resulting “starting point” in terms of unit costs is 53.93€2009. Accordingly, the en-route DUC trend required in RP2 to reach the Union-wide target of 49.10 €2009 in 2019 is a reduction of -1.9% p.a. For consistency purposes, it is important totake into account this figure when comparing a State planned en-route DUC trend to the RP2 Union-wide target since the former is computed using actual 2014 costs and traffic as starting point.

For the sake of completeness, the PRB analysis also presents the RP2 DUC trend using the starting point from the initial PP (see Key point 3. below for further details).

Key points for Italy en-route charging zone

In the following section, five assessment criteria are considered in line with Annex IV of the Performance Scheme regulation (EU No 390/2013). For each criteria, the results of the

90

95

100

105

110

115

120

125

130

0

10

20

30

40

50

60

70

80

2011 2012 2013 2014 2015 2016 2017 2018 2019

En

-ro

ute

co

sts

and

ser

vic

e u

nit

s in

dex

(2

011=

100)

Det

erm

ined

un

it c

ost

, €

(200

9)

Revised PP (July 2015) cost-efficiency target for RP2 - Italy

En-route DUC (Initial PP Jun 2014) En-route DUC (Revised PP Jul 2015)

2011-13 actual, 2014F and RP2 en-routedetermined costs (Initial PP Jun 2014)

2011-14 actual and RP2 en-routedetermined costs (Revised PP Jul 2015)

En-route TSU (Initial PP Jun 2014) En-route TSU (Revised PP Jul 2015)


13

original assessment are presented along with the changes from the revised RP2 PP.

1. Traffic forecast assumptions:

Original assessment Not Passed

Revised PP (July 2015)

Traffic forecast assumptions were revised

Figure 2: En-route TSU forecasts overview

Table 6: En-route TSU forecasts – including STATFOR Feb. 2015

Assessment of Revised RP2 PP (July 2015):

The en-route TSU planned for 2015-2019 have been revised downwards compared to the information reported in the initial PP (June 214). In fact, the revised TSU forecast lies in between the STATFOR February 2015 base case and high forecast scenarii. The resultingen-route TSU forecasts over RP2 are on average approximately -6% lower for each year of RP2 than those provided in the initial PP. In addition, the revised TSU forecasts are in line with STATFOR February 2014 base case scenario for 2015 and 2016, and between the base case and high scenarios for the 2017-2019 period. Italy confirms that their new traffic scenario is influenced by “the postponement of the economic recovery, initially expected for 2014 and the closure of the Libyan airspace in the last months of 2014”.

In addition, the following two comments provided by Italy in its revised PP are noted:

1. “(…) the new traffic forecast, is in line with the baseline scenario published by STATFOR in September 2014 update.

2. Please note that the current difficult situation related to the temporary closure of the Libyan airspace (by the second half of 2014) is producing effects on the traffic trend, especially for what concerns en-route overflights. The assumptions in the Plan consider the possibility that Libyan situation will continue at most till 2016 summer season. In

90

95

100

105

110

115

120

125

130

2011 2012 2013 2014 2015 2016 2017 2018 2019

Ind

ex o

f en

-ro

ute

SU

s (2

011=

100)

Italy

STATFOR actuals STATFOR Feb 15 high

STATFOR Feb 15 base STATFOR Feb 15 low

STATFOR Feb 14 base PP RP1 Determined

2014 Intitial (June 2014) PP RP2 Determined

Revised (July 2015) PP RP2 Determined

Service Units ('000s) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2011-19 2015-19PP RP1 Determined 8,525 8,781 9,071 Actuals, 2014, Initial (June 2014) PP RP2 Determined 8,370 8,139 8,117 8,314 9,014 9,447 9,824 10,209 10,630 3.0% 4.2%Revised (July 2015) PP RP2 Determined 8,558 8,866 9,207 9,554 9,898 2.1% 3.7%STATFOR Feb 15 base 8,314 8,462 8,777 9,025 9,305 9,577 1.7% 3.1%STATFOR Feb 15 high 8,314 8,592 8,986 9,422 9,858 10,286 2.6% 4.6%STATFOR Feb 15 low 8,314 8,322 8,548 8,596 8,717 8,831 0.7% 1.5%STATFOR Feb 14 base 8,358 8,611 8,865 9,090 9,316 9,583 1.7% 2.7%STATFOR Feb 14 high 8,579 9,014 9,447 9,824 10,209 10,630 3.0% 4.2%STATFOR Feb 14 low 8,127 8,178 8,248 8,327 8,417 8,525 0.2% 1.0%Initial (June 2014) PP RP2 vs STATFOR Feb 14 base (%) 4.7% 6.6% 8.1% 9.6% 10.9%Revised (July 2015) PP RP2 vs STATFOR Feb 14 base (%) -0.6% 0.0% 1.3% 2.5% 3.3%The 2015-2019 CAGR is shown (rather than the 2014-19 CAGR) to reflect the fact that not all FABs/States will provide an updated forecast for 2014


14

case such exogenous event should continue after that period, Italy may take into consideration the opportunity to ask a review of the cost efficiency targets defined in this Plan (local alert thresholds).” (FAB Revised PP, comments under C in 3.1.D.1 ERT-CZ 3).

2015 Traffic situation to date: For the first six months of 2015, Italy records a -2.8% decrease in en-route TSUs (1st Semester 2015/2014).

2. Economic assumptions:

Original assessment Passed


No changes except for 2014 actual data

Table 7: Economic assumptions


The actual inflation rate provided for the year 2014 was updated to 0.2% (from 0.7% originally), in line with the actual Eurostat inflation (HICP all items) published in April 2015, as required in Article 7.1 of the Charging Regulation (391/2013).

The planned inflation rates provided for the years 2015-2019 have not been changed compared to the information submitted in the initial PP and are in line with IMF April 2014 inflation forecasts.

The latest IMF inflation forecasts released in April 2015 for Italy reflect lower inflation rates over the 2015-2019 period than those published in April 2014. As a result, the inflation rates planned by Italy between 2015 and 2019 are higher than the latest IMF forecasts with differences ranging between 0.3 and 1.0 percentage point (in 2015).

3. En-route DUC trend:

Original assessment Not passed

Revised PP (July 2015) DUC trend was revised


Changes in DCs compared to initial PP:

Italy has revised downwards the DCs for each year of RP2 (see Table 5). Cumulatively over RP2, en-route DCs for Italy are now -3.9% lower than those provided in the initial PP (-123.7 M€2009).

RP2 en-route DUC trend based on 2014 “actual” starting point:

Italy’s en-route DUC is expected to decrease by -3.3% p.a. over the 2014-2019 period, exactly in line with the Union-wide targets for RP2 (-3.3% p.a.) and also better than the reduction planned in the initial PP (-2.8% p.a.).

The en-route DUC trend over the 2014-19 period is better than the RP2 Union-wide DUC reduction required to reach the Union-wide target when the latter is computed using as

Inflation: Italy 2012 2013 2014 2015 2016 2017 2018 2019

Initial (June 2014) PP RP2 annual % change 3.3% 1.3% 0.7% 1.0% 1.1% 1.3% 1.5% 1.6%Revised (July 2015) PP RP2 annual % change 3.3% 1.3% 0.2% 1.0% 1.1% 1.3% 1.5% 1.6%Eurostat/IMF avg annual % change 1.3% 0.2% 0.0% 0.8% 1.0% 1.1% 1.2%Difference (Revised (July 2015) RP2 PP vs Eurostat/IMF avg) p.p. difference 0.0% 0.0% 1.0% 0.3% 0.3% 0.4% 0.4%Initial (June 2014) PP RP2 2009=100 108.0 109.4 110.2 111.3 112.5 114.0 115.7 117.5Revised (July 2015) PP RP2 2009=100 108.0 109.4 109.7 110.8 112.0 113.5 115.2 117.0Eurostat/IMF avg 2009=100 108.0 109.4 109.7 109.7 110.6 111.7 112.9 114.3Difference (Revised (July 2015) RP2 PP vs Eurostat/IMF avg) index difference 0.0 0.0 0.0 1.1 1.4 1.8 2.2 2.7


15

starting point the 2014 actual costs and TSUs (-1.9% p.a.).

RP2 en-route DUC trend based on 2014 starting point from initial PP:

Considering the 2014 forecast starting point from the initial PP (i.e. 70.58 €2009) and the 2019 revised target of 61.05 €2009, the RP2 DUC trend is (-2.9% p.a.), below the initial 2014-2019 Union-wide target trend (-3.3% p.a.).

If the initial PP inflation index is applied, then the 2019 revised target would become 60.77€2009, and the RP2 DUC trend would also be -2.9% p.a., i.e. below the initial 2014-2019 Union-wide target trend (-3.3% p.a.).

En-route DUC trend over the combined RP1 and RP2 periods:

When assessed over the 2011-2019 periodiii, the en-route DUC trend is planned to be -1.9% p.a. which is better than the trend underpinning the Union-wide targets (-1.7% p.a.). Italy’s planned en-route DUC profile over 2011-2019 (both RP1 and RP2) mainly reflects the fact that, in real terms, DCs are expected to slightly increase by +0.1% p.a. on average while the number of TSU is planned to grow by +2.1% per year on average over the same period.

If the initial (July 2014) RP2 PP inflation index was applied, then the 2019 revised target would be 60.77 €2009, and the DUC trend over the combined RP1 and RP2 periods would be (-2.0% p.a.), i.e. also better than the 2011-2019 Union-wide target trend (-1.7% p.a.).

2015 DCs versus 2014 actual costs:

Italy’s en-route DCs for 2015 (609.0 M€2009) are +1.6% higher than 2014 provisional actual en-route costs (599.2 M€2009).

4. En-route DUC level:


Revised PP (July 2015) DUC level was revised


Italy’s revised en-route DUC planned for 2019 (61.05 €2009) is +2.2% higher than the average of the comparators in 2019 (59.76 €2009).

The revised en-route DUC planned by Italy for 2019 is -0.4% lower than in the initial PP(61.30 €2009) but other comparators collective effort was comparatively more important. Actually, Italy’s revised real en-route DUC level is higher than that provided in the initial RP2 PP for each year of the RP2 except in 2019 (differences ranging from +1.6% to +4.3%).

The deterioration in en-route DUC level for years 2015-2018 is due to the combination of a downwards revision of DCs (see point 3), and a downwards reduction of en-route TSUs forecast (see point 1).

5. En-route cost of capital:

Original assessment Not Passed

Revised PP (July 2015) Cost of capital was revised

Assessment of Revised RP2 performance plan (July 2015):

The weighted average cost of capital (WACC) rate used to calculate the cost of capital of ENAV is 5.14% for 2015 and 2016 and 5.64% for each year of the 2017-2019 period. This is lower than the WACC reported in the initial PP (between 6.1% and 6.4%), mainly due to a lower %RoE than in the initial PP (by -1.2 p.p. over 2015-2016 and -0.7 p.p. over 2017-2019).


16

Overall view of Italy en-route cost-efficiency targets


Key points of the analysis of the revised RP2 en-route cost-efficiency targets submitted by Italy:

Compared to the initial PP submitted in June 2014, the en-route DUC reported for the year 2014 has been revised upwards (+2.1%). Although actual 2014 TSU have been used, this higher starting point does not reflect all actual data in terms of en-route costs for Italy.

The en-route TSU planned for 2015-2019 have been revised downwards compared to the information reported in the initial PP. In fact, the revised TSU forecast lies in between the STATFOR February 2015 base case and high forecast scenarii. The resulting en-route TSU over RP2 are on average -6.2% lower in each year of RP2than those provided in the initial PP. The revised TSU forecasts are also in line withSTATFOR February 2014 base case scenario for 2015 and 2016, and between the base case and high scenarios for the 2017-2019 period.

The inflation rates provided for the years 2015-2019 have not been changed compared to the information submitted in the initial PP and are in line with IMF April 2014 inflation forecasts.

Considering the 2014 provisional ‘actual’ starting point, Italy’s en-route DUC is expected to decrease by -3.3% p.a. over the 2014-2019 period, exactly in line with the Union-wide target for RP2 (-3.3% p.a.) and also better than the reduction planned in the initial PP (-2.8% p.a.). Considering the 2014 forecast starting point from the initial PP (i.e. 70.58 €2009) and the 2019 revised target of 61.05 €2009, the RP2 DUC trend is (-2.9% p.a.), i.e. worse than the 2014-2019 Union-wide target trend (-3.3% p.a.).

When assessed over the 2011-2019 period (covering RP1 and RP2), the en-route DUC trend is planned to be -1.9% p.a. which is better than the trend underpinning the Union-wide targets (-1.7% p.a.).

Italy’s revised en-route DUC planned for 2019 (61.05 €2009) is -0.4% lower than in the initial PP (61.30 €2009), but +2.2% higher than the average of the comparator group (59.76 €2009). In fact, the revised DUC is higher than that provided in the initial RP2 PP for each year of the RP2 except in 2019 (differences ranging from +1.6% to +4.3%).

The WACC rate used to calculate the cost of capital of ENAV is 5.14% for 2015 and 2016 and 5.64% for each year of the 2017-2019 period. This is lower than the WACC reported in the initial PP (between 6.1% and 6.4%), mainly due to a lower RoE than in the initial PP (by -1.2 p.p. on average over 2015-2016 and -0.7 p.p. over 2017-2019).

Conclusions:

Italy:

The PRB considers that Italy revised en-route cost-efficiency targets for RP2 meet the consistency criteria and are in line with the points identified in Commission Decision


17

2015/347 (Art. 4).

There is a deterioration compared to the initial PP, due to the fact that the downwards revision of DCs was not sufficient to compensate for the substantial downwards revision of the TSUs. Considering the 2014 forecast starting point from the initial PP and the 2019 revised target, the RP2 DUC trend is –2.9% p.a. This is below the 2014-2019 Union-wide target trend (-3.3% p.a.). However, considering the provisional 2014 actual starting point as provided by Italy, the RP2 DUC trend is -3.3% p.a. When assessed over the 2011-2019 period, the en-route DUC trend is planned to be -1.9% p.a. which is better than the trend underpinning the Union-wide target (-1.7% p.a.).

The PRB considers that Italy should carefully manage its traffic risk given that the 2015 traffic (en-route TSUs) outturn so far is below the forecast considered in the revised PP.

4.4 Italy: Terminal charging zones assessment following revised Performance Plan submission

4.4.1 The revised summary results of each check following the revised RP2 PP submission are presented below, alongside the headline results of the original assessment.

Overview of Terminal ANS charging zones (Italy-TCZ 1 and Italy-TCZ 2):

There are two TCZs reported in the RP2 PP for Italy:

TCZ 1 (1 airport: Fiumicino, with more than 225 000 IFR movements): where traffic risk sharing applies;

TCZ 2 (4 airports: Malpensa, Linate, Venezia Tessera and Bergamo Orio al Serio, all with more than 70 000 IFR movements): which Italy decided to exempt from traffic risk sharing;

There were no change of scope of airports between 2014 and 2015, since Italydecide to split its airports into three TCZ from 2014 onwards. Before 2014, Italy was reporting terminal ANS cost-efficiency data for 47 airports in one single TCZ.

Figure 3: Terminal ANS cost-efficiency targets for RP2 initial and revised PPs

85

90

95

100

105

2015D 2016D 2017D 2018D 2019D

Det

erm

ined

un

it c

ost

in

dex

(20

15=

100)

Italy

SES aggregated TANS DUC (Initial June 2014) SES aggregated TANS DUC (Revised July 2015)

Aggregated terminal DUC (Initial June 2014) Aggregated terminal DUC (Revised June 2015)


18

Table 8: Initial and revised terminal cost-efficiency targets for RP2

The combined TCZs assessed monetised contribution provided by Italy through its revised terminal ANS cost-efficiency targets for RP2 represents an increase of +2.1 M€2009

compared to the information provided in the initial performance plan (June 2014). This is fully attributable to an update of 2014 actual inflation (impacting the RP2 DC in €2009). There were no changes in TNSUs or DCs in nominal terms over RP2.

Key points for Italy terminal charging zone


Original assessment TCZ 1: Passed

TCZ 2: Passed

Revised PP (July 2015) No changes


Compared to the initial PP submission, Italy has not revised its TNSU forecast for each of the years during RP2 which is now in line with STATFOR September 2014 base case.


Original assessment TCZ 1: passed

TCZ 2: passed



As for en-route, only 2014 actual inflation was updated and the planned inflation rates provided for the years 2015-2019 are identical to the information submitted in the initial PP, and are in line with IMF April 2014 inflation forecasts (and en-route inflation forecasts).

Initial June 2014 Key figures: terminal 2015D 2016D 2017D 2018D 2019D2015-19

CAGR (%)

Determined costs EUR m (nom) 104.2 107.2 107.8 109.8 111.5 1.7%Inflation rate * annual % change 1.0% 1.1% 1.3% 1.5% 1.6%Inflation index * 2009=100 111.3 112.5 114.0 115.7 117.5 1.4%Determined costs EUR m (2009) 93.6 95.3 94.6 94.9 94.9 0.3%Terminal SUs '000s 505.4 518.8 532.2 544.5 555.4 2.4%Determined unit cost EUR (2009) 185.22 183.62 177.66 174.35 170.80 -2.0%Exchange rate EUR:EUR (2009) 1.00 Determined unit cost EUR (2009) 185.22 183.62 177.66 174.35 170.80 -2.0%

Revised July 2015 Key figures: terminal 2015D 2016D 2017D 2018D 2019D2015-19

CAGR (%)

Determined costs EUR m (nom) 104.2 107.2 107.8 109.8 111.5 1.7%Inflation rate * annual % change 1.0% 1.1% 1.3% 1.5% 1.6%Inflation index * 2009=100 110.8 112.0 113.5 115.2 117.0 1.4%Determined costs EUR m (2009) 94.0 95.7 95.0 95.4 95.3 0.3%Terminal SUs '000s 505.4 518.8 532.2 544.5 555.4 2.4%Determined unit cost EUR (2009) 186.05 184.45 178.46 175.13 171.57 -2.0%Exchange rate EUR:EUR (2009) 1.00 Determined unit cost EUR (2009) 186.05 184.45 178.46 175.13 171.57 -2.0%The 2015-2019 CAGR shown in the table is different from the main en-route comparator period (2014-2019),

the reason for this being the potential for changes to the size and composition of TCZs between 2014 and 2015

Total RP2Difference between revised and initial terminal DUC % 0.4% 0.4% 0.4% 0.4% 0.4%Difference between revised and initial terminal DUC EUR (2009) 0.83 0.82 0.80 0.78 0.77 Revised TNSUs '000s 505.4 518.8 532.2 544.5 555.4 Assessed monetised contribution EUR m (2009) 0.4 0.4 0.4 0.4 0.4 2.1


19

3. Terminal ANS DUC trend:

Original assessment

TCZ 1: passed with reservations


Revised PP (July 2015) No changes in trend


Italy’s terminal DUC is expected to decrease on average by -2.0% p.a. over the 2015-2019 period which is identical to the terminal DUC trend provided in the initial plan (-2.0% p.a.) but slightly worse than the trend underpinning the (revised) SES average TANS DUC trend (−2.6% p.a.).

However, due to the 2014 actual inflation update, Italy cumulated and combined TANS DCs for TCZ1 and TCZ2 increase by some +2.1 M€2009 over RP2.

There are no other changes recorded as compared to the initial plan: the trends therefore remain identical for the DCs and DUC over RP2 for the combined TANS DC and for each individual TCZ as well.

It is noted that the aggregated level of TANS DCs in 2015 for Italy TCZs is some +9% higher than the reported 2014 actual level.

4. Terminal cost of capital:

Original assessment





No changes in relation to terminal cost of capital were provided in the revised plan.

Overall view of Italy terminal ANS cost-efficiency KPIs


Key points of the analysis of the revised RP2 TANS cost-efficiency targets submitted by Italy:

No changes were provided in the RP2 performance plan for the terminal traffic forecast assumptions, economic assumptions, DUC trend or cost of capital.

Compared to the initial plan (June 2014), and due to the 2014 actual inflation update, Italy’s DCs are slightly revised upwards in real terms for each year of RP2 (around +0.4% on average over RP2).

Italy’s terminal DUC is expected to decrease on average by -2.0% p.a. over the 2015-2019 period which is identical to the terminal DUC trend provided in the initial plan but slightly worse than the trend underpinning the (revised) SES average TANS DUC trend (-2.6% p.a.).


20

Annex 1: En-route Capacity considerations In preparation for the PRB to present conclusions to the Commission, the PRB reviewed any additional information that was submitted beyond the FAB performance plan. As previously referred to in 3.3 of the main report, more information on the considerations of the PRB can be found in this annex.

LEGISLATION Regulation (EC) 549/2009 Article 11.3c states:

(c) The consistency of the national or functional airspace block targets with the Community-wide performance targets shall be assessed by the Commission using the assessment criteria referred to in point (d) of paragraph 6. In the event that the Commission identifies that one or more national or functional airspace block targets do not meet the assessment criteria, it may decide, in accordance with the advisory procedure referred to in Article 5(2), to issue a recommendation that the national supervisory authorities concerned propose revised performance target(s). The Member State(s) concerned shall adopt revised performance targets and appropriate measures which shall be notified to the Commission in due time. Where the Commission finds that the revised performance targets and appropriate measures are not adequate, it may decide, in accordance with the regulatory procedure referred to in Article 5(3), that the Member States concerned shall take corrective measures.

Alternatively, the Commission may decide, with adequate supporting evidence, to revise the Community-wide performance targets in accordance with the regulatory procedure referred to in Article 5(3).

Regulation (EU) 390/2013 Articles 14.3 & 14.4 state:

3. Where the Commission finds that a performance plan, or part thereof, and some or all of its target(s) are not consistent with the Union-wide targets and are not contributing adequately to them and/or are not consistent with one or more of the criteria laid down in Annex IV, it shall, within five months after reception of the performance plan and in accordance with the procedure established in Article 5(2) of Regulation (EC) No 549/2004, issue a recommendation to the Member State(s) concerned to adopt a revised performance plan, or part thereof, and/or target(s). This recommendation shall be made after consultation of the Member State(s) concerned, and shall identify precisely which parts of the performance plan and/or target(s) are to be revised as well as explaining the rationale of the Commission’s assessment.

4. In such case, the Member State(s) concerned shall adopt a revised performance plan, or part thereof, and/or target(s), taking account of the Commission’s views, together with the appropriate measures for reaching those targets and shall notify the Commission accordingly within four months after the notification of the recommendation.

In accordance with Article 14.4, Member States that are requested to revise their performance plans are obliged to revise the relevant targets and to notify the Commission of the appropriate measures taken to ensure that the revised targets will be reached.

REVISION OF EN-ROUTE CAPACITY TARGETS Notwithstanding the recommendation of the Commission, the revised Blue Med performance plan did not contain revised capacity targets. The Blue Med RP2 en-route capacity targets remain inconsistent with the union-wide targets for each year of RP2.


21

APPROPRIATE MEASURES FOR REACHING IMPROVED EN-ROUTE CAPACITY TARGETS New information on additional capacity enhancement measures in the revised performance plan includes Greece planning on upgrading/ replacing its ATM system from 2016, and Cyprus hiring and training additional ATCOs in the Nicosia ACC (7 ATCOs by the end of 2015, 6 more by summer 2016 and a further 6 by the end of 2016.)

[Comment: It is unclear if the dates provided for additional ATCOs in Cyprus refer to the date of initial hiring or to the date that they will be operational and providing ATC service, which could be significantly later. Furthermore, the updated ANSP capacity plans contained in NOP 2015-2019 do not refer to the same intake of new ATCOs. They refer to 6 additional ATCOs in 2016 and 5 additional ATCOs in 2018- a difference of 8 ATCOs and a slippage of up to 2 years.]

ADDITIONAL INFORMATION No supplementary information was provided to the PRU.

NETWORK OPERATIONS PLAN: CAPACITY PLANS Annex 5 of the Network Operations Plan “ACC Traffic Forecast & Capacity Plans” compiles the “Planned capacity enhancement measures” as described by the local ANSP to the Network Manager over the medium-term planning period (approx. 5 years).

Comparison of the NOP 2014-2018/2019 (June 2014 edition) with the NOP 2015-2019 (May 2015 edition) reveals that the only additional capacity enhancement measures planned for the Blue Med ACCs, in response to the recommendation of the Commission are: ATM system upgrade in Greece and opening of 5th & 6th sectors in Cyprus being brought forward from 2016 & 2018 to 2015 and 2016/2017 respectively. Neither Malta nor Italy has planned any additional capacity enhancement measures.

REMEDIAL MEASURES In Section 10.2 of the Network Operations Plan, the Network Manager has identified several reasons for capacity constraints at three ACCs within the Blue Med area: Athens, Makedonia and Nicosia ACC. Furthermore, the Network Manager has suggested remedial actions that, if implemented, could significantly improve capacity performance at those ACCs.

CYPRUS–NICOSIAACCReasons for lack of capacity

Inflexible use of staff Delayed implementation of new ATM system Low sector capacities Lack of flexibility in sector configurations Lack of flexibility in opening scheme Failure to fully implement capacity enhancement measures planned in the capacity

plan Proposed NM measures

Implementation of re-sectorisation proposals Sector capacities re-evaluations following the CAPAN study performed in 2013 Flexible rostering allowing better alignment between traffic demand and sector

opening times Flexible configurations opening, according to the traffic flows Improved ATFCM techniques Implementation of a new ATM system.

Cyprus DCA confirmed measures: Implementation of re-sectorization proposals Sector capacities re-evaluations following the CAPAN study performed in 2013


22

Flexible rostering allowing better alignment between traffic demand and sector opening times

Roster flexibility is one of the expected benefits of the corporatization effort Flexible configurations opening, according to the traffic flows To be achieved with flexible rostering Improved ATFCM techniques Implementation of a new ATM system New functionalities planned Creation of a corporatised ANSP

NM assessment No additional measures have been confirmed by Cyprus DCA. It is expected that the current work undertaken by NM and the Cyprus authorities, when implemented, will deliver the required increase in capacity

GREECE–ATHENSACCReasons for lack of capacity

Economic and social problems resulting in: Lack of investments in ATC Lack of ATCO recruitment

Proposed NM measures Addressing social and economic aspects, including separation between the regulator

and ANSP to allow development and implementation of operational plans and staff recruitment.

HCAA confirmed measures: Discussions are continuing with the HCAA.

NM assessment Discussions are continuing with the HCAA

GREECE–MAKEDONIAACCReasons for lack of capacity

Economic and social problems resulting in: Lack of investments in ATC Lack of ATCO recruitment

Proposed NM measures Addressing social and economic aspects, including separation between regulator and

ANSP to allow development and implementation of operational plans and staff recruitment.

HCAA confirmed measures: Discussions are continuing with the HCAA

NM assessment Discussions are continuing with the HCAA

[Comment: The Network Manager highlights inflexibility in use of staff; inflexibility in sector configurations and inflexibility in opening scheme as drivers for lack of capacity in Cyprus, rather than a shortage of ATCOs. Although Cyprus DCA has confirmed that measures are needed to improve flexibility, it has not presented any timeframe for doing so.]

[Comment: The Network Manager has not identified problems with the current ATM system as being a driver for lack of capacity in Greece.]

[Comment: No remedial measures have been suggested for the other Blue Med ACCs since they are not identified, by the Network Manager, as presenting capacity bottlenecks for the network, in RP2.


23

OTHER CONSIDERATIONS Blue Med FAB Incentive scheme for en route capacity

BLUE MED FAB did not present a FAB-wide incentive scheme for en-route capacity performance.

Malta stated that it is not applying an incentive scheme for en-route capacity.

Greece provided no information in regards to an incentive scheme.

Cyprus states that it is applying an incentive scheme with penalties/bonus within 1% of ATS turnover. It does not provide any information on the working of the incentive scheme so it cannot be determined if it is compliant with the SES legislation.

Italy has submitted on an en-route capacity incentive scheme:

Incentive Scheme on En route ATFM delay per flight

The Incentive Scheme on en route is mainly based on the scheme already used in RP1 with adaptations related to the different legal and operational environment. The incentive scheme:

1. relates to the Capacity KPI “The average minutes of en route ATFM delay per flight”

2. takes into consideration the reference values provided by NM and PRB as adequate contribution (based on NOP, LSSIP Italy, Capacity Plans), specifically: 0,09 min/flight in 2015; 0,10 min/flight in 2016; 0,11 min/flight for the years 2017 to 2019 included

3. is symmetrical and incremental 4. takes into account all en-route ATFM delay causes excluding exceptional

events 5. has a maximum level at 1% of the revenue from en route ANS

6. is proportional to the operational and economic effects on Airspace Users.

The calculation of the incentive (bonus or penalty) is based on the costs of ATFM delay for Airspace Users in a gate-to-gate perspective. This calculation takes into consideration the


24

average over the RP of projected minutes of ATFM delay for each year of RP2 multiplied by €87 (University of Westminster - “European airline delay cost reference values” – ACE 2013) and allocating half of the economic effect to ENAV as a bonus, in case of over-performance, or as a penalty, in case of under-performance.

The calculation provides for an economic value of more than 1,6 mln € each 0,01 min/flight (average en-route ATFM delay per en-route flight) that is translated into a rounded figure of 815.000 € bonus/penalty, each 0,01 min/flight result, for ENAV. The calculation will be performed at the end of each year of RP2, based on the actual performance results and with a maximum of 1% of revenues from en route ANS.

[Comment: The incentive scheme refers to reference values provided by NM and PRB to determine adequate contribution. However, the only official reference values for RP2 are as published at FAB level. There are no official ‘reference values’ published at State level in RP2.]

[Comment: Since it is based upon a local indicative value, it is impossible to determine if it fosters high performance, and if it is therefore compliant with the SES legislation. ]

ACTUAL CAPACITY PERFORMANCE DURING RP1

CYPRUS

Minutes of ATFM en-route delay

2012 2013 2014 Observations

Reference value

0.93 0.59 0.3

National Target 1.9 1.7 1.0

Actual performance

1.59 2.16 1.91

[Comment: Cyprus has experienced significant capacity problems every year since 2007, and has consistently failed to resolve them. RP1 did not see any improvement in en route capacity performance.]

GREECE



Reference value

0.37 0.32 0.26

National Target

1.1 1 0.95

Actual performance

0.15 0.06 0.41


25

[Comment: Greece easily surpassed both the national target, and the reference value for the years 2012 and 2013. In 2014, capacity performance surpassed the national target but was not sufficient to meet the respective reference value. The PRB annual monitoring report for 2013 commented on the variation between the national targets and actual performance.]

ITALY



Reference value 0.14 0.14 0.12

National Target 0.14 0.14 0.12

Actual performance

0 0 0.02

[Comment: Italy delivered excellent en-route capacity performance during RP1, easily surpassing the national targets.]

MALTA



Reference value

0.02 0.03 0.05

National Target

0.02 0.03 0.05

Actual performance

0 0 0

[Comment: Malta delivered excellent en-route capacity performance over RP1 with zero delay for airspace users.]


26

CAPACITY PLANNING IN BLUE MED ACCS

[Comment: Nicosia ACC has consistently postponed and downgraded planned capacity enhancements: with the result that the Network Manager expects significant capacity problems for the duration of RP2, unless the capacity constraints are addressed satisfactorily.]

[Comment: The planned decrease in capacity coupled with the increasing traffic led the Network Manager to flag concerns over capacity problems for the duration of RP2.]

40

60

80

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019

RP1 Reference RP2 Reference

Nicosia ACC

90

110

130

150

2010 2011 2012 2013 2014 2015 2016 2017 2018 20192010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019


Athens ACC


27

[Comment: The planned decrease in capacity coupled with the increasing traffic led the Network Manager to flag concerns over capacity problems for the duration of RP2.]

[Comment: A national reorganisation between ACCs resulted in a ‘capacity drop’ in 2013. However, consistent capacity planning leads the Network Manager to expect no capacity problems in Brindisi ACC during RP2.]

70

90

110

130

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019


Makedonia ACC

60

70

80

90

100

110

120

130

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019

RP1 Reference RP2 reference

Brindisi ACC


28

[Comment: A national reorganisation between ACCs resulted in a ‘capacity jump’ in 2013. Consistent capacity planning leads the Network Manager to expect no capacity problems in Milan ACC during RP2.]

[Comment: Consistent capacity planning leads the Network Manager to expect no capacity problems in Padua ACC during RP2.]

150

170

190

210

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019


Milan ACC

160

180

200

220

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019


Padua ACC


29

[Comment: A national reorganisation between ACCs resulted in a ‘capacity drop’ in 2013. However, consistent capacity planning leads the Network Manager to expect no capacity problems in Rome ACC during RP2.]

MALTA ACC

[Comment: The Network Manager states that Malta ACC has sufficient capacity to cope with expected demand during RP2.]

170

190

210

230

250

270

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019


Rome ACC


30

Blue Med OVERALL

[Comment: Blue Med ACCs range from capacity surpluses to severe capacity constraints. Although, nominally a FAB entity, airspace users do not appear to be getting any benefit as the various ANSPs are not pooling resources to improve overall FAB operations.]

DOCUMENTS USED FOR CAPACITY ANALYSIS: 2013 SES performance scheme Annual Monitoring Report 2014 SES performance scheme Annual Monitoring Report (draft) Blue Med RP2 performance plan; Blue Med revised performance plan; Network Operations plan 2014-2018/2019, June 2014 edition; Network Operations plan 2015-2019, June 2015 edition; PRC Performance Review Report 2007. Regulation (EC) 549/2004 Regulation (EU) 390/2013


31

References i COMMISSION IMPLEMENTING REGULATION (EU) No 390/2013 of 3 May 2013 laying down a performance scheme for air navigation services and network functions ii COMMISSION IMPLEMENTING DECISION (EU) 2015/347 of 2 March 2015 concerning the inconsistency of certain targets included in the national or functional airspace block plans submitted pursuant to Regulation (EC) No 549/2004 of the European Parliament and of the Council with the Union-wide performance targets for the second reference period and setting out recommendations for the revision of those targets (notified under document C(2015) 1263) iii It is noted that Italy provided a corrected value for the 2011 actual costs (625.2 M€ instead of 599.1

M€ in nominal terms) with the following note: ”Please note that total determined costs for 2011 have been adjusted in order to reflect the correct actual amount.(…)”. This value is considered in the trend analysis and will be reconfirmed through the ongoing data validation process with Italy.

PRB Assessment Report of RP2 FAB Revised Performance Targets - DANUBE FAB

1

PRB Assessment of RP2 FAB Revised Performance Targets DANUBE FAB

Version 3.1



2




3

Table of Contents

1 INTRODUCTION ................................................................................................................................... 4


3 CAPACITY ............................................................................................................................................. 6

3.1 EN‐ROUTE DELAY LEVEL ............................................................................................................................... 6

REFERENCES ................................................................................................................................................. 8


4

1 INTRODUCTION 1.1.1 Pursuant to Commission Implementing Regulation (EU) No 390/2013i, the DANUBE

FAB delivered its Performance Plan on 27 June 2014.


1.1.3 Following the ad-hoc Single Sky Committee meeting on 24 October 2014, the DANUBE FAB was invited to reconsider their RP2 Performance Plan submitted for the 1 July 2014 deadline, in order to see how they could address the recommendations and observations made by the PRB.

1.1.4 As a result, the DANUBE FAB submitted significant and detailed corrigenda/amendments to their RP2 Performance Plan via the EU-PRB SharePoint repository on 14 November 2014.

1.1.5 The PRB assessed the new information received and provided to the Commission a report reflecting the changes to the content of the recommendations in the FAB assessment report for the key performance area of cost-efficiency. This updated version of the PRB assessment report was submitted to the Commission on 12 December 2014.

1.1.6 Further on, the Commission Implementing Decision (EU) 2015/347ii established that targets in the key performance area of capacity submitted by the DANUBE FAB are not in conformity with the respective reference values and therefore not consistent with the relevant Union-wide performance target.

1.1.7 The Commission therefore asked the DANUBE FAB Member States to revise their capacity targets downwards. As a minimum, those targets should be in accordance with the respective FAB reference values set out in the Network Operations Plan (NOP).

1.1.8 The DANUBE FAB submitted revised targets on 1 July 2015. The PRB has assessed these revised targets including all other relevant information provided and presented its conclusions on the new targets in this report.


2 CONTENT OF THE SUBMISSION 2.1.1 The DANUBE FAB submitted a revised Performance Plan on 1 July 2015.


The body of the plan including only those parts which were changed;

A submission letter signed by the competent authorities and dated 29 June 2015;

Amended Annex C (Republic of Bulgaria):

Amended Annex C (Romania):

2.1.3 No specific references to the PRB observations / recommendations were included.

2.1.4 In the specific, the PRB notes that the Danube FAB has provided updates / amendments on the following points:

Section 1.5 (List of airports):

Section 3.1 (3.1.(c) - Capacity)

Section 3.1 (3.1.(d).3-Termlnal Charging Zone #1):


5

Section 4.1 (4.1 - Incentive schemes for the capacity targets):

Additional explanatory material on the amendments in CAPACITY KPA for Republic of Bulgaria:

Section 3.1 (3.1.(d).1 - En Route Charging Zone #2):

Section 3.1 (3.1.(d).2 - En Route ANS at FAB level):

2.1.5 Since no Annex A was provided with the submission, the PRB notes that no specific consultation with airspace users was conducted during the preparation of the revised targets for RP2.


6

3 CAPACITY 3.1 En-route delay level 3.1.1 The EC Decision 2015/347 published on the 2nd March 2015 (see Article 3) states

that: "The performance targets in the key performance area of capacity submitted …by Bulgaria and Romania as regards Danube FAB […] should be revised downwards. As a minimum, those targets should be in accordance with the respective FAB reference values set out in the Network Operations Plan. Where the Network Operations Plan specifies remediation or mitigation measures, account should be taken of those measures when revising the performance targets."

2015 2016 2017 2018 2019

DANUBE reference value (NOP March 2014)

0.04 0.04 0.04 0.05 0.06

Original FAB Target 0.08 0.08 0.08 0.09 0.09


Consistency check


Primary check:


3.1.2 The DANUBE FAB targets are consistent with the respective FAB reference values for the period 2015 – 2019.

Secondary check:


3.1.3 The DANUBE FAB has adopted capacity targets that, if achieved, will provide a net benefit to network capacity and to airspace users both within DANUBE FAB and in other FABs.



The latest ANSP capacity plans (from the NOP 2015-2019) indicate that the DANUBE FAB capacity performance should meet the required level of performance to be consistent with the union-wide target for each year in RP2, but that capacity plans may need to be adapted to meet the more stringent FAB targets, as adopted by DANUBE FAB.


7


Year 2015 2016 2017 2018 2019


Adopted FAB targets 0.03 0.03 0.03 0.03 0.04



Year 2015 2016 2017 2018 2019


FAB targets 0.03 0.03 0.03 0.03 0.04

ANSP

contribution

BULATSA 0.05 0.05 0.05 0.06 0.07

ROMATSA 0.00 0.00 0.00 0.00 0.00

Aggregated

ANSP contribution 0.04 0.04 0.04 0.05 0.06


3.1.4 Whilst the expected ANSP contribution is consistent with the respective FAB reference values, it is not consistent with the new more ambitious FAB targets. (Traffic based on STATFOR medium forecast February 2015)


Historic performance (Annex IV section 1(d))

3.1.5 Romania and Bulgaria have provided excellent capacity performance during RP1 with zero delay for airspace users. This is in spite of a significant increase in traffic volume associated with the Ukraine crisis and the re-routing of major traffic flows.




8

References i COMMISSION IMPLEMENTING REGULATION (EU) No 390/2013 of 3 May 2013 laying down a performance scheme for air navigation services and network functions ii COMMISSION IMPLEMENTING DECISION (EU) 2015/347 of 2 March 2015 concerning the inconsistency of certain targets included in the national or functional airspace block plans submitted pursuant to Regulation (EC) No 549/2004 of the European Parliament and of the Council with the Union-wide performance targets for the second reference period and setting out recommendations for the revision of those targets (notified under document C(2015) 1263)

PRB Assessment Report of RP2 FAB Revised Performance Targets – FAB CE

1

Version 3.1


PRB Assessment of RP2 FAB Revised Performance Targets FAB CE


2




3



3 CAPACITY ............................................................................................................................................. 6

3.1 EN‐ROUTE DELAY LEVEL ............................................................................................................................... 6

4 COST‐EFFICIENCY ................................................................................................................................. 9

4.1 AUSTRIA: OVERVIEW OF EC DECISION (2ND MARCH 2015) ................................................................................ 9

4.2 AUSTRIA: SUMMARY OF CHANGES IN REVISED PERFORMANCE PLAN (JULY 2015) ................................................... 9 4.3 AUSTRIA: EN‐ROUTE CHARGING ZONE ASSESSMENT FOLLOWING REVISED PERFORMANCE PLAN SUBMISSION .............. 10 4.4 AUSTRIA: TERMINAL CHARGING ZONE ASSESSMENT FOLLOWING REVISED PERFORMANCE PLAN SUBMISSION .............. 16 4.5 SLOVAKIA: OVERVIEW OF EC DECISION (2ND

MARCH 2015) ............................................................................ 19 4.6 SLOVAKIA: SUMMARY OF CHANGES IN REVISED PERFORMANCE PLAN (JULY 2015) ............................................... 19 4.7 SLOVAKIA: EN‐ROUTE CHARGING ZONE ASSESSMENT FOLLOWING REVISED PERFORMANCE PLAN SUBMISSION ............ 20 4.8 SLOVAKIA: TERMINAL CHARGING ZONE ASSESSMENT FOLLOWING REVISED PERFORMANCE PLAN SUBMISSION ............ 26

REFERENCES ............................................................................................................................................... 29

Table of Figures FIGURE 1: EN‐ROUTE COST‐EFFICIENCY TARGETS IN RP2 INITIAL AND REVISED PPS ................................................................. 11

FIGURE 2: EN‐ROUTE SERVICE UNITS FORECASTS OVERVIEW ............................................................................................... 12

FIGURE 3: TERMINAL COST‐EFFICIENCY TARGETS FOR RP2 INITIAL AND REVISED PPS ............................................................... 16

FIGURE 4: EN‐ROUTE COST‐EFFICIENCY TARGETS IN RP2 INITIAL AND REVISED PPS ................................................................. 21

FIGURE 5: EN‐ROUTE SERVICE UNITS FORECASTS OVERVIEW ............................................................................................... 22

FIGURE 6: TERMINAL COST‐EFFICIENCY TARGETS IN RP2 INITIAL AND REVISED PPS ................................................................. 26



TABLE 3: INDIVIDUAL ANSP CONTRIBUTIONS TO THE FAB REFERENCE VALUE .......................................................................... 7


TABLE 5: EN‐ROUTE SERVICE UNITS FORECAST – INCLUDING STATFOR FEBRUARY 2015 ........................................................ 12

TABLE 6: ECONOMIC ASSUMPTIONS .............................................................................................................................. 13

TABLE 7: INITIAL AND REVISED TERMINAL COST‐EFFICIENCY TARGETS FOR RP2 ....................................................................... 16


TABLE 9: EN‐ROUTE SERVICE UNITS FORECASTS – INCLUDING STATFOR FEBRUARY 2015 ....................................................... 22

TABLE 10: ECONOMIC ASSUMPTIONS ............................................................................................................................ 23

TABLE 11: INITIAL AND REVISED TERMINAL COST‐EFFICIENCY TARGETS FOR RP2 ..................................................................... 26


4

1 INTRODUCTION 1.1.1 Pursuant to Commission Implementing Regulation (EU) No 390/2013i, the FAB CE

delivered its Performance Plan on 19 June 2014.


1.1.3 Following the ad-hoc Single Sky Committee meeting on 24 October 2014, the FAB CE was invited to reconsider its initial RP2 Performance Plan submitted in June 2014, in order to see how the recommendations and observations made by the PRB could be addressed.

1.1.4 As a result, the FAB CE submitted significant and detailed corrigenda/amendments to its RP2 Performance Plan via the EU-PRB SharePoint repository in November 2014.

1.1.5 The PRB assessed the new information received and provided to the Commission a report reflecting the changes to the content of the recommendations in the FAB assessment report for the Key Performance Area of cost-efficiency. This updated version of the PRB assessment report was submitted to the Commission on 9 February 2015.

1.1.6 Further on, the Commission Implementing Decision (EU) 2015/347ii established that targets in the Key Performance Areas of capacity and cost-efficiency (for Austria and Slovakia) submitted by the FAB CE are not consistent with the relevant Union-wide performance target.

1.1.7 The Commission therefore asked the FAB CE to revise its capacity targets downwards. As a minimum, those targets should be in accordance with the respective FAB reference values set out in the Network Operations Plan (NOP). In addition, Austria and Slovakia should also revise their en-route determined unit costs downwards.

1.1.8 The FAB CE submitted revised targets on 21 May 2015. The PRB has assessed these revised targets including all other relevant information provided and presented its conclusions on the new targets in this report.



5

2 CONTENT OF THE SUBMISSION 2.1.1 The FAB CE submitted a revised Performance Plan on 21 May 2015.


The body of the plan signed by the competent authorities and dated 7 May 2015;

The updated Reporting Tables and additional information; and,

The updated Annex C, D and E.


2.1.4 The PRB notes that the FAB CE has provided updates on the following points:

The geographical scope has been clarified with the naming of the FIRs concerned and explicit exclusion of Sarajevo FIR;

The macroeconomic scenario has been updated mentioning the takeover of ATS provision from BiH ANS authorities;

The additional military KPI (Annex E2) has been removed;

Explanation of the role of the Performance Working Group (PRWG) in the implementation and monitoring of the performance at FAB level.



6


that: "The performance targets in the key performance area of capacity submitted by the Czech Republic, Croatia, Hungary, Austria, Slovenia and Slovakia as regards FABCE […] should be revised downwards. As a minimum, those targets should be in accordance with the respective FAB reference values set out in the Network Operations Plan. Where the Network Operations Plan specifies remediation or mitigation measures, account should be taken of those measures when revising the performance targets."

2015 2016 2017 2018 2019

FAB CE reference value (NOP March 2014) 0.30 0.29 0.29 0.29 0.29

Original FAB target (June 2014) 0.32 0.31 0.31 0.30 0.29


Consistency check


Primary check:


3.1.2 The revised FAB CE targets are consistent with the respective FAB reference values.

Secondary check:


3.1.3 The FAB CE has adopted targets that will provide a performance surplus that could be of benefit to the network.



3.1.4 The Network Operations Plan 2015-2019 (March 2015 edition) shows how the FAB CE ANSPs can provide a significant positive contribution to network performance by implementing the existing capacity plans. Such a positive contribution could benefit airspace users within the FAB CE and other FABs in meeting the overall target of 0.5 minutes per flight.


7

Year 2015 2016 2017 2018 2019






3.1.5 The aggregated contribution expected from the individual ANSPs is not consistent with the overall FAB targets for en-route capacity performance.

Year 2015 2016 2017 2018 2019


Revised FAB target 0.29 0.29 0.28 0.28 0.27

ANSP contribution

Austro Control 0.21 0.21 0.20 0.19 0.19

Croatia Control 0.23 0.22 0.21 0.21 0.19

ANS CR 0.09 0.1 0.09 0.10 0.10

HungaroControl 0.06 0.05 0.05 0.04 0.05

LPS SR 0.10 0.10 0.10 0.11 0.10

Slovenia Control 0.21 0.21 0.22 0.23 0.22

Aggregated ANSP contribution 0.31 0.30 0.29 0.29 0.28




3.1.6 Section 5 of the FAB CE Performance Plan has been updated to give details on projects involving civil-military cooperation and coordination. Examples of the enhancements, as part of the improved application of the flexible use of airspace include: harmonising the airspace management and airspace design policies at FAB level; integrating the ASM and ATFCM functions and national level and allocating airspace based upon the users’ requirements. Eventually, FAB CE plan to integrate the ASM and ATFCM functions at FAB level (2020+).

3.1.7 Section 5 refers to efforts to ensure that military requirements are also considered both nationally and at FAB level, although no specific metrics or indicators are proposed for this as part of the FAB performance plan.


Historic performance (Annex IV section 1(d))


8

3.1.8 In Croatia, the implementation of new sectorisation including the change of division flight level significantly improved capacity in 2013. Although this dipped somewhat in 2014, capacity performance in Croatia has been generally improving since 2011.

3.1.9 Austria continues to provide capacity performance that is in line with the contribution required to be consistent with the EU-wide target for capacity and that greatly exceeds the targets adopted in the national performance plan.

3.1.10 The Czech Republic continues to provide excellent capacity performance that provides a positive contribution to the EU-wide target.

3.1.11 Hungary and Slovenia consistently provide excellent capacity performance with zero delay for airspace users.

3.1.12 Slovakia provided sufficient capacity to surpass the requirements for each year of RP1, with zero delays for airspace users during 2012 and 2013.


9

4 COST-EFFICIENCY 4.1 Austria: Overview of EC Decision (2nd March 2015) 4.1.1 The assessment carried out by the EC assisted by the PRB has shown that the RP2

cost-efficiency targets submitted by the FAB CE for Austria in its initial Performance Plan (July 2014) are not consistent with the relevant Union-wide performance targets.

4.1.2 The EC Decision 2015/347 published on the 2nd March 2015 (see Whereas 6) indicates that: "Concerning the key performance area of cost-efficiency, the targets expressed in en route determined unit costs submitted by Member States have been assessed, in accordance with the principles laid down in point 5, in conjunction with point 1, of Annex IV to the Implementing Regulation (EU) No 390/2013, by taking account of the trend of en route determined unit costs over the second reference period and the combined period of the first and the second reference period (2012-19), the number of service units (traffic forecast) and the level of en route determined unit costs in comparison to Member States having a similar operational and economic environment."

4.1.3 The EC Decision (see Whereas 7) further specifies the reasons for assessing Austria’s cost-efficiency targets as not consistent with the relevant Union-wide performance targets and indicates that: “As regard Austria, its targets are based on a planned reduction of its en route determined unit costs over the second reference period by 3,5% per year on average. While this slightly exceeds the targeted reduction of the average Union-wide en route determined unit costs over the second reference period (–3,3% per year), its planned reduction over the combined period of the first and the second reference period is below the trend on Union-wide level (–1,1% per year, compared to –1,7% per year). Furthermore, the targets are based on planned en route determined costs at the start of the second reference period that are 8 % above the actual en route costs reported in the year 2013. As a result, the improvement in cost-efficiency realised in the first reference period has not been taken adequately into account when setting the targets for the second reference period. In addition, the target for 2019 is based on planned en route determined unit costs that are substantially above (+20%) the average en route determined unit costs of the Member States having a similar operational and economic environment to the one of Austria”.

4.1.4 The analysis focuses on the changes made to the initial RP2 performance plan and on the elements that were specifically identified in Whereas 6 and 7 of EC Decision 2015/347 and which are listed in paragraphs 4.1.2 and 4.1.3 above. Namely, this analysis is focused, in a first step, on whether the en-route DUC trend is equal or better than -1.7% p.a. over the first and second reference periods combined and −3.3% p.a. over the second reference period. Should the en-route cost-efficiency target not pass the first step, a second step looks if the DUC level planned for 2019 is markedly lower than the comparator group average.

4.2 Austria: Summary of changes in revised Performance Plan (July 2015) 4.2.1 The main differences between the RP2 revised and initial PP are as follows:

A lower starting point for 2014 in terms of DUC, based on actual data for 2014;

A downwards revision of the DCs provided for the 2015-2019 period;

An update of the inflation rate for 2014 in order to reflect actual data; and,

An upwards revision of the en-route SU forecast for 2015-2019.


10

4.3 Austria: En-route charging zone assessment following revised Performance Plan submission


Overview

The tables below show three sets of data for Austria:

Initial PP (June 2014): showing the initial PP data as published in the PRB Assessment Report of Performance Plans for RP2 on 6 October 2014;

European Commission Decision (March 2015): showing the PP data as included in the EC Decision. For a number of States, the Decision data included updates to the data provided in the initial PP (e.g. revision of EUROCONTROL costs, revision of the 2015 data to lower the 2015 unit rate, etc.); and,

Revised PP (July 2015): showing the data provided in the RP2 revised PP.


The assessed monetised contribution provided by Austria’s revised en-route cost-efficiency target for RP2 is a reduction of -51.1 M€2009 compared to the information provided in the initial PP submitted in June 2014. This comprises -13.0 M€2009 which is attributable to the downward revision of the DCs over RP2, and a significant contribution of -38.1 M€2009 due to the upward revision of the en-route SUs forecasts.


2014F 2015D 2016D 2017D 2018D 2019D2011-19

CAGR2014-19

CAGR2015-19

CAGR

Determined costs EUR m (nom) 196.4 192.1 195.3 198.3 203.1 206.8 2.4% 1.0% 1.9%Inflation rate annual % change 1.8% 1.7% 1.7% 1.7% 1.7% 1.7% 1.9% 1.7% 1.7%Inflation index 2009=100 112.6 114.5 116.4 118.4 120.4 122.5 Determined costs EUR m (2009) 174.5 167.8 167.8 167.5 168.6 168.9 0.5% -0.7% 0.2%Service units '000s 2 486 2 577 2 658 2 728 2 798 2 882 1.7% 3.0% 2.8%Determined unit cost EUR (2009) 70.19 65.12 63.12 61.39 60.27 58.60 -1.1% -3.5% -2.6%Exchange rate (2009) EUR:EUR 1.00 Determined unit cost EUR (2009) 70.19 65.12 63.12 61.39 60.27 58.60 -1.1% -3.5% -2.6%


2014F 2015D 2016D 2017D 2018D 2019D2011-19

CAGR2014-19

CAGR2015-19

CAGR

Determined costs EUR m (nom) 188.2 195.3 198.3 203.1 206.8 2.4%Inflation rate annual % change 1.7% 1.7% 1.7% 1.7% 1.7% 1.7%Inflation index 2009=100 114.4 116.4 118.3 120.4 122.4 Determined costs EUR m (2009) 164.5 167.9 167.6 168.7 169.0 0.7%Service units '000s 2 693 2 658 2 728 2 798 2 882 1.7%Determined unit cost EUR (2009) 61.09 63.15 61.42 60.30 58.63 -1.0%Exchange rate (2009) EUR:EUR 1.00 Determined unit cost EUR (2009) 61.09 63.15 61.42 60.30 58.63 -1.0%

Revised Performance Plan (July 2015) 2014A 2015D 2016D 2017D 2018D 2019D 2011-19 2014-19 2015-19Determined costs EUR m (nom) 177.5 188.2 192.1 195.9 199.7 201.4 2.1% 2.6% 1.7%Inflation rate annual % change 1.5% 1.7% 1.7% 1.7% 1.7% 1.7% 1.8% 1.7% 1.7%Inflation index 2009=100 112.2 114.2 116.1 118.1 120.1 122.1 Determined costs EUR m (2009) 158.1 164.9 165.5 165.9 166.3 164.9 0.2% 0.8% 0.0%Service units '000s 2 645 2 693 2 777 2 850 2 928 3 014 2.3% 2.6% 2.9%Determined unit cost EUR (2009) 59.78 61.23 59.59 58.21 56.81 54.71 -2.0% -1.8% -2.8%Exchange rate (2009) EUR:EUR 1.00 Determined unit cost EUR (2009) 59.78 61.23 59.59 58.21 56.81 54.71 -2.0% -1.8% -2.8%

Total RP2Difference between revised and initial en-route DUC % -6.0% -5.6% -5.2% -5.7% -6.6%Difference between revised and initial en-route DUC EUR (2009) 3.89- 3.53- 3.18- 3.45- 3.88- Revised en-route TSUs '000s 2 693 2 777 2 850 2 928 3 014 Assessed monetised contribution EUR m (2009) 10.5- 9.8- 9.1- 10.1- 11.7- -51.1


11


Starting Point based on actual 2014 data

The real en-route unit cost reported by Austria for the year 2014 in the body of the revised PP (63.45 €2009) does not reflect the actual en-route unit cost since its computed using a forecast for the 2014 en-route costs (167.8 M€2009) and not actual data. Indeed, when FAB CE submitted its revised PP for RP2 (May 2015), actual 2014 en-route costs were not known. For the purposes of assessing the cost-efficiency targets provided in RP2 revised PPs, the PRB considers preferable to take into account the actual en-route unit cost in 2014 as starting point for the RP2 cost-efficiency targets. This methodology was applied to all the charging zones for which revised cost-efficiency targets were submitted in July 2015.

As a result, the PRB computes that the en-route actual unit cost for 2014 amounts to 59.78€2009 which is -14.8% lower than the figure provided in the initial RP2 PP (70.19 €2009).This deviation is mainly due to the fact that actual total en-route SUs for 2014 (2,645,392) are +6.4% higher than the value provided in the initial RP2 PP (2,486,000). The actual en-route costs reported for the year 2014 (158.1 M€2009) are lower (by -9.4%) than the estimated figure that was provided in the initial PP (174.5 M€2009).

Important Note:

At the time of performing this assessment, the actual 2014 costs and traffic (en-route SUs) are known at Union-wide level and the resulting actual “starting point” in terms of unit costs is 53.93 €2009. Accordingly, the en-route DUC trend required in RP2 to reach the Union-wide target of 49.10 €2009 in 2019 is a reduction of -1.9% p.a. For consistency purposes, it is important to take into account this figure when comparing a State planned en-route DUC trend to the RP2 Union-wide target since the former is computed using actual 2014 costs and traffic as starting point.

For the sake of completeness, the PRB analysis also presents the RP2 DUC trend using the starting point from the initial PP (see item 3 for further details).

Key points for Austria en-route charging zone

In the following section, five assessment criteria are considered in line with Annex IV of the Performance Scheme regulation (390/2013). For each of these criteria, the results of the

90

95

100

105

110

115

120

125

130

0

10

20

30

40

50

60

70

80

2011 2012 2013 2014 2015 2016 2017 2018 2019

En

-ro

ute

co

sts

and

ser

vic

e u

nit

s in

dex

(2

011=

100)

Det

erm

ined

un

it c

ost

, €

(200

9)

Revised PP (July 2015) cost-efficiency target for RP2 - Austria






12

original assessment are presented along with the changes arising from the revised PP submission.





Figure 2: En-route service units forecasts overview

Table 5: En-route service units forecast – including STATFOR February 2015

Assessment of Revised RP2 PP (July 2015)

The number of en-route service units (SUs) planned for the 2015-2019 period has been revised upwards compared to the information reported in the initial PP. In fact, the revised SUs forecast is in line with STATFOR September 2014 base case, while taking into account the 2014 actuals. This results in planned en-route SUs over RP2 that are approximately +4.5% higher in each year of the RP than those provided in the initial PP. The planned en-route SUs are slightly below the STATFOR February 2015 low case scenario for 2015 and 2016, and between the low and base case scenarios for the 2017-2019 period.





90

95

100

105

110

115

120

125

130

135

2011 2012 2013 2014 2015 2016 2017 2018 2019

Ind

ex o

f en

-ro

ute

SU

s (2

011=

100)

Austria






Service Units ('000s) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2011-19 2015-19PP RP1 Determined 2,720 2,814 2,947 Actuals, 2014, Initial (June 2014) PP RP2 Determined 2,519 2,469 2,456 2,645 2,577 2,658 2,728 2,798 2,882 1.7% 2.8%Revised (July 2015) PP RP2 Determined 2,693 2,777 2,850 2,928 3,014 2.3% 2.9%STATFOR Feb 15 base 2,645 2,760 2,866 2,938 3,021 3,097 2.6% 2.9%STATFOR Feb 15 high 2,645 2,796 2,936 3,063 3,187 3,306 3.5% 4.3%STATFOR Feb 15 low 2,645 2,721 2,788 2,802 2,838 2,871 1.6% 1.4%STATFOR Feb 14 base 2,486 2,577 2,658 2,728 2,798 2,882 1.7% 2.8%STATFOR Feb 14 high 2,536 2,667 2,802 2,919 3,039 3,161 2.9% 4.3%STATFOR Feb 14 low 2,436 2,485 2,511 2,539 2,571 2,607 0.4% 1.2%Initial (June 2014) PP RP2 vs STATFOR Feb 14 base (%) 0.0% 0.0% 0.0% 0.0% 0.0%Revised (July 2015) PP RP2 vs STATFOR Feb 14 base (%) 4.5% 4.5% 4.5% 4.6% 4.6%The 2015-2019 CAGR is shown (rather than the 2014-19 CAGR) to reflect the fact that not all FABs/States will provide an updated forecast for 2014


13



The actual inflation rate provided for the year 2014 was updated to 1.5% (from 1.8% originally), in line with the actual Eurostat HICP published in April 2015, as required in Article 7.1 of the Charging Regulation (391/2013).


The latest IMF inflation forecasts released in April 2015 for Austria reflect lower inflation rates over the 2015-2019 period than those published in April 2014. As a result, the inflation rates planned by Austria between 2015 and 2018 are higher than the latest IMF forecastswith differences ranging between 0.1 and 0.6 percentage points. The planned inflation rate provided for the year 2019 (1.7%) is slightly lower than the figure forecast by the IMF April 2015 for that year (1.8%).

The FAB CE revised PP does not include detailed information on Austria’s rationale for not using IMF April 2015 inflation forecasts.



Revised PP (July 2015) DUCs trend was revised



Austria has revised downwards the DCs planned for each year of RP2 (see Table 4). Cumulatively over RP2, en-route DCs for Austria are -1.5% lower than those provided in the initial PP (-13.0 M€2009).

RP2 DUC trend based on 2014 actual starting point:

Austria’s en-route DUC is expected to decrease by -1.8% p.a. over the 2014-2019 period. This is worse than the Union-wide target for RP2 (-3.3% p.a.) and also worse than the reduction planned in the initial PP (-3.5% p.a.). However, the en-route DUC trend for Austria over the 2014-19 period (-1.8% p.a.) is in the same order of magnitude than the DUC reduction required to reach the Union-wide target when computed using as starting point the 2014 actual costs and SUs (-1.9% p.a.).

RP2 DUC trend based on 2014 starting point from initial PP:

Considering the 2014 forecast starting point from the initial PP (i.e. 67.05 €2009) and the 2019 revised target of 54.71 €2009, the RP2 DUC trend is -4.0% p.a.. This is better than the 2014-2019 Union-wide target trend (-3.3% p.a.).

If the initial PP inflation index is applied, then the 2019 revised target would become 54.58 €2009, and the RP2 DUC trend would also be -4.0% p.a., i.e. better than the 2014-2019

Inflation: Austria 2012 2013 2014 2015 2016 2017 2018 2019

Initial (June 2014) PP RP2 annual % change 2.6% 2.1% 1.8% 1.7% 1.7% 1.7% 1.7% 1.7%Revised (July 2015) PP RP2 annual % change 2.6% 2.1% 1.5% 1.7% 1.7% 1.7% 1.7% 1.7%Eurostat/IMF avg annual % change 2.1% 1.5% 1.1% 1.5% 1.6% 1.7% 1.8%Difference (Revised (July 2015) RP2 PP vs Eurostat/IMF avg) p.p. difference 0.0% 0.0% 0.6% 0.2% 0.2% 0.1% -0.1%Initial (June 2014) PP RP2 2009=100 108.3 110.6 112.6 114.5 116.4 118.4 120.4 122.5Revised (July 2015) PP RP2 2009=100 108.3 110.6 112.2 114.2 116.1 118.1 120.1 122.1Eurostat/IMF avg 2009=100 108.3 110.6 112.2 113.5 115.2 117.0 118.9 121.0Difference (Revised (July 2015) RP2 PP vs Eurostat/IMF avg) index difference 0.0 0.0 0.7 0.9 1.1 1.2 1.2


14

Union-wide target trend (-3.3% p.a.).

DUC trend over the combined RP1 and RP2 period:

When assessed over the 2011-2019 period, the en-route DUC trend is planned to be -2.0% p.a. which is better than (a) the trend underpinning the Union-wide target (-1.7% p.a.) and (b) the DUC reduction provided in the initial PP (-1.1% p.a.). Austria’s planned en-route DUC profile over 2011-2019 mainly reflects the fact that DCs are expected to slightly increase by +0.2% p.a. while the number of SUs is planned to grow by +2.3% per year on average.

If the initial PP inflation index is applied, then the 2019 revised target would become 54.58 €2009, and the DUC trend over the combined RP1-RP2 periods would also be -2.0% p.a., i.e. better than the 2011-2019 Union-wide target trend (-1.7% p.a.).


Austria’s en-route DCs for 2015 (164.9 M€2009) are +4.3% higher than 2014 actual en-route costs (158.2 M€2009), and then planned to remain fairly constant until 2019.



Revised PP (July 2015) DUCs level was revised


Austria’s planned en-route DUC for 2019 (54.71 €2009) is -7.6% lower than the average of the comparator group (59.24 €2009).

The revised DUC planned by Austria for 2019 is -6.6% lower than that provided in the initial RP2 PP. In fact, the revised planned DUC is lower than that provided in the initial RP2 PP for each year of the period (differences ranging between -5.2% and -6.6%).

The improvement in DUC level is due to the combination of a downwards revision of DCs over the RP2 period (see point 3), and a higher en-route SUs forecast for RP2 (see point 1).





The weighted average cost of capital (WACC) rate used to calculate the cost of capital of Austro Control is 4.0% for each year of RP2. This is the same WACC as that reported in the initial PP.

Overall view of Austria en-route cost-efficiency KPI


Key points of the analysis of the revised RP2 en-route cost-efficiency targets submitted by Austria:

The en-route actual unit cost for 2014 is -14.8% lower than the figure reported in the initial PP submitted in June 2014. This deviation is mainly due to the combination of higher actual en-route SUs (+6.4%) and lower actual en-route costs (-9.4%) compared to the figures provided in the initial RP2 PP.


15

The en-route SUs forecast over the 2015-2019 period has also been updated and now reflects STATFOR September 2014 base case scenario. This results in planned en-route SUs over RP2 that are approximately +4.5% higher in each year of the RP than those provided in the original PP.

The planned inflation rates provided for the years 2015-2019 have not been changed compared to the information submitted in the initial PP and are in line with IMF April2014 inflation forecasts.

Considering the 2014 actual starting point, Austria’s en-route DUC is expected to decrease by -1.8% p.a. over the 2014-2019 period. This is worse than the Union-wide target for RP2 (-3.3% p.a.). However, the en-route DUC trend for Austria over the 2014-19 period (-1.8% p.a.) is in the same order of magnitude than the DUC reduction required to reach the Union-wide target when computed using as starting point the 2014 actual costs and SUs (-1.9% p.a.). Considering the 2014 forecast starting point from the initial PP (i.e. 67.05 €2009) and the 2019 revised target of 54.71 €2009, the RP2 DUC trend is -4.0% p.a. which is better than the 2014-2019 Union-wide target trend (-3.3% p.a.).

When analysed over the 2011-2019 period which covers both RP1 and RP2, Austria’s en-route DUC is expected to decrease by -2.0% p.a. which is better than the trend underpinning the Union-wide cost-efficiency target (-1.7% p.a.), and the DUC reduction that was provided in the initial PP (-1.1% p.a.).

The en-route DUCs provided for RP2 have been revised significantly downwards for each year of the RP. As a result, in 2019 Austria’s planned en-route DUC (54.71 €2009) is expected to be -7.6% lower than the average of the comparator group (59.24 €2009).

The assessed monetised contribution provided by Austria’s revised en-route cost-efficiency target for RP2 is a reduction of -51.1 M€2009 compared to the information provided in the initial PP submitted in June 2014. This comprises -13.0 M€2009 which is attributable to the downward revision of the DCs over RP2, and a significant contribution of -38.1 M€2009 due to the upward revision of the en-route SUs forecasts.

Conclusions:

The PRB considers that Austria revised en-route cost-efficiency targets for RP2 meet the consistency criteria and are in line with the points identified in EC Decision 2015/347 (Art. 4).

There is an improvement compared to the initial PP, due to the combination of a downwards revision in DCs and a significant upwards revision in the TSU forecast. Considering the 2014 forecast starting point from the initial PP and the 2019 revised target, the RP2 DUC trend is –4.0% p.a. This is better than the 2014-2019 Union-wide target trend (-3.3% p.a.). When assessed over the 2011-2019 period, the en-route DUC trend is planned to be -2.0% p.a. which is better than the trend underpinning the Union-wide target (-1.7% p.a.). In addition, the planned en-route DUC for 2019 is -7.6% lower than the average of the comparator group.

The costs exempt application of ~€95M for RP1 also needs to be considered in this context, prior to approval.


16

4.4 Austria: Terminal charging zone assessment following revised Performance Plan submission


Overview

Figure 3: Terminal cost-efficiency targets for RP2 initial and revised PPs


87

89

91

93

95

97

99

101

103

2015D 2016D 2017D 2018D 2019D

De

term

ined

un

it c

ost

in

de

x (2

015

=10

0)

Austria


Austria (Initial June 2014) Austria (Revised June 2015)


CAGR (%)

Determined costs EUR m (nom) 41.0 41.9 43.1 44.0 44.8 2.3%Inflation rate * annual % change 1.7% 1.7% 1.7% 1.7% 1.7% 1.7%Inflation index * 2009=100 114.5 116.4 118.4 120.4 122.5 Determined costs EUR m (2009) 35.8 36.0 36.4 36.5 36.6 0.5%Terminal SUs '000s 181.0 187.9 193.1 199.4 205.5 3.2%Determined unit cost EUR (2009) 197.79 191.53 188.42 183.14 178.07 -2.6%Exchange rate EUR:EUR (2009) 1.00 Determined unit cost EUR (2009) 197.79 191.53 188.42 183.14 178.07 -2.6%


CAGR (%)

Determined costs EUR m (nom) 39.9 40.9 42.4 43.0 43.4 2.1%Inflation rate * annual % change 1.7% 1.7% 1.7% 1.7% 1.7%Inflation index * 2009=100 114.2 116.1 118.1 120.1 122.1 Determined costs EUR m (2009) 35.0 35.2 35.9 35.8 35.5 0.4%Terminal SUs '000s 183.8 190.1 196.2 202.4 209.2 3.3%Determined unit cost EUR (2009) 190.20 185.31 182.84 177.07 169.72 -2.8%Exchange rate EUR:EUR (2009) 1.00 Determined unit cost EUR (2009) 190.20 185.31 182.84 177.07 169.72 -2.8%The 2015-2019 CAGR shown in the table is different from the main en-route comparator period (2014-2019),


Total RP2Difference between revised and initial terminal DUC % -3.8% -3.2% -3.0% -3.3% -4.7%Difference between revised and initial terminal DUC EUR (2009) 7.59- 6.22- 5.58- 6.07- 8.34- Revised TNSUs '000s 183.8 190.1 196.2 202.4 209.2 Assessed monetised contribution EUR m (2009) 1.4- 1.2- 1.1- 1.2- 1.7- -6.6


17

The assessed monetised contribution provided by Austria’s revised terminal cost-efficiency target for RP2 is a reduction of -6.6 M€2009 compared to the information provided in the initial PP submitted in June 2014. This comprises -3.9 M€2009, which is attributable to the downward revision of the DCs over RP2, and an amount of -2.8 M€2009 due to the upward revision of the terminal SUs forecasts.

Key points for Austria terminal charging zone






Compared to the initial PP submission, Austria has revised upwards its TNSU forecast for each of the years during RP2 which is now in line with STATFOR September 2014 base case. This results in planned terminal SUs over RP2 that are on average +1.5% higher than those provided in the initial PP.





As for en-route, the planned inflation rates provided for the years 2015-2019 have not been changed compared to the information submitted in the initial PP, and are in line with IMF April 2014 inflation forecasts.





Austria has revised downwards the terminal DCs planned for each year of RP2. Cumulatively over the 2015-2019 period, total DCs are -2.1% lower than those provided in the initial PP (-3.9 M€2009).

Austria’s terminal DUC is expected to decrease by -2.8% p.a. over the 2015-2019 periodwhich is slightly better than the DUC reduction provided in the initial PP (-2.6% p.a.).





No changes in relation to this area were provided in the revised PP, therefore there are no changes to the original assessment.


18

Overall view of Austria terminal ANS cost-efficiency KPI


Key points of the analysis of the revised RP2 TANS cost-efficiency targets submitted by Austria:

Compared to the initial PP, Austria has revised upwards its TNSU forecast for RP2 (around +1.5% on average over the RP).

Austria’s terminal DUC is expected to decrease by -2.8% p.a. over the 2015-2019 period which is slightly better than the DUC reduction provided in the initial PP (−2.6% p.a.).

The assessed monetised contribution provided by Austria’s revised terminal cost-efficiency target for RP2 is a reduction of -6.6 M€2009 compared to the information provided in the initial PP submitted in June 2014. This comprises -3.9 M€2009 which is attributable to the downward revision of the DCs over RP2, and an amount of -2.8 M€2009 due to the upward revision of the terminal SUs forecasts.


19

4.5 Slovakia: Overview of EC Decision (2nd March 2015) 4.5.1 The assessment carried out by the EC assisted by the PRB has shown that the RP2

cost-efficiency targets submitted by the FAB CE for Slovakia in its initial Performance Plan (July 2014) are not consistent with the relevant Union-wide performance targets.


4.5.3 The EC Decision (see Whereas 8) further specifies the reasons for assessing Slovakia’s cost-efficiency targets as not consistent with the relevant Union-wide performance targets and indicates that: “As regard Slovakia, its targets are based on a planned reduction of its en route determined unit costs over the second reference period by 2,6% per year on average. This is below the targeted reduction of the average Union-wide en route determined unit costs over the second reference period (-3,3% per year). While the reduction in planned en route determined unit costs over the combined period of the first and the second reference period slightly exceeds the trend on Union-wide level (-2,1% per year, compared to -1,7% per year), the target for 2019 is based on planned en route determined unit costs that are substantially above (+18,6%) the average en route costs determined unit costs of the Member States having a similar operational and economic environment to the one of Slovakia.”

4.5.4 The analysis focuses on the changes brought to the initial RP2 PP and on the elements that were specifically identified in Whereas 6 and 8 of EC Decision 2015/347 and which are listed in paragraph 4.1.2 and §4.1.3 above. Namely, this analysis is focused, in a first step, on whether the en-route DUC trend is equal or better than -1.7% p.a. over the first and second reference periods and -3.3% p.a. over the second reference period. Should the en-route cost-efficiency target not pass the first step, a second step looks if the DUC level planned for 2019 is markedly lower than the comparator group average.

4.6 Slovakia: Summary of changes in revised Performance Plan (July 2015) 4.6.1 The main differences between the RP2 Revised PP and the initial PP are as follows:

Lower starting point 2014 for en-route in terms of DUC, based on actual data for 2014;

Lower DCs provided for the 2015-2019 period, for both en-route and terminal; Lower cost of capital, for both en-route and terminal; Update of the economic assumptions; Lower en-route and terminal SU forecasts 2015-2019; Lower resulting en-route and terminal DUCs for the period 2016-2019; and, Higher en-route and terminal DUCs for 2015 but lower unit rates to be charged to

airspace users.


20

4.7 Slovakia: En-route charging zone assessment following revised Performance Plan submission


Overview

The tables below show three sets of data for Slovakia:

Initial PP (submitted in June 2014): showing the initial PP data as published in the PRB Assessment Report of Performance Plans for RP2 on 6 October 2014;

European Commission Decision (March 2015): showing the PP data as included in the EC Decision. For a number of States, the Decision data included updates to the data provided in the initial PP (e.g. revision of EUROCONTROL costs, revision of the 2015 data to lower the 2015 unit rate, etc.); and

Revised PP (July 2015): showing the data provided in the RP2 Revised Performance Plan.


The monetary contribution provided in the revised PP by Slovakia for the en-route cost-efficiency in RP2 is a reduction of -8.2 M€2009 overall compared to the initial RP2 PP. It corresponds to a decrease in determined costs by -15.4 M€2009, partly compensated by a downwards revision of the traffic assumptions for which the monetised contribution is an increase by +7.2 M€2009.


2014F 2015D 2016D 2017D 2018D 2019D2011-19

CAGR2014-19

CAGR2015-19

CAGR

Determined costs EUR m (nom) 61.1 62.1 66.4 69.7 73.4 74.6 4.9% 4.1% 4.7%Inflation rate annual % change 0.7% 1.6% 1.8% 2.0% 2.1% 2.2%Inflation index 2009=100 111.2 112.9 115.0 117.3 119.7 122.3 1.9% 1.9% 2.0%Determined costs EUR m (2009) 54.9 55.0 57.7 59.4 61.3 61.0 2.9% 2.1% 2.6%Service units '000s 1,051 1,114 1,168 1,219 1,268 1,331 5.0% 4.8% 4.5%Determined unit cost EUR (2009) 52.27 49.34 49.44 48.76 48.36 45.82 -2.1% -2.6% -1.8%Exchange rate (2009) EUR:EUR 1.00 Determined unit cost EUR (2009) 52.27 49.34 49.44 48.76 48.36 45.82 -2.1% -2.6% -1.8%


2014F 2015D 2016D 2017D 2018D 2019D2011-19

CAGR2014-19

CAGR2015-19

CAGR

Determined costs EUR m (nom) 61.7 66.5 69.8 73.5 74.7 4.9%Inflation rate annual % change 1.6% 1.8% 2.0% 2.1% 2.2% 2.0%Inflation index 2009=100 112.9 115.0 117.3 119.7 122.3 Determined costs EUR m (2009) 54.6 57.8 59.5 61.4 61.0 2.8%Service units '000s 1,114 1,168 1,219 1,268 1,331 4.5%Determined unit cost EUR (2009) 49.04 49.50 48.82 48.42 45.88 -1.7%Exchange rate (2009) EUR:EUR 1.00 Determined unit cost EUR (2009) 49.04 49.50 48.82 48.42 45.88 -1.7%

Revised Performance Plan (July 2015) 2014A 2015D 2016D 2017D 2018D 2019D 2011-19 2014-19 2015-19Determined costs EUR m (nom) 59.5 59.3 61.9 63.0 66.3 67.6 3.6% 2.6% 3.3%Inflation rate annual % change -0.1% 0.0% 1.4% 1.7% 1.8% 2.0%Inflation index 2009=100 110.2 110.3 111.8 113.7 115.7 118.1 1.5% 1.4% 1.7%Determined costs EUR m (2009) 54.0 53.8 55.4 55.4 57.3 57.3 2.0% 1.2% 1.6%Service units '000s 1,044 1,078 1,126 1,186 1,250 1,312 4.8% 4.7% 5.0%Determined unit cost EUR (2009) 51.69 49.86 49.16 46.70 45.82 43.64 -2.7% -3.3% -3.3%Exchange rate (2009) EUR:EUR 1.00 Determined unit cost EUR (2009) 51.69 49.86 49.16 46.70 45.82 43.64 -2.7% -3.3% -3.3%

Total RP2Difference between revised and initial en-route DUC % 1.1% -0.6% -4.2% -5.3% -4.8%Difference between revised and initial en-route DUC EUR (2009) 0.53 0.28- 2.06- 2.54- 2.18- Revised en-route TSUs '000s 1,078 1,126 1,186 1,250 1,312 Assessed monetised contribution EUR m (2009) 0.6 0.3- 2.4- 3.2- 2.9- -8.2


21



The revised en-route actual unit cost for 2014 of 51.69 €2009 is -1.1% lower than the figure provided in the initial RP2 PP (52.27 €2009). The PRB notes that this lower starting point reflects the latest available actual data in terms of en-route costs and traffic for Slovakia.

Indeed, Slovakia has reported actual total en-route SUs for 2014 (1,044,343), which is slightly lower (-0.6%) than the value provided in the initial RP2 PP.

In addition, the actual en-route DCs reported for the year 2014 (54.0 M€2009) are lower (by -1.7%) than the estimated figure that was provided in the initial RP2 PP (54.9 M€2009).

Important Note:

At the time of performing this assessment the actual 2014 costs and traffic (en-route SUs) are known at Union-wide level and the resulting actual “starting point” in terms of unit costs is 53.93 €2009. Accordingly, the en-route DUC trend required in RP2 to reach the Union-wide target of 49.10 €2009 in 2019 is a reduction of -1.9% p.a. For consistency purposes, it is important to take into account this figure when comparing a State planned en-route DUC trend to the RP2 Union-wide target since the former is computed using actual 2014 costs and traffic as starting point.


Key points for Slovakia en-route charging zone

In the following section, the five assessment criteria are considered in line with Annex IV of the Performance Scheme regulation (390/2013). For each criteria, the result of the initial assessment is given, along with the potential changes arising from the revised PP submission.

1. Traffic forecast assumptions: Original assessment Passed

Revised PP Traffic forecast assumptions

80

90

100

110

120

130

140

150

160

0

10

20

30

40

50

60

2011 2012 2013 2014 2015 2016 2017 2018 2019 En

-ro

ute

co

sts

and

ser

vic

e u

nit

s in

dex

(2

011=

100)

Det

erm

ined

un

it c

ost

, €

(200

9)

Revised PP (July 2015) cost-efficiency target for RP2 - Slovakia






22

(July 2015) were revised

Figure 5: En-route service units forecasts overview

Table 9: En-route service units forecasts – including STATFOR February 2015


The number of en-route service units (SUs) planned for the 2015-2019 period in the RP2 revised PP have been revised downwards compared to the information reported in the initial PP. The forecast en-route SUs are now in line with the STATFOR February 2015 high case scenario for all years of RP2. Slovakia considers this forecast “the most realistic one in view of the latest traffic development and it best fits the scenario for which operational measures are recently targeted at network level”.




Economic assumptions were revised

90

100

110

120

130

140

150

160

2011 2012 2013 2014 2015 2016 2017 2018 2019

Ind

ex o

f en

-ro

ute

SU

s (2

011=

100)

Slovakia






Service Units ('000s) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2011-19 2015-19PP RP1 Determined 941 978 1,018 Actuals, 2014, Initial (June 2014) PP RP2 Determined 900 922 985 1,044 1,114 1,168 1,219 1,268 1,331 5.0% 4.5%Revised (July 2015) PP RP2 Determined 1,078 1,126 1,186 1,250 1,312 4.8% 5.0%STATFOR Feb 15 base 1,044 1,060 1,091 1,125 1,169 1,209 3.8% 3.3%STATFOR Feb 15 high 1,044 1,078 1,126 1,186 1,250 1,312 4.8% 5.0%STATFOR Feb 15 low 1,044 1,041 1,054 1,062 1,086 1,106 2.6% 1.5%STATFOR Feb 14 base 1,051 1,114 1,168 1,219 1,268 1,329 5.0% 4.5%STATFOR Feb 14 high 1,068 1,146 1,225 1,301 1,378 1,464 6.3% 6.3%STATFOR Feb 14 low 1,033 1,082 1,110 1,140 1,170 1,204 3.7% 2.7%Initial (June 2014) PP RP2 vs STATFOR Feb 14 base (%) 0.0% 0.0% 0.0% 0.1%Revised (July 2015) PP RP2 vs STATFOR Feb 14 base (%) -3.2% -3.6% -2.7% -1.4% -1.3%The 2015-2019 CAGR is shown (rather than the 2014-19 CAGR) to reflect the fact that not all FABs/States will provide an updated forecast for 2014


23



The inflation rate for 2014 was updated to -0.1% (from 0.7% originally), in line with the actual Eurostat HICP published in April 2015, as required in Article 7.1 of the Charging Regulation (391/2013).

The economic assumptions for the years 2015-2019 have been updated in line with the IMF CPI forecast as published in April 2015, which are lower than those used in the initial RP2 PP by -1.6 p.p. in 2015 and by between -0.2 and -0.4 p.p. in each remaining year of RP2.

As a result, the inflation index is lower by -4.2 p.p. than in the initial RP2 PP by the end of RP2.




En-route DUC trend was revised



Slovakia has revised downwards the DCs planned for each year of RP2 (Table 8). Cumulatively over RP2, total DCs for Slovakia are -5.2% lower than those provided in the initial PP (by -15.4 M€2009).


Considering the 2014 actual starting point, Slovakia’s en-route DUC is expected to decrease by -3.3% p.a. over the 2014-2019 period, in line with the Union-wide target for RP2 (-3.3% p.a.) and also an improvement on the reduction planned in the initial PP (-2.6% p.a.). This improvement is due to the reduction in total en-route DCs for RP2 (lower by -5.2% in total over RP2 in the revised RP2 PP compared to the initial PP), which is larger than the downwards revision in en-route SU traffic forecast (lower by -2.4% in total over RP2 in the revised RP2 PP compared to the initial PP).

In addition, the en-route DUC trend for Slovakia over the 2014-19 period (-3.3% p.a.) is better than the RP2 Union-wide DUC reduction required to reach the Union-wide target when computed using as starting point the 2014 actual costs and SUs (-1.9% p.a.).


Considering the 2014 forecast starting point from the initial PP (i.e. 52.27 €2009) and the 2019 revised target of 43.64 €2009, the RP2 DUC trend is –3.5% p.a.. This is better than the 2014-2019 Union-wide target trend (-3.3% p.a.).

If the initial PP inflation index is applied, then the 2019 revised target would become 42.12 €2009, and the RP2 DUC trend would also be –4.2% p.a., i.e. better than the 2014-2019 Union-wide target trend (-3.3% p.a.).

Inflation: Slovakia 2012 2013 2014 2015 2016 2017 2018 2019

Initial (June 2014) PP RP2 annual % change 3.7% 1.5% 0.7% 1.6% 1.8% 2.0% 2.1% 2.2%Revised (July 2015) PP RP2 annual % change 3.7% 1.5% -0.1% 0.0% 1.4% 1.7% 1.8% 2.0%Eurostat/IMF avg annual % change 1.5% -0.1% 0.0% 1.4% 1.7% 1.8% 2.0%Difference (Revised (July 2015) RP2 PP vs Eurostat/IMF avg) p.p. difference - - - - - - -Initial (June 2014) PP RP2 2009=100 108.7 110.3 111.2 112.9 115.0 117.3 119.7 122.3Revised (July 2015) PP RP2 2009=100 108.7 110.3 110.2 110.3 111.8 113.7 115.7 118.1Eurostat/IMF avg 2009=100 108.7 110.3 110.2 110.3 111.8 113.7 115.7 118.1Difference (Revised (July 2015) RP2 PP vs Eurostat/IMF avg) index difference - - - - - - - -


24


The en-route DUC trend over the period 2011-2019 is planned to be -2.7% p.a., also better than the trend underpinning the Union-wide target (-1.7% p.a.).

If the initial PP inflation index is applied, then the 2019 revised target would become 42.12 €2009, and the DUC trend over the combined RP1+RP2 periods would be –3.1% p.a., i.e. better than the 2011-2019 Union-wide target trend (-1.7% p.a.).


Slovakia’s en-route DCs for 2015 are -0.4% lower than 2014 actual en-route costs. This shows that the improvements achieved in RP1 have been reflected in RP2 planning.




En-route DUC level was revised


Slovakia’s planned en-route DUC for 2019 (43.64 €2009) is +16.5% higher than the average of the comparator group (37.46 €2009).

The revised planned DUC by Slovakia in 2019 is -4.8% lower than that provided in the initial RP2 PP. It is lower for each year of the period, except for 2015.

The improvement is due to the downwards revision of DCs over the RP2 period (see point 3), which are lower by -5.2% in total over RP2 in the revised PP compared to the initial PP. This is however partly compensated by the downwards revision in en-route SU traffic forecast (point 1).

The PRB notes that the increase of the revised 2015 DUC compared to the initial PP is due to the downwards revision of the traffic assumptions and of the inflation assumptions, the DCs for 2015 being lower by -2.2% compared to the initial RP2 PP in real terms (and by -4.5% in nominal terms), while the number of TSUs is lower by -3.2% compared to the initial RP2 PP. The PRB also notes that the resulting revised 2015 unit rate to be charged to airspace users in 2015 (54,99 €) is lower than that applied from 1 January 2015 (55,38 €).




En-route cost of capital was revised


LPS Investment Plan was thoroughly reviewed and resulted in revised total Capex being +20% higher than in the initial RP2 PP in real terms and longer lifecycles (new between 4 to 8 years). The revised Capex is significantly lower at the beginning of the period (2015-2016) and considerably higher at the end of the period (2018-2019), also reflecting the postponement of some main capex. As a result, the revised depreciation costs are much lower than in the initial PP (by -32.9% for RP2) and the asset base is lower (by -9.2%).

LPS’s capital structure was also revised to take account of “an extra part-payment of the loan” in 2014, resulting in a lower share of the debt in the capital of LGS in RP2.

Finally, the RoE rate was revised downwards (lower asset beta in 2018-2019 and lower risk free rate). The RoE now ranges between 6.2% at the beginning of the period and 5.2% at the end of the period (vs. a range between 7.7% and 7.3% in the initial plan). As the interest


25

on debt was revised downwards as well, the resulting weighted average cost of capital (WACC) rate ranges between 5.7% and 5.2% (i.e. -1 p.p. lower than in the initial plan.

As a result of all these revisions, the determined cost of capital is lower by -4.1 M€2009 over RP2 or by -22%, compared to the initial PP.

Overall view of Slovakia en-route cost-efficiency KPI


Key points of the analysis of the revised RP2 en-route cost-efficiency targets submitted by Slovakia:

Slovakia has updated the 2014 actual costs and revised the planned DCs downwards for all years in RP2;

Slovakia has updated the en-route SUs forecast for RP2 in line with the February 2015 STATFOR high scenario;

Slovakia has updated the inflation assumptions in line with IMF April 2015 forecasts; Considering the 2014 actual starting point, the en-route DUC provided by Slovakia

for RP2 is expected to decrease by -3.3% p.a. over the 2014-2019 period, in line with the Union-wide target for RP2 (-3.3% p.a.) and better than the RP2 Union-wide DUC reduction required to reach the Union-wide target when computed using as starting point the 2014 actual costs and SUs (-1.9% p.a.). Considering the 2014 forecast starting point from the initial PP, the RP2 DUC trend is –3.5% p.a.. , i.e. also better than the 2014-2019 Union-wide target trend (-3.3% p.a.).

When assessed over the 2011-2019 period(RP1 and RP2), the en-route DUC trend is planned to be -2.7% p.a. , i.e. better than the trend underpinning the Union-wide target (-1.7% p.a.);

The en-route DUC provided by Slovakia for RP2 is significantly lower than the initial RP2 PP for 2016 to 2019. The revised DUC for 2019 is -4.8% lower than that provided in the initial RP2 PP. It is lower for each year of the period, except for 2015;

The en-route DUC for 2015 is higher than in the initial RP2 PP. However, the revised unit rate to be charged to airspace users in 2015 (54.99 €) is lower than that applied from 1 January 2015 (55.38 €), which requires a technical adjustment to reimburse airspace users.

The monetary contribution provided in the revised PP by Slovakia for the en-route cost-efficiency in RP2 is a reduction of -8.2 M€2009 overall compared to the initial RP2 PP. It corresponds to a decrease in determined costs by -15.4 M€2009, partly compensated by a downwards revision of the traffic assumptions for which the monetised contribution is an increase by +7.2 M€2009.

Conclusions:

The PRB considers that Slovakia revised en-route cost-efficiency targets for RP2 meet the consistency criteria and are in line with the points identified in EC Decision 2015/347 (Art. 4).

There is an improvement compared to the initial PP due to a downwards revision in DCs, partially offset by a lower amended TSU forecast. Considering the 2014 forecast starting point from the initial PP and the 2019 revised target, the RP2 DUC trend is –3.5% p.a. This is better than the 2014-2019 Union-wide target trend (-3.3% p.a.). When assessed over the 2011-2019 period, the en-route DUC trend is planned to be -2.7% p.a. which is better than the trend underpinning the Union-wide target (-1.7% p.a.).


26

4.8 Slovakia: Terminal charging zone assessment following revised Performance Plan submission


Overview

Figure 6: Terminal cost-efficiency targets in RP2 initial and revised PPs


80

85

90

95

100

105

2015D 2016D 2017D 2018D 2019D

Det

erm

ined

un

it c

ost

in

dex

(20

15=

100)

Slovakia


Slovakia (Initial June 2014) Slovakia (Revised June 2015)


CAGR (%)



CAGR (%)

Determined costs EUR m (nom) 2.8 2.9 3.0 3.1 3.2 3.2%Inflation rate * annual % change 1.4% 1.7% 1.8% 2.0%Inflation index * 2009=100 110.3 111.8 113.7 115.7 118.1 1.7%Determined costs EUR m (2009) 2.6 2.6 2.6 2.7 2.7 1.4%Terminal SUs '000s 8.8 9.6 10.2 10.9 11.6 7.2%Determined unit cost EUR (2009) 291.44 274.18 257.59 248.58 234.02 -5.3%Exchange rate EUR:EUR (2009) 1.00 Determined unit cost EUR (2009) 291.44 274.18 257.59 248.58 234.02 -5.3%The 2015-2019 CAGR shown in the tab le is different from the main en-route comparator period (2014-2019),


Total RP2Difference between revised and initial terminal DUC % 0.7% -2.3% -4.5% -5.6% -6.5%Difference between revised and initial terminal DUC EUR (2009) 1.92 6.40- 12.20- 14.70- 16.15- Revised TNSUs '000s 8.8 9.6 10.2 10.9 11.6 Assessed monetised contribution EUR m (2009) 0.0 0.1- 0.1- 0.2- 0.2- -0.5


27

The monetary contribution provided in the revised PP by Slovakia for the terminal cost-efficiency in RP2 is a reduction of -0.5 M€2009 overall compared to the initial RP2 PP. It corresponds to a decrease in determined costs by -1.3 M€2009, partly compensated by a downwards revision of the traffic assumptions for which the monetised contribution is an increase by +0.8 M€2009.

Key points for Slovakia en-route charging zone






The number of terminal service units (SUs) planned for the 2015-2019 period in the RP2 revised PPP have been revised downwards compared to the information reported in the initial PP.

The forecast terminal SUs are now in line with the STATFOR February 2015 base case scenario for all years of RP2.






The inflation rate for 2014 was updated to -0.1% (from 0.7% originally), in line with the actual Eurostat HICP published in April 2015.

The economic assumptions for the years 2015-2019 have been updated in line with the IMF CPI forecast as published in April 2015, which are lower than those used in the initial RP2 PP by -1.6 p.p. in 2015 and by between -0.2 and -0.4 p.p. in each remaining year of RP2.


The inflation indexes are the same as those used for en-route.




Terminal ANS DUC trend was revised


Slovakia has revised downwards the DCs planned for each year of RP2 (Table 1). Cumulatively over RP2, total DCs for Slovakia are -8.8% lower than those provided in the initial PP (by -1.3 M€2009).

Slovakia’s terminal DUC is expected to decrease by -5.3% p.a. over the 2015-2019 period,i.e. an improvement on the reduction planned in the initial PP (-3.6% p.a.). This improvement is due to the reduction in total terminal DCs for RP2 (lower by -8.8% in total over RP2 in the revised RP2 PP compared to the initial PP), which is larger than the downwards revision in


28

terminal SU traffic forecast (lower by -5.2% in total over RP2 in the revised RP2 PP compared to the initial PP).




Terminal cost of capital was revised


The cost of capital rates (WACC, RoE and interest on debt), are the same as those applied for the revised en-route cost-efficiency target.

The revisions described in the en-route section above (investment plan, asset base, financial structure, RoE) are also valid for terminal ANS.

As a result of these revisions, the determined cost of capital is lower by -0.5 M€2009 over RP2 or by -30%, compared to the initial PP.

Overall view of Slovakia terminal ANS cost-efficiency KPI


Key points of the analysis of the revised RP2 TANS cost-efficiency targets submitted by Slovakia:

Slovakia has revised the planned DCs downwards for all years in RP2; Slovakia has updated the terminal SUs forecast for RP2 in line with the February

2015 STATFOR base scenario; Slovakia has updated the inflation assumptions in line with IMF April 2015 forecasts; The terminal DUC provided by Slovakia for RP2 is expected to decrease by -5.3%

p.a. over the 2015-2019 period, i.e. an improvement on the reduction planned in the initial PP (-3.6% p.a.);

The terminal DUC provided by Slovakia for RP2 is significantly lower than the initial RP2 PP for 2016 to 2019. The revised DUC for 2019 is -4.8% lower than that provided in the initial RP2 PP. It is lower for each year of the period, except for 2015;

The terminal DUC for 2015 is higher than in the initial RP2 PP. However, the revised unit rate to be charged to airspace users in 2015 (321.37 €) is lower than that applied from 1 January 2015 (326.96 €), which requires a technical adjustment to reimburse airspace users.

The monetary contribution provided in the revised PP by Slovakia for the terminal cost-efficiency in RP2 is a reduction of -0.5 M€2009 overall compared to the initial RP2 PP. It corresponds to a decrease in determined costs by -1.3 M€2009, partly compensated by a downwards revision of the traffic assumptions for which the monetised contribution is an increase by +0.8 M€2009.


29


PRB Assessment Report of RP2 FAB Revised Performance Targets – FABEC

1

PRB Assessment of RP2 FAB Revised Performance Targets FABEC

Version 3.1



2




3



3 CAPACITY ............................................................................................................................................. 8

3.1 EN‐ROUTE DELAY LEVEL ............................................................................................................................... 8 3.2 RECOMMENDATIONS ................................................................................................................................ 10 3.3 ADDITIONAL PRB CONSIDERATIONS ............................................................................................................ 11 3.4 PRB CONCLUSIONS .................................................................................................................................. 11

4 COST‐EFFICIENCY ............................................................................................................................... 13

4.1 BELGIUM‐LUXEMBOURG: OVERVIEW OF EC DECISION (2ND MARCH 2015) ......................................................... 13

4.2 BELGIUM‐LUXEMBOURG: SUMMARY OF CHANGES IN REVISED PERFORMANCE PLAN (JULY 2015) ........................... 13 4.3 BELGIUM‐LUXEMBOURG: EN‐ROUTE CHARGING ZONE ASSESSMENT FOLLOWING REVISED PERFORMANCE PLAN SUBMISSION ......................................................................................................................................................... 14 4.4 BELGIUM: TERMINAL CHARGING ZONE ASSESSMENT FOLLOWING REVISED PERFORMANCE PLAN SUBMISSION ............. 22 4.5 LUXEMBOURG: TERMINAL CHARGING ZONE ASSESSMENT FOLLOWING REVISED PERFORMANCE PLAN SUBMISSION ...... 25 4.6 FRANCE: OVERVIEW OF EC DECISION (2ND

MARCH 2015) ............................................................................... 28 4.7 FRANCE: SUMMARY OF CHANGES IN REVISED PERFORMANCE PLAN (JULY 2015) .................................................. 28 4.8 FRANCE: EN‐ROUTE CHARGING ZONE ASSESSMENT FOLLOWING REVISED PERFORMANCE PLAN SUBMISSION ............... 29 4.9 FRANCE: TERMINAL CHARGING ZONE ASSESSMENT FOLLOWING REVISED PERFORMANCE PLAN SUBMISSION ............... 36 4.10 GERMANY: OVERVIEW OF EC DECISION (2ND

MARCH 2015) ............................................................................ 39 4.11 GERMANY: SUMMARY OF CHANGES IN REVISED PERFORMANCE PLAN (JULY 2015) .............................................. 39 4.12 GERMANY: EN‐ROUTE CHARGING ZONE ASSESSMENT FOLLOWING REVISED PERFORMANCE PLAN SUBMISSION ........... 40 4.13 GERMANY: TERMINAL CHARGING ZONE ASSESSMENT FOLLOWING REVISED PERFORMANCE PLAN SUBMISSION ............ 48 4.14 NETHERLANDS: OVERVIEW OF EC DECISION (2ND

MARCH 2015) ...................................................................... 51 4.15 NETHERLANDS: SUMMARY OF CHANGES IN REVISED PERFORMANCE PLAN (JULY 2015) ......................................... 51 4.17 NETHERLANDS: EN‐ROUTE CHARGING ZONE ASSESSMENT FOLLOWING REVISED PERFORMANCE PLAN SUBMISSION ...... 52 4.18 NETHERLANDS: TERMINAL CHARGING ZONE ASSESSMENT FOLLOWING REVISED PERFORMANCE PLAN SUBMISSION ...... 59 4.19 SWITZERLAND: OVERVIEW OF EC DECISION (30TH

JUNE 2015) ......................................................................... 62 4.20 SWITZERLAND: SUMMARY OF CHANGES IN REVISED PERFORMANCE PLAN (JULY 2015) ......................................... 62 4.21 SWITZERLAND: EN‐ROUTE CHARGING ZONE ASSESSMENT FOLLOWING REVISED PERFORMANCE PLAN SUBMISSION ...... 63 4.22 SWITZERLAND: TERMINAL CHARGING ZONE ASSESSMENT FOLLOWING REVISED PERFORMANCE PLAN SUBMISSION ....... 71

ANNEX 1: EN‐ROUTE CAPACITY CONSIDERATIONS ...................................................................................... 74

REFERENCES ............................................................................................................................................... 89

Table of Figures FIGURE 1: BELGIUM – LUXEMBOURG: EN‐ROUTE COST‐EFFICIENCY TARGETS IN RP2 INITIAL AND REVISED PPS ............................ 15

FIGURE 2: BELGIUM – LUXEMBOURG: EN‐ROUTE SERVICE UNITS FORECASTS OVERVIEW .......................................................... 16

FIGURE 4: BELGIUM: TERMINAL COST‐EFFICIENCY TARGETS FOR RP2 INITIAL AND REVISED PPS ................................................ 22

FIGURE 5: LUXEMBOURG: TERMINAL COST‐EFFICIENCY TARGETS FOR RP2 INITIAL AND REVISED PPS .......................................... 25

FIGURE 6: FRANCE: EN‐ROUTE COST‐EFFICIENCY TARGETS IN RP2 INITIAL AND REVISED PPS .................................................... 30

FIGURE 7: FRANCE: EN‐ROUTE SERVICE UNITS FORECASTS OVERVIEW ................................................................................... 31

FIGURE 8: FRANCE: TERMINAL COST‐EFFICIENCY TARGETS FOR RP2 INITIAL AND REVISED PPS .................................................. 36

FIGURE 9: GERMANY: EN‐ROUTE COST‐EFFICIENCY TARGETS IN RP2 INITIAL AND REVISED PPS ................................................. 41

FIGURE 10: GERMANY: EN‐ROUTE SERVICE UNITS FORECASTS OVERVIEW ............................................................................. 42

FIGURE 11: GERMANY: EN‐ROUTE ATSP RISK EXPOSURE IN INITIAL AND REVISED PPS ............................................................ 45

FIGURE 12: GERMANY: TERMINAL COST‐EFFICIENCY TARGETS FOR RP2 INITIAL AND REVISED PPS ............................................. 48


4

FIGURE 13: NETHERLANDS: EN‐ROUTE COST‐EFFICIENCY TARGETS IN RP2 INITIAL AND REVISED PPS.......................................... 53

FIGURE 14: NETHERLANDS: EN‐ROUTE SERVICE UNITS FORECASTS OVERVIEW ........................................................................ 54

FIGURE 15: NETHERLANDS: TERMINAL COST‐EFFICIENCY TARGETS FOR RP2 INITIAL AND REVISED PPS ....................................... 59

FIGURE 16: SWITZERLAND: EN‐ROUTE COST‐EFFICIENCY TARGETS IN RP2 INITIAL AND REVISED PPS .......................................... 64

FIGURE 17: SWITZERLAND: EN‐ROUTE SERVICE UNITS FORECASTS OVERVIEW ........................................................................ 65

FIGURE 18: SWITZERLAND: TERMINAL COST‐EFFICIENCY TARGETS FOR RP2 INITIAL AND REVISED PPS ........................................ 71


TABLE 2: COST OF ADDITIONAL DELAY TO AIRSPACE USERS ................................................................................................... 8


TABLE 4: INDIVIDUAL ANSP CONTRIBUTIONS TO THE FAB REFERENCE VALUE ........................................................................ 10

TABLE 5: BELGIUM – LUXEMBOURG: INITIAL AND REVISED EN‐ROUTE COST‐EFFICIENCY TARGETS FOR RP2 ................................. 14

TABLE 6: BELGIUM – LUXEMBOURG: EN‐ROUTE SERVICE UNITS FORECAST – INCLUDING STATFOR FEBRUARY 2015 ................... 16

TABLE 7: BELGIUM – LUXEMBOURG: ECONOMIC ASSUMPTIONS ......................................................................................... 17

TABLE 8: BELGIUM: INITIAL AND REVISED TERMINAL COST‐EFFICIENCY TARGETS FOR RP2 ........................................................ 22

TABLE 9: LUXEMBOURG: INITIAL AND REVISED TERMINAL COST‐EFFICIENCY TARGETS FOR RP2 .................................................. 25

TABLE 10: FRANCE: INITIAL AND REVISED EN‐ROUTE COST‐EFFICIENCY TARGETS FOR RP2 ........................................................ 29

TABLE 11: FRANCE: EN‐ROUTE SERVICE UNITS FORECAST – INCLUDING STATFOR FEBRUARY 2015 .......................................... 31

TABLE 12: FRANCE: ECONOMIC ASSUMPTIONS ................................................................................................................ 31

TABLE 13: FRANCE: INITIAL AND REVISED TERMINAL COST‐EFFICIENCY TARGETS FOR RP2 ........................................................ 36

TABLE 14: GERMANY: INITIAL AND REVISED EN‐ROUTE COST‐EFFICIENCY TARGETS FOR RP2 ..................................................... 40

TABLE 15: GERMANY: EN‐ROUTE SERVICE UNITS FORECAST – INCLUDING STATFOR FEBRUARY 2015 ...................................... 42

TABLE 16: GERMANY: ECONOMIC ASSUMPTIONS ............................................................................................................ 43

TABLE 17: GERMANY: INITIAL AND REVISED TERMINAL COST‐EFFICIENCY TARGETS FOR RP2 ..................................................... 48

TABLE 18: NETHERLANDS: INITIAL AND REVISED EN‐ROUTE COST‐EFFICIENCY TARGETS FOR RP2 ............................................... 52

TABLE 19: NETHERLANDS: EN‐ROUTE SERVICE UNITS FORECAST – INCLUDING STATFOR FEBRUARY 2015 ................................. 54

TABLE 20: NETHERLANDS: ECONOMIC ASSUMPTIONS ....................................................................................................... 55

TABLE 21: NETHERLANDS: INITIAL AND REVISED TERMINAL COST‐EFFICIENCY TARGETS FOR RP2 ............................................... 59

TABLE 22: SWITZERLAND: INITIAL AND REVISED EN‐ROUTE COST‐EFFICIENCY TARGETS FOR RP2 ................................................ 63

TABLE 23: SWITZERLAND: EN‐ROUTE SERVICE UNITS FORECAST – INCLUDING STATFOR FEBRUARY 2015 ................................. 65

TABLE 24: SWITZERLAND: ECONOMIC ASSUMPTIONS ....................................................................................................... 66

TABLE 25: SWITZERLAND: INITIAL AND REVISED TERMINAL COST‐EFFICIENCY TARGETS FOR RP2 ................................................ 71


5

1 INTRODUCTION Pursuant to Commission Implementing Regulation (EU) No 390/2013i, the FABEC 1.1.1

delivered its Performance Plan on 30 June 2014.

The PRB submitted an initial assessment report to the Commission on 6 October 1.1.22014.

1.1.3 Following the ad-hoc Single Sky Committee meeting on 24 October 2014, the FABEC was invited to reconsider their RP2 Performance Plan submitted for the 1 July 2014 deadline, in order to see how they could address the recommendations and observations made by the PRB.

1.1.4 As a result, the FABEC submitted significant and detailed corrigenda/amendments to their RP2 Performance Plan via the EU-PRB SharePoint repository on 31 October and 5 December 2014.

1.1.5 The PRB assessed the new information received and provided to the Commission a report reflecting that there were no changes to the content of the recommendations in the FAB assessment report for the key performance areas of capacity and cost-efficiency. This updated version of the PRB assessment report was submitted to the Commission on 12 December 2014.

Further on, the Commission Implementing Decision (EU) 2015/347ii (2015/1056 for 1.1.6Switzerlandiii) established that targets in the key performance areas of capacity and cost-efficiency submitted by the FABEC States are not consistent with the relevant Union-wide performance targets.

The Commission therefore asked the FABEC States to revise their capacity targets 1.1.7downwards. As a minimum, those targets should be in accordance with the respective FAB reference values set out in the Network Operations Plan (NOP). In addition, the FABEC States should also revise their en route determined unit costs downwards.

The FABEC submitted revised targets on 2 July 2015. The PRB has assessed these 1.1.8revised targets including all other relevant information provided and presented its conclusions on the new targets in this report.



6

2 CONTENT OF THE SUBMISSION 2.1.1 The FABEC submitted a revised Performance Plan on 2 July 2015.


The body of the plan, including a formal submission letter signed by the competent authorities and dated 2 July 2015;

Annex A (Stakeholder Consultation);

Annex C (Reporting Tables and additional information;

Annex D (Investment plan); and,

Annex E (Assumptions for calculation of pension costs, annex to the Additional information to French ER EUROCONTROL tables for RP2)

Changes were identified in the new submission (new text in green colour) 2.1.3

2.1.4 No specific references to the PRB observations / recommendations were explicitly included.

2.1.5 The PRB notes that the FABEC has provided updates on the following points:

Geographical scope: for the calculation of the operational KPIs, the “operational area of responsibility” of the ANSPs has to be taken into account;

Macroeconomic scenario;

Updated list of exempted airport which refers to the "List of airports for the RP2 FAB Performance Plans" prepared by PRU/PRB which contains all FABEC airports exempted from the Performance and Charging Regulations;

Partly updated CAPEX section;

Updated section 3.1.(a).(i) - Safety KPI #1: Level of Effectiveness of Safety Management, including description of the consistency between local and Union-wide targets;

Updated section 3.1.(a).(ii) - Safety KPI #2: Application of the severity classification based on the Risk Analysis Tool (RAT) methodology;

Expanded section 3.1.(c).(i) - Capacity KPI #1: En route ATFM delay per flight;

Updated and expanded 3.1.(c).(ii) - Capacity KPI #2: Terminal and airport ANS ATFM arrival delay per flight;

Minor changes in section 4.1 - Incentive schemes for the capacity targets section;

Updated and expanded analysis of the sensitivity to external assumptions (section 6.1);

Expansion of section 6.2. (Comparison with previous performance plans).

2.1.6 Extensive material covering consultations with airspace users conducted by the FABEC States during the preparation of the revised targets for RP2 was provided under Annex A. The submission covered the following meetings/consultations organised:

Belgium and Luxembourg

Users’ consultation meeting for reviewed PP RP2 (22 June 2015);

Unions’ consultation meeting for reviewed PP RP2 (22 June 2015).


7

France

DSNA Consultation meeting (5th March 2015);

Commission Consultative Économique Budget Annexe « contrôle et exploitation aériens » (29 May 2015).

Germany

Consultation Meeting #18 - German written Consultation concerning the national part of the Revision of the FABEC performance planning for RP2 (15 to 26 June 2015).

The Netherlands

Stakeholder Consultation Meeting Revised RP2 Performance plan and Chargeable Unit Rate 2016 (26 May 2015).

Switzerland

Stakeholder consultation on revision of the national chapters RP2 performance plan and yearly status report according to charging regulation article 9 (5 June 2015).


8


that: "The performance targets in the key performance area of capacity submitted by […] Belgium, Germany, France, Luxembourg and the Netherlands as regards FABEC […] should be revised downwards. As a minimum, those targets should be in accordance with the respective FAB reference values set out in the Network Operations Plan. Where the Network Operations Plan specifies remediation or mitigation measures, account should be taken of those measures when revising the performance targets."

2015 2016 2017 2018 2019

FAB EC reference value (NOP March 2014) 0.43 0.42 0.42 0.42 0.43

Original FAB target (June 2014) 0.48 0.49 0.48 0.47 0.43


Shortfall 0.05 0.07 0.06 0.05 0

Consistency check


Primary check:


The FABEC targets have not been revised and are therefore not consistent with the 3.1.2respective FAB reference values for the years 2015-2018 but are consistent for the year 2019. The additional cost to airspace users, due to the capacity shortfall is expected to be approximately €112 million during RP2, as shown in Table 2.

2015 2016 2017 2018 2019

Capacity shortfall 0.05 0.07 0.06 0.05 0

Expected FAB Traffic flights (000’s) 5,668 5,811 5,927 6,047 6,164

Additional minutes of delay (000’s) 283.4 406.8 355.6 302.3 0

Cost of additional delay (€ Million) 23.5 33.8 29.5 25.1 0

Table 2: Cost of additional delay to airspace users

Secondary check:



9

No other FAB has adopted capacity targets that will make up for the capacity shortfall 3.1.3from the FABEC.



The Network Operations Plan 2015-2019 (June 2015 edition) provides a delay 3.1.4forecast for the FABEC, based on existing capacity plans together with STATFOR baseline traffic forecast (February 2015). It is important to note that the delay forecast does not include delays for disruptions such as industrial action or technical failures. Similar delays have accounted for between 8% - 48% of delays in the FABEC since 2009.


Year 2015 2016 2017 2018 2019




Both the Commission and the PRB raised concerns about capacity planning in the 3.1.5FABEC as far back as 2011. Despite repeated requests to ensure that the FABEC ANSPs develop and implement suitable capacity plans, capacity plans were continuously downgraded and/or postponed.

According to the Network Operations Plan 2015-2019, six of the fourteen FABEC 3.1.6ACCs are expected to provide capacity in line with their required capacity profile each year during RP2: Amsterdam, Brussels, Geneva, Munich, Paris & Zurich. However, with the exception of Munich ACC, the ability of these ACCs to countermand capacity shortages elsewhere in FABEC has been eroded due to downgrading or postponement of previous capacity plans.

Eight of the fourteen FABEC ACCs are expected to experience capacity shortfalls for 3.1.7significant periods of RP2: Karlsruhe (2 years), Bordeaux (3 years), Bremen (3 years), Langen (3 years), Marseille (5 years), Reims (5 years), Brest (5 years) & Maastricht (5 years). All of the above ACCs/UACs have significantly downgraded or postponed capacity improvements in recent years.

3.1.8 The Network Manager has highlighted remedial actions that can be taken to improve capacity plans at the four French ACCs mentioned above, in section 10.2 of the Network operations Plan 2015-2019.



The aggregation of the individual ANSPs to FAB performance is not consistent with 3.1.9either the relevant FAB reference value, or with the FAB target.


10

Year 2015 2016 2017 2018 2019


FAB Target 0.48 0.49 0.48 0.47 0.43

ANSP

contribution

BELGOCONTROL 0.08 0.08 0.08 0.08 0.09

DFS 0.35 0.34 0.32 0.31 0.30

DSNA 0.37 0.40 0.40 0.39 0.32

LVNL 0.16 0.18 0.18 0.16 0.16

MUAC 0.18 0.18 0.18 0.18 0.18

SKYGUIDE 0.22 0.22 0.22 0.23 0.23

Aggregation of contribution 0.49 0.51 0.50 0.50 0.45




Section 5 of the FABEC Performance Plan has not been updated. The FABEC 3.1.10Performance Plan contains details about 3 airspace design projects that involve significant civil – military coordination. However, the FABEC Performance Plan makes no reference to re-activating the cooperation and coordination arrangements that were successfully implemented in August 2012 on a trial basis, and which led to improvement in flight efficiency and a significant 48% reduction in delays compared to the same period the year before.

3.2 En-route capacity Recommendations 3.2.1 In accordance with Regulation (EU) No 390/2013 Article 15(3): since the en-route

capacity part of the revised performance plans for FABEC are not consistent with the union-wide targets for en-route capacity, the PRB recommends that the Commission decides that Belgium, France, Germany, Luxembourg, Netherlands and Switzerland should take corrective measures.

3.2.2 In accordance with Regulation (EU) No 390/2013 Article 15(4), the PRB recommends that the FAB en-route capacity targets for FABEC be revised to meet the respective reference values, as published in the Network Operations Plan (2014-2018/2019) June 2014 edition. The rationale for this recommendation is that the binding union-wide targets for en-route capacity cannot be achieved unless FABs adopt binding en-route capacity targets consistent with their respective reference values.

3.2.3 In accordance with Regulation (EU) No 390/2013 Article 15 (4), the PRB recommends that the level of performance, for en-route capacity, expected for Belgium, France, Germany, Luxembourg, Netherlands and Switzerland, as members


11

of FABEC, should be, as a minimum, the FABEC reference values as published in the Network Operations Plan (2014-2018/2019) June 2014 edition. Adoption of such targets will allow the States concerned to take the appropriate corrective measures.

3.2.4 In accordance with Regulation (EU) No 390/2013 Article 15 (4), the PRB suggests that Belgium, France, Germany, Luxembourg, Netherlands and Switzerland, as members of FABEC, should implement the remedial measures listed by the Network Manager in section 10.2 of the Network Operations Plan (2015-2019). The PRB suggests that those States should agree with the Network Manager, as a matter of priority, an action plan to resolve any outstanding capacity issues. The PRB recommends that the implementation of these local actions plans should be monitored by the NSAs of the relevant FABs

3.3 PRB Considerations In preparation for the PRB to present findings to the Commission, the PRB reviewed 3.3.1


For the FABEC, additional information submitted to the Commission included the 3.3.2DSNA strategy plan 2014-2016 (revised edition January 2015) and a letter from the Director of Air Transport (France), Marc BOREL to the Director of Air Transport, DG-MOVE (European Commission) Margus RAHUOJA, on 2/7/2015: Lett 15-82. Both of these documents referred to capacity planning in France and in the FABEC.

The PRB also considered the remedial measures presented by the Network Manager 3.3.3in the NOP 2015-2019, at the FABEC ACCs that were identified as having capacity constraints during RP2.

The PRB considered the submission by the FABEC of an attempt to justify the setting 3.3.4of FABEC targets that were not consistent with the union-wide targets for capacity.

The PRB considered the FAB-wide en-route capacity incentive scheme presented in 3.3.5the FABEC performance plan, and how it proposes to function.

Finally, the PRB considered the actual capacity performance during RP1 and the 3.3.6evolution of capacity planning at FABEC ACCs.

More information on these considerations can be found in “Annex 1: En-route 3.3.7Capacity considerations” to this report.

3.4 PRB findings The PRB finds that the performance plan of FABEC, with regards to capacity, does 3.4.1

not contribute adequately to the overall EU wide target and therefore fails. It could pass, provided that the following terms are delivered and committed:

The Commission should invite: 3.4.2

FABEC to provide a FAB-wide consolidated capacity plan with clear milestones and a firm commitment to deliver improved en-route capacity performance to airspace users over RP2. This will have to be coordinated FAB internally and with the Network manager and will have to be reflected with an updated NOP plan.

France to integrate the implementation dates of the promised improvement of the technical system as mentioned in the letter of the Director of air transport to the Commission in the NOP and to makea firm commitment regarding the delivery date of the new system

FABEC to provide a FAB wide en-route capacity incentive scheme with the following characteristics:



12

(ii) Dead-band between FABEC reference values and FABEC Targets.

(iii) Bonuses paid when FABEC capacity performance is better than respective FABEC reference value;

(iv) Penalties paid when FABEC capacity performance is worse than proposed FABEC Targets

The Commission should conduct a mid-term review of the FABEC Performance 3.4.3Plan at the end of 2017. This review could be carried out by the PRB assessing the overall contribution to the EU wide target for the full RP2 time period.

Since the FAB capacity reference values were derived from the union-wide target of 3.4.40.5 minutes ATFM delay per flight, it is evident that accepting FAB performance plans that are not consistent with the relevant reference values will impact the possible achievement of the union-wide target.

The PRB considers that the Commission should address this issue, if relevant, once 3.4.5the final adopted FAB targets for en-route capacity are known.


13

4 COST-EFFICIENCY 4.1 Belgium-Luxembourg: Overview of EC Decision (2nd March 2015) 4.1.1 The assessment carried out by the EC assisted by the PRB has shown that the RP2

cost-efficiency targets submitted by FAB EC for Belgium-Luxembourg in its initial Performance Plan (July 2014) are not consistent with the relevant Union-wide performance targets.


4.1.3 The EC Decision (see Whereas 9) further specifies the reasons for assessing Belgium-Luxembourg’s cost-efficiency targets as not consistent with the relevant Union-wide performance targets and indicates that: “Belgium and Luxembourg have a joint charging zone. Their targets are based on a planned reduction of the en route determined unit costs over the second reference period by only 0,2% per year on average. This is significantly below the targeted reduction of the average Union-wide en route determined unit costs over the second reference period (–3,3% per year). Also over the combined period of the first and the second reference period the planned en route determined unit costs do not decrease in line with the Union-wide trend (–0,4%, compared to –1,7%). Furthermore, the target for 2019 is based on planned en route determined unit costs that are above (+3,7%) the average en route determined unit costs of the Member States having a similar operational and economic environment to the one of Belgium and Luxembourg and around 27% above the Union-wide performance target in 2019.”

4.1.4 The analysis focuses on the changes made to the initial RP2 performance plan (PP) and on the elements that were specifically identified in Whereas 6 and 9 of EC Decision 2015/347 and which are listed in paragraphs 4.1.2 and 4.1.3 above. Namely, this analysis is focussed, in a first step, on whether the en-route DUC trend is equal or better than -1.7% p.a. over the first and second reference periods combined and -3.3% p.a. over the second reference period. Should the en-route cost-efficiency target not pass the first step, a second step looks at if the DUC level planned for 2019 is markedly lower than the comparator group average.

4.2 Belgium-Luxembourg: Summary of changes in revised Performance Plan (July 2015)

4.2.1 The main differences between the RP2 revised and initial PP are as follows:


An upwards revision of the DCs provided for the 2015-2019 period;


An upwards revision of the en-route SU forecast for 2015-2019.


14

4.3 Belgium-Luxembourg: En-route charging zone assessment following revised Performance Plan submission


Overview

The tables below show three sets of data for Belgium-Luxembourg:

Initial PP (June 2014): showing the initial PP data as published in the PRB Assessment Report of RP2 FAB Performance Plans on 6 October 2014;

European Commission Decision (March 2015): showing the PP data as included in the EC Decision. For a number of States, the Decision data included updates to thedata provided in the initial PP (e.g. revision of EUROCONTROL costs, revision of the 2015 data to lower the 2015 unit rate, etc.); and

Revised PP (July 2015): showing the data provided in the RP2 revised PP. It should be noted that the DCs and DUCs trends computed for the 2011-2019 period in Table 5 below reflect the information provided in the en-route Reporting Tables. However, it should be noted that actual en-route costs for 2011 were strongly impacted by a one-off reduction of EUROCONTROL costs due to the implementation of IFRS (impact of circa 6.0 M€). This specificity required some adjustments to the data, which were not reflected in the en-route Reporting Tables, but which were implemented in this document for the purposes of assessing Belgium-Luxembourg revised cost-efficiency target (see item 3 for further details).

Table 5: Belgium – Luxembourg: Initial and revised en-route cost-efficiency targets for RP2

The assessed monetised contribution provided by Belgium-Luxembourg’s revised en-route cost-efficiency target for RP2 is a reduction of -42.4 M€2009 compared to the information


2014F 2015D 2016D 2017D 2018D 2019D2011-19

CAGR2014-19

CAGR2015-19

CAGR



2014F 2015D 2016D 2017D 2018D 2019D2011-19

CAGR2014-19

CAGR2015-19

CAGR


Revised Performance Plan (July 2015) 2014A 2015D 2016D 2017D 2018D 2019D 2011-19 2014-19 2015-19Determined costs EUR m (nom) 161.2 168.3 172.8 177.3 180.6 184.6 2.6% 2.7% 2.3%Inflation rate annual % change 0.5% 1.1% 1.2% 1.3% 1.4% 1.4%Inflation index 2009=100 110.4 111.6 112.9 114.4 116.0 117.6 1.3% 1.3% 1.3%Determined costs EUR m (2009) 146.1 150.8 153.0 154.9 155.7 157.0 1.2% 1.4% 1.0%Service units '000s 2,362 2,440 2,510 2,580 2,650 2,720 2.6% 2.9% 2.8%Determined unit cost EUR (2009) 61.84 61.79 60.95 60.04 58.74 57.71 -1.4% -1.4% -1.7%Exchange rate (2009) EUR:EUR 1.00 Determined unit cost EUR (2009) 61.84 61.79 60.95 60.04 58.74 57.71 -1.4% -1.4% -1.7%

Total RP2Difference between revised and initial en-route DUC % -2.2% -3.8% -5.5% -6.6% -7.6%Difference between revised and initial en-route DUC EUR (2009) 1.39- 2.42- 3.51- 4.14- 4.75- Revised en-route TSUs '000s 2,440 2,510 2,580 2,650 2,720 Assessed monetised contribution EUR m (2009) 3.4- 6.1- 9.1- 11.0- 12.9- -42.4


15

provided in the initial PP submitted in June 2014. This mainly reflects a contribution of -46.6 M€2009 arising from the upward revision of the en-route SUs forecasts, while en-route DCs are +4.2 M€2009 higher than that provided in the initial PP for RP2.

Figure 1: Belgium – Luxembourg: En-route cost-efficiency targets in RP2 initial and revised

PPs


The starting point in terms of 2014 en-route unit costs reported by Belgium-Luxembourg in the body of the initial RP2 PP (63.21 €2009) corresponds to the DUR provided for 2014 in the RP1 PP. On the other hand, the PRB noted in October 2014 that in Annex E of the initial RP2 PP, Belgium-Luxembourg provided en-route DCs and SUs for 2014 which were different from the information reported in the body of the initial PP.

Indeed, Belgium-Luxembourg reported in Annex E en-route costs amounting to 159.8 M€2009 for 2014 compared to €153.1 M€2009 as disclosed in the body of the initial PP. The difference between these two figures mainly reflected costs associated with en-route ANS provided by ANA Luxembourg, which were included in the DCs provided for RP2 but were not comprised in RP1 DCs. This adjustment was made in order to ensure consistency between the starting point and the DCs reported for RP2. In addition, the number of total SUs for 2014 (2,324,049) provided in Annex C was significantly lower (-4.1%) than the figure provided in the body of the initial RP2 PP (2,422,721). Based on these figures, the 2014 en-route unit costs amounted to 68.77 €2009 which was +8.8% higher than the DUR reported in the RP1 PP.

The 2014 starting point provided for Belgium-Luxembourg in the revised PP reflects actual data in terms of en-route costs and SUs, and include the costs associated with en-route ANS provided by ANA Luxembourg. The actual en-route unit cost for 2014 (61.84 €2009) is now -10.1% lower than the figure computed using the information provided in Annex E of the initial RP2 PP (68.77 €2009). This difference is mainly due to the fact that Belgium-Luxembourg has reported (a) actual en-route SUs for 2014 (2,362,038) which are +1.6% higher than the value provided in Annex C of the initial PP (2,324,049), and (b) actual en-route costs (146.1 M€2009) that are -8.6% lower than those computed using data reported in Annex C of the initial PP (159.8 M€2009).

Important Note:

At the time of performing this assessment, the actual 2014 costs and traffic (en-route SUs)

90

95

100

105

110

115

120

125

0

10

20

30

40

50

60

70

2011 2012 2013 2014 2015 2016 2017 2018 2019

En

-ro

ute

co

sts

and

ser

vic

e u

nit

s in

dex

(2

011=

100)

Det

erm

ined

un

it c

ost

, €

(200

9)Revised PP (July 2015) cost-efficiency target for RP2 - Belgium_Lux






16

are known at Union-wide level and the resulting actual “starting point” in terms of unit costs is 53.93 €2009. Accordingly, the en-route DUC trend required in RP2 to reach the Union-wide target of 49.10 €2009 in 2019 is a reduction of -1.9% p.a. For consistency purposes, it is important to take into account this figure when comparing a State planned en-route DUC trend to the RP2 Union-wide target since the former is computed using actual 2014 costs and traffic as starting point.


Key points for Belgium-Luxembourg en-route charging zone

In the following section, five assessment criteria are considered in line with Annex IV of the Performance Scheme regulation (390/2013). For each of these criteria, the results of the original assessment are presented along with the changes arising from the revised PP submission.


Original assessment Passed with reservations



Figure 2: Belgium – Luxembourg: En-route service units forecasts overview

Table 6: Belgium – Luxembourg: En-route service units forecast – including STATFOR February 2015

90

95

100

105

110

115

120

125

130

135

2011 2012 2013 2014 2015 2016 2017 2018 2019

Ind

ex o

f en

-ro

ute

SU

s (2

011=

100)

Belgium_Lux

STATFOR actuals STATFOR Feb 15 highSTATFOR Feb 15 base STATFOR Feb 15 lowSTATFOR Feb 14 base PP RP1 Determined2014 Intitial (June 2014) PP RP2 DeterminedRevised (July 2015) PP RP2 Determined

Service Units ('000s) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2011-19 2015-19PP RP1 Determined 2,284 2,350 2,423 Actuals, 2014, Initial (June 2014) PP RP2 Determined 2,212 2,232 2,277 2,362 2,371 2,398 2,427 2,463 2,501 1.6% 1.3%Revised (July 2015) PP RP2 Determined 2,440 2,510 2,580 2,650 2,720 2.6% 2.8%STATFOR Feb 15 base 2,362 2,436 2,510 2,576 2,645 2,715 2.6% 2.7%STATFOR Feb 15 high 2,362 2,458 2,553 2,654 2,752 2,842 3.2% 3.7%STATFOR Feb 15 low 2,362 2,412 2,463 2,484 2,518 2,554 1.8% 1.4%STATFOR Feb 14 base 2,352 2,424 2,495 2,558 2,627 2,702 2.5% 2.8%STATFOR Feb 14 high 2,379 2,472 2,578 2,670 2,771 2,872 3.3% 3.8%STATFOR Feb 14 low 2,324 2,371 2,398 2,427 2,463 2,501 1.6% 1.3%Initial (June 2014) PP RP2 vs STATFOR Feb 14 base (%) -2.2% -3.9% -5.1% -6.3% -7.4%Revised (July 2015) PP RP2 vs STATFOR Feb 14 base (%) 0.7% 0.6% 0.9% 0.9% 0.7%The 2015-2019 CAGR is shown (rather than the 2014-19 CAGR) to reflect the fact that not all FABs/States will provide an updated forecast for 2014


17


The number of en-route service units (SUs) planned for the 2015-2019 period has been revised upwards compared to the information reported in the initial PP. In fact, the revised SUs forecast (+2.8% p.a.) is slightly higher than STATFOR February 2015 base case scenario (+2.7% p.a.). This results in planned en-route SUs over RP2 that are on average +6.1% higher than those provided in the initial PP.

According to the forecast provided in the revised PP, en-route SUs are expected to grow by +3.3% in 2015. This is lower than the actual growth rate of en-route SUs for Belgium-Luxembourg in the first eight months of 2015 (+4.2% compared to the same period in 2014).





Table 7: Belgium – Luxembourg: Economic assumptions




The latest IMF inflation forecasts released in April 2015 for Belgium reflect lower inflation rates over the 2015-2017 period than those published in April 2014. As a result, the inflation rates planned by Belgium-Luxembourg between 2015 and 2017 are higher than the latest IMF forecasts, with differences ranging between 1.1 and 0.2 percentage points. On the other hand, the planned inflation rate provided for the year 2018 is equivalent to the IMF April 2015 forecast, while the planned inflation rate for 2019 (1.4%) is slightly lower (1.6%).

The FABEC revised PP does not include detailed information on Belgium-Luxembourg’s rationale for not using IMF April 2015 inflation forecasts.





Belgium-Luxembourg Charging Zone has two specificities to take into account when computing trends over RP1 and RP2, so as to ensure consistency in costs series as documented in the FABEC revised PP, on page 125:

1) Actual costs 2011 are strongly impacted by a one-off reduction due to IFRS (impact

Inflation: Belgium_Lux 2012 2013 2014 2015 2016 2017 2018 2019

Initial (June 2014) PP RP2 annual % change 2.6% 1.2% 1.0% 1.1% 1.2% 1.3% 1.4% 1.4%Revised (July 2015) PP RP2 annual % change 2.6% 1.2% 0.5% 1.1% 1.2% 1.3% 1.4% 1.4%Eurostat/IMF avg annual % change 1.2% 0.5% 0.1% 0.9% 1.1% 1.4% 1.6%Difference (Revised (July 2015) RP2 PP vs Eurostat/IMF avg) p.p. difference 0.0% 0.0% 1.1% 0.3% 0.2% 0.0% -0.2%Initial (June 2014) PP RP2 2009=100 108.5 109.8 111.0 112.2 113.5 115.0 116.6 118.2Revised (July 2015) PP RP2 2009=100 108.5 109.8 110.4 111.6 112.9 114.4 116.0 117.6Eurostat/IMF avg 2009=100 108.5 109.8 110.4 110.5 111.5 112.7 114.3 116.1Difference (Revised (July 2015) RP2 PP vs Eurostat/IMF avg) index difference 0.0 0.0 0.0 1.2 1.5 1.7 1.7 1.5


18

of circa 6.0 M€).

2) As documented above, RP2 costs include costs for the ANSP ANA Luxembourg, whereas such costs were not included in the costs reported for the en-route charging zone until 2014 included (impact of circa 5.5 M€).

These specificities complexify the analysis as they require some adjustments to the data, which are not reflected in the en-route Reporting Tables submitted for the purposes of the Charging Regulation.


Belgium-Luxembourg have revised upwards the real en-route DCs planned for each year of RP2 (see Table 5). Cumulatively over RP2, en-route DCs for Belgium-Luxembourg are +0.6% higher than those provided in the initial PP (+4.2 M€2009). This deviation is partly due to the fact that the planned inflation rate reported for 2014 in the initial PP (1.0%) was substantially higher than the actual inflation rate (0.5%) which is provided in Belgium-Luxembourg revised submission.


Belgium-Luxembourg’s en-route DUC is expected to decrease by -1.4% p.a. over the 2014-2019 period. This is worse than the Union-wide target for RP2 (-3.3% p.a.) and than the reduction planned in the initial PP (-1.9% p.a., taking into account the starting point reported in Annex E). The en-route DUC trend for Belgium-Luxembourg over the 2014-19 period (-1.4% p.a.) is also worse than the RP2 Union-wide DUC reduction required to reach the Union-wide target when computed using as starting point the 2014 actual costs and SUs (-1.9% p.a.). Note: The DUC trend over 2014-2019 would be -0.7% p.a. if ANA Luxembourg 2014 actual costs were excluded from the 2014 actual starting point.


Considering the 2014 forecast starting point from the initial PP based on information provided in Annex E (i.e. 68.77 €2009), including 2014 forecast costs for ANA Luxembourg in order to have a consistent series over 2014-2019, and an updated traffic forecast for 2014 which was not reflected in the body of the initial PP) and the 2019 revised target of 57.71 €2009, the RP2 DUC trend is -3.4% p.a.. This is better than the 2014-2019 Union-wide target trend (-3.3% p.a.). Note: The DUC trend over 2014-2019 would be -2.6% p.a. if ANA Luxembourg 2014 forecast costs were excluded from the initial PP 2014 starting point.

If the initial PP inflation index is applied, then the 2019 revised target would become 57.40 €2009, and the RP2 DUC trend would be –3.5% p.a., i.e. also better than the 2014-2019 Union-wide target trend (-3.3% p.a.). Note: The DUC trend over 2014-2019 would be -2.7% p.a. if ANA Luxembourg 2014 forecast costs were excluded from the initial PP 2014 starting point.


When assessed over the 2011-2019 period, the en-route DUC trend is planned to be -1.4% p.a. which is worse than the trend underpinning the Union-wide target (-1.7% p.a.), but definitively better than the DUC reduction provided in the initial PP (-0.4% p.a.). It should be noted that the levels of MUAC and EUROCONTROL costs in 2011 were exceptionally low, reflecting the impact of a one-off exceptional reduction (some -6 M€ as documented above) mainly relating to the implementation of IFRS budgeting. Belgium-Luxembourg considers that it is important to take this element into account when computing the en-route DUC trend over the 2011-2019 period. On this basis, Belgium-Luxembourg 2011 en-route unit cost would amount to 66.93 €2009 and the planned reduction in en-route DUC would be -1.8% p.a.between 2011 and 2019.

If the initial PP inflation index is applied, then the 2019 revised target would become 57.40 €2009, and the DUC trend over the combined RP1+RP2 periods would be -1.9% p.a., i.e. also


19

better than the 2011-2019 Union-wide target trend (-1.7% p.a.).


Belgium-Luxembourg’s en-route DCs for 2015 (150.8 M€2009) are +3.2% higher than 2014 actual en-route costs (146.1 M€2009) and no structural costs reductions are foreseen for RP2 since DCs are planned to increase by +1.0% p.a. between 2015 and 2019.





Belgium-Luxembourg’s planned en-route DUC for 2019 (57.71 €2009) is -1.3% lower than that of the Netherlands, its direct comparator (58.45 €2009).

The revised DUC planned by Belgium-Luxembourg for 2019 is -7.6% lower than that provided in the initial RP2 PP. In fact, the revised planned DUC is lower than that provided in the initial PP for each year of RP2 with differences ranging from -2.2% in 2015 to -7.6% in 2019. These improvements (i.e. lower DUCs) mainly reflect the upward revision of the en-route SUs forecast for RP2 in the revised PP (+6.1% on average over RP2).



Revised PP (July 2015) Cost of capital was revised


The rates of return on equity (RoE) and the WACC reported for Belgocontrol in the revised PP range from 4.2% in 2015 to 5.1% in 2019. This is higher than the rates provided in the initial PP which were ranging from 3.6% in 2015 to 4.5% in 2019. From 2015 onwards, the MUAC part of Belgium-Luxembourg cost-base will be subject to the traffic risk sharing arrangements. Since Belgocontrol will bear MUAC traffic risk over RP2, some costs which were reported in MUAC cost-base are now reflected in the cost of capital provided for Belgocontrol.

Overall view of Belgium-Luxembourg en-route cost-efficiency KPI


Key points of the analysis of the revised RP2 en-route cost-efficiency targets submitted by Belgium-Luxembourg:

Compared to the information provided in Annex E of the initial PP (June 2014), the en-route unit cost reported for the year 2014 has been revised substantially downwards (-10.1%). This lower starting point reflects the latest available actual data in terms of en-route costs and traffic for Belgium-Luxembourg.

The en-route SUs forecast over the 2015-2019 period has been revised upwards compared to the information provided in the initial PP. The planned growth of en-route SUs provided for Belgium-Luxembourg en-route charging zone over this period (+2.8% p.a.) is slightly higher than STATFOR February 2015 base scenario (+2.7% p.a.).


20

Inflation rates provided for the years 2015-2019 have not been changed compared to the information submitted in the initial PP and are in line with IMF April 2014 inflation forecasts.

Considering the 2014 actual starting point excluding 2014 actual costs for ANA Luxembourg (i.e. 59.72 €2009), the RP2 DUC trend is –0.7% p.a. This is worse than the effort required to reach the 2019 Union-wide target trend (-1.9% p.a.).However, considering the 2014 actual starting point (i.e. 61.84 €2009, including 2014 forecast costs for ANA Luxembourg in order to have a consistent series over 2014-2019), the RP2 DUC trend is -1.4% p.a. Considering the 2014 forecast starting point from the initial PP excluding 2014 forecast costs for ANA Luxembourg, i.e. 65.90 €2009, and the 2019 revised target of 57.71 €2009, the RP2 DUC trend is –2.6% p.a. This is below the 2014-2019 Union-wide target trend (-3.3% p.a.). However, Considering the 2014 forecast starting point from the initial PP including 2014 forecast costs for ANA Luxembourg (in order to have a consistent series over 2014-2019, i.e. 68.77 €2009), and the 2019 revised target of 57.71 €2009, the RP2 DUC trend is –3.4% p.a.. This is better than the 2014-2019 Union-wide target trend (-3.3% p.a.).

When assessed over the 2011-2019 period, the en-route DUC trend is planned to be -1.4% p.a. which is worse than the trend underpinning the Union-wide target (-1.7%p.a.) but better than the DUC reduction provided in the initial PP (-0.4% p.a.). Adjusting Belgium-Luxembourg en-route costs to neutralize the impact of a one-off accounting reduction in MUAC and EUROCONTROL 2011 costs, leads to a planned reduction in en-route DUC of -1.8% p.a. over the 2011-2019 period. This is slightly better than the trend underpinning the Union-wide target (-1.7% p.a.).

Belgium-Luxembourg’s en-route DCs for 2015 are +3.2% higher than 2014 actual en-route costs and no structural costs reductions are foreseen for RP2 since DCs are planned to increase by +1.0% p.a. between 2015 and 2019.

The en-route DUCs provided for RP2 have been revised downwards for each year of the RP. As a result, Belgium-Luxembourg’s planned en-route DUC for 2019 (57.71 €2009) is expected to be -1.3% lower than that of the Netherlands, its direct comparator (58.45 €2009).

The rates of RoE and the WACC reported for Belgocontrol in the revised PP were revised upwards. From 2015 onwards, the MUAC part of Belgium-Luxembourg cost-base will be subject to the traffic risk sharing arrangements. Since Belgocontrol will bear MUAC traffic risk over RP2, some costs which were reported in MUAC cost-base are now reflected in the cost of capital provided for Belgocontrol.

The assessed monetised contribution provided by Belgium-Luxembourg’s revised en-route cost-efficiency target for RP2 is a reduction of -42.4 M€2009 compared to the information provided in the initial PP submitted in June 2014. This mainly reflects a contribution of -46.6 M€2009 arising from the upward revision of the en-route SUs forecasts, while en-route DCs are +4.2 M€2009 higher than that provided in the initial PP for RP2.

Conclusions:

The PRB considers that Belgium-Luxembourg revised en-route cost-efficiency targets for RP2 do not meet the consistency criteria and are not in line with the points identified in EC Decision 2015/347 (Art. 4).

For RP1, the Belgium-Luxembourg cost base did not include en route costs of the ANSP ANA Luxembourg (these costs were covered by taxpayer money and not included in the cost profiles for comparison in 2011). As of RP2, the situation has changed and costs are now included. If one were to assume that these costs would have been included also in RP1, the


21

2014 costs would have been circa 5.5 M€ higher. It is arguable whether this consideration should be taken into account when calculating the starting point for RP2. The Commission is of the view that an artificial increase of the starting point is not correct as the inclusion of ANA Luxembourg is a real cost increase for airspace users during RP2. For transparency reasons, both data series are presented below.

DUC trend over RP2:

Considering the 2014 forecast starting point from the initial PP, i.e. 65.90 €2009, and the 2019 revised target of 57.71 €2009, the RP2 DUC trend is –2.6% p.a. This is below the 2014-2019 Union-wide target trend (-3.3% p.a.).

Including 2014 forecast costs for ANA Luxembourg, the 2014 forecast starting point from the initial PP would be 68.77 €2009, and with the 2019 revised target of 57.71 €2009, the RP2 DUC trend would be –3.4% p.a.

Considering the 2014 actual costs as starting point (i.e. 59.72 €2009), the RP2 DUC trend is –0.7% p.a.

DUC trend over the combined RP1+RP2 periods:

Considering the revised target of 57.71 €2009, the DUC trend over the combined RP1+RP2 periods is -1.4% p.a. which is worse than the 2011-2019 Union-wide target trend (-1.7% p.a.).

Note: Actual costs 2011 were impacted by a one-off reduction due to IFRS (impact of circa 6.0 M€). If the 2011 starting point were adjusted, then the comparisons above for RP1 and RP2 together would be better than the Union-wide target (-1.8%).

2019 level with comparator group:

Planned en-route DUC for 2019 (57.71 €2009) is lower (-1.3%) than that of Member States having a similar operational and economic environment (comparator group) (58.45 €2009).


22

4.4 Belgium: Terminal charging zone assessment following revised Performance Plan submission

This section does not yet reflect latest data submitted by Belgium on 2 October 2015


Overview

Figure 3: Belgium: Terminal cost-efficiency targets for RP2 initial and revised PPs

Table 8: Belgium: Initial and revised terminal cost-efficiency targets for RP2

89

91

93

95

97

99

101

103

105

2015D 2016D 2017D 2018D 2019D

Det

erm

ined

un

it c

ost

in

dex

(20

15=

100)

Belgium


Aggregated terminal DUC (Initial June 2014) Aggregated terminal DUC (Revised June 2015)


CAGR (%)



CAGR (%)



Total RP2Difference between revised and initial terminal DUC % 0.0% 0.0% 0.0% 0.0% 0.0%Difference between revised and initial terminal DUC EUR (2009) - - - - - Revised TNSUs '000s 199.7 203.6 207.3 212.2 217.0 Assessed monetised contribution EUR m (2009) - - - - - - DC effect EUR (2009) - - - - - - Traffic effect EUR (2009) - - - - - -


23

It is noted that for all the five terminal charging zones (Antwerpen, Brussels, Charleroi, Liège and Oostende-Brugge), FABEC’s revised PP does not include any updates with respect to terminal DCs, TNSUs and DUCs compared to the information provided in the initial PP.

Key points for Belgium terminal charging zone









No changes, but inflation indexes provided for RP2

differ from data reported for en-route ANS


As for en-route, the planned inflation rates provided for the years 2015-2019 have not been changed compared to the information submitted in the initial PP and are in line with IMF October 2014 inflation forecasts.

However, the inflation indexes reported for TANS in the revised PP (see Table 8 above) differ from that disclosed for en-route ANS (some 0.6 index points for each year of the RP). The reason for this discrepancy is that, while in the revised PP the inflation indexes provided for en-route ANS over RP2 were updated taking into account 2014 actual inflation, this adjustment has not been done for TANS.

The revised PP should be amended to ensure that the inflation indexes reported over RP2 for TANS are consistent with that disclosed for en-route ANS.


Original assessment Not passed, except for Liège TCZ









24


Overall view of Belgium terminal ANS cost-efficiency KPI


For all the five terminal charging zones (Antwerpen, Brussels, Charleroi, Liège and Oostende-Brugge), FABECs revised PP does not include any updates with respect to terminal DCs, TNSUs and DUCs compared to the information provided in the initial PP. Therefore, there are no changes to the original PRB assessment of Belgium’s TANS cost-efficiency targets for RP2.

In addition, the PRB notes that the inflation indexes reported for TANS in the revised PP differ from that disclosed for en-route ANS (some 0.6 index points for each year of the RP). The reason for this discrepancy is that, while in the revised PP the inflation indexes provided for en-route ANS over RP2 were updated taking into account 2014 actual inflation, this adjustment has not been done for TANS. The revised PP should be amended so that the inflation indexes reported for en-route and TANS cost-efficiency targets over RP2 are consistent.


25

4.5 Luxembourg: Terminal charging zone assessment following revised Performance Plan submission


Overview

Figure 4: Luxembourg: Terminal cost-efficiency targets for RP2 initial and revised PPs

Table 9: Luxembourg: Initial and revised terminal cost-efficiency targets for RP2

89

91

93

95

97

99

101

103

105

2015D 2016D 2017D 2018D 2019D

Det

erm

ined

un

it c

ost

in

dex

(20

15=

100)

Luxembourg


Luxembourg (Initial June 2014) Luxembourg (Revised June 2015)

Corrigendum to initial PP Key figures: terminal 2015D 2016D 2017D 2018D 2019D2015-19

CAGR (%)



CAGR (%)

Determined costs EUR m (nom) 11.4 12.4 12.8 13.2 13.5 4.4%Inflation rate * annual % change 1.8% 1.8% 1.8% 1.9% 1.9%Inflation index * 2009=100 115.5 117.5 119.7 122.0 124.3 1.9%Determined costs EUR m (2009) 9.9 10.5 10.7 10.8 10.9 2.5%Terminal SUs '000s 41.3 43.0 44.7 46.9 49.0 4.4%Determined unit cost EUR (2009) 238.48 244.71 239.02 230.65 221.84 -1.8%Exchange rate EUR:EUR (2009) 1.00 Determined unit cost EUR (2009) 238.48 244.71 239.02 230.65 221.84 -1.8%The 2015-2019 CAGR shown in the tab le is different from the main en-route comparator period (2014-2019),


Total RP2Difference between revised and initial terminal DUC % 0.0% 0.0% 0.0% 0.0% 0.0%Difference between revised and initial terminal DUC EUR (2009) - - - - - Revised TNSUs '000s 41.3 43.0 44.7 46.9 49.0 Assessed monetised contribution EUR m (2009) - - - - - - DC effect EUR (2009) - - - - - - Traffic effect EUR (2009) - - - - - -


26

FABEC’s revised PP does not include any updates with respect to terminal DCs, TNSUs and DUCs compared to the information provided in the initial PP.

It should be noted that the figures disclosed for the initial PP in Table 9 above correspond to the information provided by Luxembourg in a Corrigendum to the initial PP provided end of August 2014 as part of the review of the Compliance of the 2015 unit rates with the Charging and Performance Regulations. Therefore, the figures provided in Table 9 above differ from the data reported in the initial FABEC PP sumitted in June 2014.

Key points for Luxembourg terminal charging zone









No changes, but inflation indexes provided for RP2

do not reflect actual inflation data for 2014



However, the PRB notes that the inflation indexes provided for TANS over RP2 do not take into account 2014 actual inflation. Indeed, at the time of preparing the initial PP for RP2 in Spring 2014, the actual inflation rates for 2014 were not known. The revised PP should be amended to ensure that the inflation indexes reported over the 2015-2019 period for Luxembourg are based on actual inflation data for 2014, and not on a forecast as it was the case in the initial PP.










27



Overall view of Luxembourg terminal ANS cost-efficiency KPI


FABEC’s revised PP does not include any updates for terminal ANS with respect to terminal DCs, TNSUs and DUCs compared to the information provided in the initial PP. Therefore there are no changes to the original PRB assessment of Luxembourg’s TANS cost-efficiency targets for RP2.

It should be noted that the inflation indexes provided for TANS over RP2 do not take into account 2014 actual inflation. Indeed, at the time of preparing the initial PP for RP2 in Spring 2014, the actual inflation rates for 2014 were not known. The revised PP should be amended to ensure that the inflation indexes reported over the 2015-2019 period for Luxembourg are based on actual inflation data for 2014, and not on a forecast as it was the case in the initial PP.


28

4.6 France: Overview of EC Decision (2nd March 2015) 4.6.1 The assessment carried out by the EC assisted by the PRB has shown that the RP2

cost-efficiency targets submitted by FABEC for France in its initial Performance Plan (July 2014) are not consistent with the relevant Union-wide performance targets.


4.6.3 The EC Decision (see Whereas 10) further specifies the reasons for assessing France’s cost-efficiency targets as not consistent with the relevant Union-wide performance targets and indicates that: “As regard France, its targets are based on a planned reduction of its en route determined unit costs over the second reference period by only 0,7% per year on average. This is significantly below the targeted reduction of the average Union-wide en route determined unit costs over the second reference period (–3,3% per year). Also over the combined period of the first and the second reference period the planned en route determined unit costs do not decrease in line with the Union-wide trend (–0,2%, compared to –1,7%). In addition, the targets are based on planned en route determined costs at the start of the second reference period that are 6,2% above the actual en route costs reported in the year 2013. As a result, the improvement in cost-efficiency realised in the first reference period has not been taken adequately into account when setting the targets for the second reference period. While the target for 2019 is based on planned en route determined unit costs that are slightly below (–2,8%) the average en route determined unit costs of the Member States having a similar operational and economic environment to the one of France, they are around 23% above the Union-wide performance target in 2019.”

4.6.4 The analysis focuses on the changes made to the initial RP2 Performance Plan (PP) and on the elements that were specifically identified in Whereas 6 and 10 of EC Decision 2015/347 and which are listed in paragraph 4.6.2 and 4.6.3 above. Namely, this analysis is focussed, in a first step, on whether the en-route DUC trend is equal or better than -1.7% p.a. over the first and second reference periods combined and -3.3% p.a. over the second reference period. Should the en-route cost-efficiency target not pass the first step, a second step looks at if the DUC level planned for 2019 is markedly lower than the comparator group average.

4.7 France: Summary of changes in revised Performance Plan (July 2015) 4.7.1 The main differences between the RP2 revised and initial PP are as follows:

Lower starting point 2014 for en-route in terms of DUC, based on actual data for 2014;

Upwards revision of the en-route SU forecasts 2015-2019; Update of the economic assumptions for both en-route and terminal.


29

4.8 France: En-route charging zone assessment following revised Performance Plan submission


Overview

The tables below show three sets of data for France:


European Commission Decision (March 2015): showing the PP data as included in the EC Decision. For a number of States (but not for France), the Decision data included updates to the data provided in the initial PP (e.g. revision of EUROCONTROL costs, revision of the 2015 data to lower the 2015 unit rate, etc.); and,


Table 10: France: Initial and revised en-route cost-efficiency targets for RP2

The monetary contribution provided in the revised PP by France for the en-route cost-efficiency in RP2 is a reduction of -35.7 M€2009 overall compared to the initial RP2 PP. It corresponds to an upwards revision of the traffic assumptions for which the monetised contribution is a decrease by -166.2 M€2009, partly compensated by the update of the RP2 inflation assumptions (+130.5 M€2009).


2014F 2015D 2016D 2017D 2018D 2019D2011-19

CAGR2014-19

CAGR2015-19

CAGR

Determined costs EUR m (nom) 1,242.8 1,290.6 1,296.6 1,328.7 1,340.1 1,343.8 2.2% 1.6% 1.0%Inflation rate annual % change 1.0% 1.2% 1.3% 1.4% 1.5% 1.6%Inflation index 2009=100 108.5 109.8 111.3 112.9 114.6 116.4 1.4% 1.4% 1.5%Determined costs EUR m (2009) 1,145.3 1,175.0 1,165.2 1,177.3 1,169.5 1,154.0 0.7% 0.2% -0.4%Service units '000s 18,226 18,487 18,604 18,714 18,876 19,064 0.9% 0.9% 0.8%Determined unit cost EUR (2009) 62.84 63.56 62.63 62.91 61.96 60.54 -0.2% -0.7% -1.2%Exchange rate (2009) EUR:EUR 1.00 Determined unit cost EUR (2009) 62.84 63.56 62.63 62.91 61.96 60.54 -0.2% -0.7% -1.2%


2014F 2015D 2016D 2017D 2018D 2019D2011-19

CAGR2014-19

CAGR2015-19

CAGR

Determined costs EUR m (nom) 1,290.6 1,296.6 1,328.7 1,340.1 1,343.8 1.0%Inflation rate annual % change 1.2% 1.3% 1.4% 1.5% 1.6% 1.5%Inflation index 2009=100 109.8 111.3 112.9 114.6 116.4 Determined costs EUR m (2009) 1,175.0 1,165.2 1,177.3 1,169.5 1,154.0 -0.4%Service units '000s 18,487 18,604 18,714 18,876 19,064 0.8%Determined unit cost EUR (2009) 63.56 62.63 62.91 61.96 60.54 -1.2%Exchange rate (2009) EUR:EUR 1.00 Determined unit cost EUR (2009) 63.56 62.63 62.91 61.96 60.54 -1.2%

Revised Performance Plan (July 2015) 2014A 2015D 2016D 2017D 2018D 2019D 2011-19 2014-19 2015-19Determined costs EUR m (nom) 1,185.1 1,290.6 1,296.6 1,328.7 1,340.1 1,343.8 2.2% 2.5% 1.0%Inflation rate annual % change 0.6% 0.1% 0.8% 1.1% 1.2% 1.5%Inflation index 2009=100 108.1 108.2 109.1 110.3 111.7 113.3 1.1% 0.9% 1.2%Determined costs EUR m (2009) 1,096.3 1,192.6 1,188.2 1,204.5 1,200.0 1,186.1 1.1% 1.6% -0.1%Service units '000s 18,497 18,662 19,177 19,300 19,526 19,759 1.4% 1.3% 1.4%Determined unit cost EUR (2009) 59.27 63.91 61.96 62.41 61.46 60.03 -0.3% 0.3% -1.6%Exchange rate (2009) EUR:EUR 1.00 Determined unit cost EUR (2009) 59.27 63.91 61.96 62.41 61.46 60.03 -0.3% 0.3% -1.6%

Total RP2Difference between revised and initial en-route DUC % 0.5% -1.1% -0.8% -0.8% -0.8%Difference between revised and initial en-route DUC EUR (2009) 0.35 0.67- 0.50- 0.50- 0.50- Revised en-route TSUs '000s 18,662 19,177 19,300 19,526 19,759 Assessed monetised contribution EUR m (2009) 6.5 12.9- 9.6- 9.7- 10.0- -35.7


30

Figure 5: France: En-route cost-efficiency targets in RP2 initial and revised PPs


The en-route actual unit cost for 2014 in the Revised PP (i.e. 59.76 €2009, before deduction of other income in order to have a consistent series over 2014-2019) is -5.6% lower than the forecast figure provided in the initial RP2 PP (i.e. 63.32 €2009, before deduction of other income). The PRB notes that this lower starting point reflects the latest available actual data in terms of en-route costs and traffic for France.

Indeed, France actual total en-route SUs for 2014 are slightly higher (+1.5%) than the forecast value provided in the initial RP2 PP, while the actual en-route DCs reported for the year 2014 are lower (by -4.2%) than the estimated figure that was provided in the initial RP2 PP.

Important Note:

At the time of performing this assessment the actual 2014 costs and traffic (en-route SUs) are known at Union-wide level and the resulting actual “starting point” in terms of unit costs is 53.93 €2009. Accordingly, the en-route DUC trend required in RP2 to reach the Union-wide target of 49.10 €2009 in 2019 is a reduction of -1.9% p.a. For consistency purposes, it is important to take into account this figure when comparing a State planned en-route DUC trend to the RP2 Union-wide target since the former is computed using actual 2014 costs and traffic as starting point.


Key points for France en-route charging zone

In the following section, the five assessment criteria are considered in line with Annex IV of the Performance Scheme regulation (390/2013). For each criteria, the result of the initial assessment is given, along with the potential changes arising from the revised PP submission.

90

95

100

105

110

115

0

10

20

30

40

50

60

70

2011 2012 2013 2014 2015 2016 2017 2018 2019 En

-ro

ute

co

sts

and

ser

vic

e u

nit

s in

dex

(2

011=

100)

Det

erm

ined

un

it c

ost

, €

(200

9)

Revised PP (July 2015) cost-efficiency target for RP2 - France






31





Figure 6: France: En-route service units forecasts overview

Table 11: France: En-route service units forecast – including STATFOR February 2015


The number of en-route service units (SUs) planned for the 2015-2019 period in the RP2 revised PP have been revised upwards compared to the information reported in the initial PP. The forecast en-route SUs have been updated from STATFOR February 2014 low case scenario to STATFOR February 2015 low case scenario for all years of RP2.





Table 12: France: Economic assumptions

90

95

100

105

110

115

120

125

130

2011 2012 2013 2014 2015 2016 2017 2018 2019

Ind

ex o

f en

-ro

ute

SU

s (2

011=

100)

France


Service Units ('000s) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2011-19 2015-19PP RP1 Determined 17,987 18,437 19,045 Actuals, 2014, Initial (June 2014) PP RP2 Determined 17,691 17,515 17,900 18,497 18,487 18,604 18,714 18,876 19,064 0.9% 0.8%Revised (July 2015) PP RP2 Determined 18,662 19,177 19,300 19,526 19,759 1.4% 1.4%STATFOR Feb 15 base 18,497 18,823 19,541 20,044 20,573 21,102 2.2% 2.9%STATFOR Feb 15 high 18,497 18,956 19,847 20,677 21,474 22,215 2.9% 4.0%STATFOR Feb 15 low 18,497 18,662 19,177 19,300 19,526 19,759 1.4% 1.4%STATFOR Feb 14 base 18,438 18,915 19,390 19,759 20,181 20,637 1.9% 2.2%STATFOR Feb 14 high 18,644 19,313 20,084 20,696 21,364 22,023 2.8% 3.3%STATFOR Feb 14 low 18,226 18,487 18,604 18,714 18,876 19,064 0.9% 0.8%Initial (June 2014) PP RP2 vs STATFOR Feb 14 base (%) -2.3% -4.1% -5.3% -6.5% -7.6%Revised (July 2015) PP RP2 vs STATFOR Feb 14 base (%) -1.3% -1.1% -2.3% -3.2% -4.3%The 2015-2019 CAGR is shown (rather than the 2014-19 CAGR) to reflect the fact that not all FABs/States will provide an updated forecast for 2014

Inflation: France 2012 2013 2014 2015 2016 2017 2018 2019

Initial (June 2014) PP RP2 annual % change 2.2% 1.0% 1.0% 1.2% 1.3% 1.4% 1.5% 1.6%Revised (July 2015) PP RP2 annual % change 2.2% 1.0% 0.6% 0.1% 0.8% 1.1% 1.2% 1.5%Eurostat/IMF avg annual % change 1.0% 0.6% 0.1% 0.8% 1.1% 1.2% 1.5%Difference (Revised (July 2015) RP2 PP vs Eurostat/IMF avg) p.p. difference 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Initial (June 2014) PP RP2 2009=100 106.4 107.4 108.5 109.8 111.3 112.9 114.6 116.4Revised (July 2015) PP RP2 2009=100 106.4 107.4 108.1 108.2 109.1 110.3 111.7 113.3Eurostat/IMF avg 2009=100 106.4 107.4 108.1 108.2 109.1 110.3 111.7 113.3Difference (Revised (July 2015) RP2 PP vs Eurostat/IMF avg) index difference 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0


32


The inflation rate for 2014 was updated to 0.62% (from 1.0% originally), in line with the actual Eurostat HICP published in April 2015.

The inflation assumptions for the years 2015-2019 have been updated in line with the IMF CPI forecast as published in April 2015.

The revised inflation assumptions are lower than those used in the initial RP2 PP for all years of RP2. As a result, the inflation index for 2019 is lower by -3.2 p.p. than in the initial RP2 PP.




En-route DUC trend was revised


France Charging Zone has one specificity to take into account when computing trends over RP1 and RP2, so as to ensure consistency in costs series as documented in the FABEC revised PP, page 127. Indeed, RP1 determined costs (DCs) and actual costs up to 2014 as presented in the Reporting Tables take account of a deduction of other income, while RP2 DCs do not. This specificity complexifies the analysis as it requires an adjustment to the data, which are not reflected in the en-route Reporting Tables submitted for the purpose of the Charging Regulation.


France has revised its DCs from the initial RP2 PP. However at the charging zone level the total DCs remain exactly the same in nominal terms as in the initial RP2 PP. The revised RP2 PP presents the following changes in nominal terms at entity level compared to the initial RP2 PP:

- DSNA costs have been slightly revised downwards (reflecting a downwards revision of the cost of capital partly compensated by an increase in other operating costs);

- MET costs have been slightly revised upwards (reflecting increases in staff costs, other operating costs and depreciation, partly compensated by a decrease in the cost of capital);

- NSA costs remain the same overall but present changes in the different cost items (increase in staff costs offset by decreases in all other cost items).

In real terms, the revised DCs are higher for each year of RP2 due to the update of the inflation assumptions (Table 10). Cumulatively over RP2, total DCs for France are +2.2% higher in real terms than those provided in the initial PP (by +130.5 M€2009).


Considering the 2014 actual starting point (i.e. 59.76 €2009, before deduction of other income in order to have a consistent series over 2014-2019), France’s en-route real DUC is expected to increase by +0.1% p.a. over RP2. This is worse than the Union-wide target (-3.3% p.a.) and also worse than the reduction planned in the initial PP (-0.7% p.a.). The deterioration of the en-route DUC trend planned for RP2 in the revised RP2 PP compared to the initial RP2 PP is mainly due to a lower starting point in 2014 based on actual data and to the downwards revision of the inflation assumptions, whereas the RP2 traffic forecast has been revised upwards.

In addition, the en-route DUC trend for France over the 2014-19 period (+0.1% p.a.) is also worse than the RP2 Union-wide DUC reduction required to reach the Union-wide target


33

when computed using as starting point the 2014 actual costs and SUs (-1.9% p.a.).

Note: Based on the Reporting Tables data, the trend is +0.3% p.a.. However, the 2014 data is net of other income, while the RP2 data is before deduction of other income.


Considering the 2014 forecast starting point from the initial PP (i.e. 63.32 €2009, before deduction of other income in order to have a consistent series over 2014-2019,) and the 2019 revised target of 60.03 €2009, the RP2 DUC trend is –1.1% p.a.. This is below the 2014-2019 Union-wide target trend (-3.3% p.a.). Note: Based on the Reporting Tables data, the trend is -0.9% p.a.. However, the 2014 data is net of other income, while the RP2 data is before deduction of other income.

If the initial PP inflation index is applied, then the 2019 revised target would become 58.41 €2009, and the RP2 DUC trend would be –1.6% p.a., i.e. also below the 2014-2019 Union-wide target trend (-3.3% p.a.). Note: Based on the Reporting Tables data, the trend is -1.5% p.a.. However, the 2014 data is net of other income, while the RP2 data is before deduction of other income.


When assessed over the combined period of RP1 and RP2, the en-route DUC trend is planned to be -0.4% p.a. , which is also worse than the trend underpinning the Union-wide target (-1.7% p.a.) but slightly better than the DUC reduction provided in the initial PP (-0.2% p.a.).Note: Based on the Reporting Tables data, the trend is -0.3% p.a.. However, the 2011 actual data is net of other income, while the RP2 data is before deduction of other income.

If the initial PP inflation index is applied, then the 2019 revised target would become 58.41 €2009, and the DUC trend over the combined RP1+RP2 periods would be –0.7% p.a., i.e. also below the 2011-2019 Union-wide target trend (-1.7% p.a.). Note: Based on the Reporting Tables data, the trend is -0.6% p.a.. However, the actual 2011 data is net of other income, while the RP2 data is before deduction of other income.


France’s en-route DCs for 2015 are +7.9% higher than 2014 actual en-route costs. This is mostly driven by an increase in staff costs. This shows that the improvements achieved in RP1 have not been reflected in RP2 planning.




En-route DUC level was revised


34


France’s planned en-route DUC for 2019 (60.03 €2009) is equivalent to the average of the comparator group (60.02 €2009).

The revised planned DUC by France in 2019 is -0.8% lower than that provided in the initial RP2 PP. It is slightly lower for each year of the period, except for 2015.

The improvement is due to the upwards revision of the traffic forecast (point 1) which is, to a large extent, compensated by the downwards revision of the RP2 inflation assumptions(points 2 and 3).

The PRB notes that the revised unit rate to be charged to airspace users in 2015 (69.34 €) is lower than that applied from 1 January 2015 (70.00 €), so this will require a technical adjustment to reimburse airspace users.




En-route cost of capital was revised


The DSNA WACC rates, RoE rates and rates of interest on debt remain unchanged compared to the initial RP2 PP.

DSNA’s asset base in the revised RP2 PP has been slightly revised downwards in nominal terms (-0.5%). However, as a result of the update of the RP2 inflation assumptions, the determined cost of capital for DSNA is higher by +1.7% over RP2 compared to the initial PP.This does not change the conclusions of the original assessment.

Overall view of France en-route cost-efficiency KPI


Key points of the analysis of the revised RP2 en-route cost-efficiency targets submitted by France:

France has updated the 2014 data in line with the actual data available; France has updated the en-route SUs forecast for RP2 in line with the February 2015

STATFOR low case scenario; France has revised downwards the inflation assumptions in line with IMF April 2015

forecasts; Considering the 2014 actual starting point, the en-route DUC provided by France for

RP2 is expected to increase by +0.1% p.a. over the 2014-2019 period, i.e. worse than the trend underpinning the Union-wide target (-3.3% p.a.) and also worse than the RP2 Union-wide DUC reduction required to reach the Union-wide target when computed using as starting point the 2014 actual costs and SUs (-1.9% p.a.). Considering the 2014 forecast starting point from the initial PP, the RP2 DUC trend is –1.1% p.a.. This is also below the 2014-2019 Union-wide target trend (-3.3% p.a.).

The en-route DUC provided by France for RP2 is expected to decrease by -0.4% p.a. over the period 2011-2019 (RP1 and RP2), also worse than the trend underpinning the Union-wide target (-1.7% p.a.);

The en-route DUC provided by France for RP2 is equivalent to the average of the comparator group;

The en-route DUC is lower than in the initial RP2 PP for each year of RP2, except for


35

2015; The revised unit rate to be charged to airspace users in 2015 (69.34 €) is lower than

that applied from 1 January 2015 (70.00 €), which requires a technical adjustment to reimburse airspace users.

The monetary contribution provided in the revised PP by France for the en-route cost-efficiency in RP2 is a reduction of -35.7 M€2009 overall compared to the initial RP2 PP. It corresponds to an upwards revision of the traffic assumptions for which the monetised contribution is a decrease by -166.2 M€2009, to a large extent compensated by the downwards revision of the RP2 inflation assumptions (+130.5 M€2009).

Conclusions:

The PRB considers that France revised en-route cost-efficiency targets for RP2 do not meet the consistency criteria and are not in line with the points identified in EC Decision 2015/347 (Art. 4).

There has been an improvement compared to the initial PP, due to the fact that the upwards revision of DCs in real terms was more than offset by a proportionately larger upwards revision in the TSU forecast. Considering the 2014 forecast starting point from the initial PP and the 2019 revised target, the RP2 DUC trend is –1.1% p.a. This is below the 2014-2019 Union-wide target trend (-3.3% p.a.). When assessed over the 2011-2019 period, the en-route DUC trend is planned to be -0.4% p.a. which is worse than the trend underpinning the Union-wide target (-1.7% p.a.). In addition, the planned en-route DUC for 2019 is equivalent to the average of the comparator group. Finally, the PRB also notes that France 2015 DCs are +7.9% higher than the 2014 actual costs. This suggests that the improvements achieved during RP1 and in particular 2014, have not been reflected in RP2 planning.

However, France has described some “associated measures” in its Annex A to FABEC Revised PP in order to improve performance in RP2. The PRB welcomes this and considers that France could pass if further clarification and information are provided, comprising:

a) a clear narrative and a concrete action plan with appropriate milestones to ensure that performance improvement is delivered;

b) transparent monitoring and reporting of progress against these milestones to stakeholders, including the PRB;

c) a common understanding of the use of the funds provided by the Innovation and Networks Executive Agency (INEA) in the context of SESAR Deployment to improve performance and reduce the chargeable unit rates.

The PRB will review progress in 2017.


36

4.9 France: Terminal charging zone assessment following revised Performance Plan submission


Overview

Figure 7: France: Terminal cost-efficiency targets for RP2 initial and revised PPs

Table 13: France: Initial and revised terminal cost-efficiency targets for RP2

The monetary contribution provided in the revised PP by France for the terminal cost-

85

87

89

91

93

95

97

99

101

103

105

2015D 2016D 2017D 2018D 2019D

Det

erm

ined

un

it c

ost

in

dex

(20

15=

100)

France


France (Initial June 2014) France (Revised June 2015)


CAGR (%)

Determined costs EUR m (nom) 241.0 243.4 248.0 248.5 250.2 0.9%Inflation rate * annual % change 1.2% 1.3% 1.4% 1.5% 1.6%Inflation index * 2009=100 109.8 111.3 112.9 114.6 116.4 1.5%Determined costs EUR m (2009) 219.4 218.8 219.8 216.9 214.9 -0.5%Terminal SUs '000s 1,057.1 1,093.6 1,097.2 1,118.0 1,142.2 2.0%Determined unit cost EUR (2009) 207.59 200.07 200.29 193.98 188.10 -2.4%Exchange rate EUR:EUR (2009) 1.00 Determined unit cost EUR (2009) 207.59 200.07 200.29 193.98 188.10 -2.4%


CAGR (%)

Determined costs EUR m (nom) 241.0 243.4 248.0 248.5 250.2 0.9%Inflation rate * annual % change 0.1% 0.8% 1.1% 1.2% 1.4%Inflation index * 2009=100 108.2 109.1 110.3 111.7 113.3 1.2%Determined costs EUR m (2009) 222.7 223.1 224.9 222.5 220.8 -0.2%Terminal SUs '000s 1,057.1 1,093.6 1,097.2 1,118.0 1,142.2 2.0%Determined unit cost EUR (2009) 210.70 204.02 204.93 199.04 193.34 -2.1%Exchange rate EUR:EUR (2009) 1.00 Determined unit cost EUR (2009) 210.70 204.02 204.93 199.04 193.34 -2.1%The 2015-2019 CAGR shown in the tab le is different from the main en-route comparator period (2014-2019),


Total RP2Difference between revised and initial terminal DUC % 1.5% 2.0% 2.3% 2.6% 2.8%Difference between revised and initial terminal DUC EUR (2009) 3.12 3.95 4.64 5.06 5.23 Revised TNSUs '000s 1,057.1 1,093.6 1,097.2 1,118.0 1,142.2 Assessed monetised contribution EUR m (2009) 3.3 4.3 5.1 5.7 6.0 24.3


37

efficiency in RP2 is an increase of +24.3 M€2009 overall compared to the initial RP2 PP, solely due to the downwards revision of the inflation assumptions, whereas DCs in nominal terms and traffic assumptions remain at the same level as in the initial RP2 PP.

Key points for France terminal charging zone





No change compared to the initial RP2 PP.






The inflation rate for 2014 was updated to 0.62% (from 1.0% originally), in line with the actual Eurostat HICP published in April 2015.

The economic assumptions for the years 2015-2019 have been updated in line with the IMF CPI forecast as published in April 2015, which are slightly lower than those used in the initial RP2 PP.


The inflation indexes are the same as those used for the en-route revised RP2 cost-efficiency targets.




Terminal ANS DUC trend was revised


France’s total DCs are the same as in the initial RP2 PP in nominal terms. In real terms, the revised DCs are higher for each year of RP2 due to the downwards revision of the inflation assumptions (Table 5). Cumulatively over RP2, total terminal DCs for France are +2.2% higher in real terms than those provided in the initial PP (by +24.3 M€2009).

As a result, France’s terminal DUC is expected to decrease by -2.1% p.a. over the 2015-2019 period, compared to -2.4% in the initial RP2 PP.




Terminal cost of capital was revised


38


The DSNA WACC rates, RoE rates and rates of interest on debt remain unchanged compared to the initial RP2 PP.

DSNA’s asset base in the revised RP2 PP has been slightly revised downwards in nominal terms (-0.5%). However, as a result of the update of the RP2 inflation assumptions, the determined cost of capital for DSNA is higher by +1.7% over RP2 compared to the initial PP.This does not change the conclusions of the original assessment and is consistent with the changes made for the en-route revised RP2 cost-efficiency targets.

Overall view of France terminal ANS cost-efficiency KPI


Key points of the analysis of the revised RP2 TANS cost-efficiency targets submitted by France:

France has revised downwards the inflation assumptions in line with IMF April 2015 forecasts and with the inflation assumptions used for the en-route revised RP2 cost-efficiency targets.

The monetary contribution provided in the revised PP by France for the terminal cost-efficiency in RP2 is an increase of +24.3 M€2009 overall compared to the initial RP2 PP, solely due to the update of the inflation assumptions, whereas DCs in nominal terms and TNSUs traffic assumptions remained at the same level as in the initial RP2 PP.


39

4.10 Germany: Overview of EC Decision (2nd March 2015) 4.10.1 The assessment carried out by the EC assisted by the PRB has shown that the RP2

cost-efficiency targets submitted by FAB EC for Germany in its initial Performance Plan (July 2014) are not consistent with the relevant Union-wide performance targets.


4.10.3 The EC Decision (see Whereas 11) further specifies the reasons for assessing Germany’s cost-efficiency targets as not consistent with the relevant Union-wide performance targets and indicates that: “As regard Germany, its targets are based on a planned reduction of its en route determined unit costs over the second reference period by 1,1 % per year on average. This is significantly below the targeted reduction of the average Union-wide en route determined unit costs over the second reference period (–3,3 % per year). Also over the combined period of the first and the second reference period the en route determined unit costs do not decrease in line with the Union-wide trend, but they are rather increasing (+0,7 %, compared to –1,7 %). In addition, the target for 2019 is based on planned en route determined unit costs in 2019 that are substantially above (+26,6 %) the average en route determined unit costs of the Member States having a similar operational and economic environment to the one of Germany and around 52% above the Union-wide performance target in 2019”.

4.10.4 The analysis focuses on the changes made to the initial RP2 performance plan and on the elements that were specifically identified in Whereas 6 and 11 of EC Decision 2015/347 and which are listed in paragraphs 4.10.2 and 4.10.3 above. Namely, this analysis is focussed, in a first step, on whether the en-route DUC trend is equal or better than -1.7% p.a. over the first and second reference periods combined and -3.3% p.a. over the second reference period. Should the en-route cost-efficiency target not pass the first step, a second step looks at if the DUC level planned for 2019 is markedly lower than the comparator group average.

4.11 Germany: Summary of changes in revised Performance Plan (July 2015)



A downwards revision of the DCs provided for the 2015-2019 period;

An update of the inflation rate for 2014 in order to reflect actual data;

An upwards revision of the en-route SU forecast for 2015-2019; and

The reporting of data that was missing in the initial PP submitted in July 2014 (i.e. breakdown of DCs for DFS and assumptions used to compute the cost of capital).


40

4.12 Germany: En-route charging zone assessment following revised Performance Plan submission


Overview

The tables below show three sets of data for Germany:


European Commission Decision (March 2015): showing the PP data as used in the EC Decision. For a number of States, the Decision data included updates to the data provided in the initial PP (e.g. revision of EUROCONTROL costs, revision of the 2015 data to lower the 2015 unit rate, etc.); and,


Table 14: Germany: Initial and revised en-route cost-efficiency targets for RP2

The assessed monetised contribution provided by Germany’s revised en-route cost-efficiency targets for RP2 is a reduction of -495.2 M€2009 compared to the information provided in the initial PP submitted in June 2014. This comprises an amount of -363.1 M€2009which is attributable to the downward revision of the DCs over RP2, and a contribution of -132.1 M€2009 due to the upward revision of the en-route SUs forecasts.


2014F 2015D 2016D 2017D 2018D 2019D2011-19

CAGR2014-19

CAGR2015-19

CAGR

Determined costs EUR m (nom) 1 068.4 1 125.3 1 132.3 1 131.6 1 129.5 1 143.7 2.7% 1.4% 0.4%Inflation rate annual % change 1.4% 1.4% 1.6% 1.7% 1.7% 1.7%Inflation index 2009=100 109.1 110.5 112.3 114.2 116.2 118.1 1.6% 1.6% 1.7%Determined costs EUR m (2009) 979.5 1 017.9 1 008.2 990.7 972.3 968.0 1.0% -0.2% -1.2%Service units '000s 12 429 12 568 12 665 12 765 12 879 13 004 0.3% 0.9% 0.9%Determined unit cost EUR (2009) 78.81 80.99 79.60 77.61 75.50 74.44 0.7% -1.1% -2.1%Exchange rate (2009) EUR:EUR 1.00 Determined unit cost EUR (2009) 78.81 80.99 79.60 77.61 75.50 74.44 0.7% -1.1% -2.1%


2014F 2015D 2016D 2017D 2018D 2019D2011-19

CAGR2014-19

CAGR2015-19

CAGR

Determined costs EUR m (nom) 1 125.3 1 132.3 1 131.6 1 129.5 1 143.7 0.4%Inflation rate annual % change 1.4% 1.6% 1.7% 1.7% 1.7% 1.7%Inflation index 2009=100 110.5 112.3 114.2 116.2 118.1 Determined costs EUR m (2009) 1 017.9 1 008.2 990.7 972.3 968.0 -1.2%Service units '000s 12 568 12 665 12 765 12 879 13 004 0.9%Determined unit cost EUR (2009) 80.99 79.60 77.61 75.50 74.44 -2.1%Exchange rate (2009) EUR:EUR 1.00 Determined unit cost EUR (2009) 80.99 79.60 77.61 75.50 74.44 -2.1%

Revised Performance Plan (July 2015) 2014A 2015D 2016D 2017D 2018D 2019D 2011-19 2014-19 2015-19Determined costs EUR m (nom) 1 015.6 1 069.1 1 039.6 1 036.4 1 036.5 1 035.1 1.4% 0.4% -0.8%Inflation rate annual % change 0.8% 1.4% 1.6% 1.7% 1.7% 1.7%Inflation index 2009=100 108.5 109.9 111.7 113.6 115.5 117.5 1.6% 1.6% 1.7%Determined costs EUR m (2009) 936.4 972.5 930.7 912.4 897.2 881.1 -0.1% -1.2% -2.4%Service units '000s 12 806 12 801 13 057 13 122 13 242 13 365 0.7% 0.9% 1.1%Determined unit cost EUR (2009) 73.12 75.97 71.28 69.53 67.76 65.92 -0.8% -2.1% -3.5%Exchange rate (2009) EUR:EUR 1.00 Determined unit cost EUR (2009) 73.12 75.97 71.28 69.53 67.76 65.92 -0.8% -2.1% -3.5%

Total RP2Difference between revised and initial en-route DUC % -6.2% -10.5% -10.4% -10.2% -11.4%Difference between revised and initial en-route DUC EUR (2009) 5.02- 8.32- 8.08- 7.74- 8.52- Revised en-route TSUs '000s 12 801 13 057 13 122 13 242 13 365 Assessed monetised contribution EUR m (2009) 64.3- 108.6- 106.0- 102.5- 113.8- -495.2


41

Figure 8: Germany: En-route cost-efficiency targets in RP2 initial and revised PPs


The revised en-route actual unit cost for 2014 (73.12 €2009) is -7.2% lower than the figure provided in the initial RP2 PP (78.81 €2009). The PRB notes that this lower starting point reflects the latest available actual data in terms of en-route costs and traffic for Germany.

Germany has reported actual total en-route SUs for 2014 (12,806,143), a figure which is higher (+3.0%) than the value provided in the initial RP2 PP (12,429,000).

In addition, the actual en-route DCs reported for the year 2014 (936.4 M€2009) are lower (by -4.4%) than the estimated figure that was provided in the initial PP (979.5 M€2009).

Important Note:



Key points for Germany’s en-route charging zone






90

95

100

105

110

115

120

0

10

20

30

40

50

60

70

80

90

2011 2012 2013 2014 2015 2016 2017 2018 2019 En

-ro

ute

co

sts

an

d s

erv

ice

un

its

ind

ex

(201

1=

100)

De

term

ine

d u

nit

co

st,

€(2

009)

Revised PP (July 2015) cost-efficiency target for RP2 - Germany






42

Figure 9: Germany: En-route service units forecasts overview

Table 15: Germany: En-route service units forecast – including STATFOR February 2015


The number of en-route service units (SUs) planned for the 2015-2019 period has been revised upwards compared to the information reported in the initial PP. The planned growth of en-route SUs provided for Germany en-route charging zone over this period (+1.1% p.a.) is in line with STATFOR February 2015 low scenario (+1.1% p.a.).

It should be noted that the planned number of SUs provided in the revised PP for the year 2015 (12,801,000) is -0.5% lower than the figure reported in STATFOR database for the low scenario (12,865,510). This difference is due to the fact that the SUs forecasts provided by STATFOR include military SUs (i.e. some 65,000 SUs) while these were not included in the planned traffic figures reported by Germany over the 2015-2019 period. This small difference does not affect the results of this assessment.

According to the forecast provided in the revised PP, en-route SUs are expected to remain fairly constant (-0.04%) in 2015. This is slightly below the actual growth rate observed for the first eight months of 2015 compared to the same period in 2014 (+0.1%).





90

95

100

105

110

115

120

2011 2012 2013 2014 2015 2016 2017 2018 2019

Ind

ex o

f en

-ro

ute

SU

s (2

011=

100)

Germany




43

Table 16: Germany: Economic assumptions




The latest IMF inflation forecasts released in April 2015 for Germany reflect lower inflation rates over the 2015-2018 period than those published in April 2014. As a result, the inflation rates planned by Germany between 2015 and 2018 are higher than the latest IMF forecasts with differences ranging between 0.1 and 1.1 percentage points. The planned inflation rate provided for the year 2019 (1.7%) is slightly lower than the figure forecast by the IMF April 2015 for that year (1.8%).

FABEC revised PP does not include detailed information on Germany’s rationale for not using latest IMF April 2015 inflation forecasts.



Revised PP (July 2015) DUC trend was revised


Germany has indicated in Annex C to the revised PP that as part of a “top-down” approach, the German State has decided to inject €500 million into DFS equity over RP2, with €50 million in 2015 and €112.5 million in each of the following four years. This is an important element which has been considered by the PRB in its analysis below.


Cumulatively over RP2, en-route DCs for Germany are -7.3% lower than those provided in the initial PP (-363.1 M€2009). This substantial revision is mainly driven by significantly lower DCs for DFS over RP2 reflecting the reporting of substantial negative amounts as exceptional cost items. Germany indicates in Annex C to the revised PP that this downwards revision is the outcome of the “top-down” approach which is linked to the German State decision to inject €500 million into DFS equity over RP2. Germany indicates in Annex C that “DFS is fully aware of its responsibility to cover these saving targets with real cost reduction measures during RP2 and has set up a cost reduction program in 2013, which shall generate savings until 2019”. In this context, it is important that the programme initiated by DFS in 2013 leads to structural costs reductions so that the “top-down” approach implemented by Germany materialises into genuine cost-efficiency improvements over RP2.

The en-route cost-base of Germany also comprises costs associated with another ATSP (MUAC) which provides ATC services in part of Germany upper airspace, the MET provider (DWD), the EUROCONTROL Agency and the German NSA. The en-route DUCs provided

Inflation: Germany 2012 2013 2014 2015 2016 2017 2018 2019

Initial (June 2014) PP RP2 annual % change 2.1% 1.6% 1.4% 1.4% 1.6% 1.7% 1.7% 1.7%Revised (July 2015) PP RP2 annual % change 2.1% 1.6% 0.8% 1.4% 1.6% 1.7% 1.7% 1.7%Eurostat/IMF avg annual % change 1.6% 0.8% 0.2% 1.3% 1.5% 1.6% 1.8%Difference (Revised (July 2015) RP2 PP vs Eurostat/IMF avg) p.p. difference 0.0% 0.0% 1.1% 0.3% 0.2% 0.1% -0.1%Initial (June 2014) PP RP2 2009=100 105.9 107.6 109.1 110.5 112.3 114.2 116.2 118.1Revised (July 2015) PP RP2 2009=100 105.9 107.6 108.5 109.9 111.7 113.6 115.5 117.5Eurostat/IMF avg 2009=100 105.9 107.6 108.5 108.7 110.1 111.8 113.6 115.6Difference (Revised (July 2015) RP2 PP vs Eurostat/IMF avg) index difference 0.0 0.0 0.0 1.2 1.6 1.8 1.9 1.9


44

for all these entities for RP2 were revised significantly downwards compared to the information provided in the initial PP (on average -11.2% for DWD, -14.2% for the NSA, -7.7% for the EUROCONTROL Agency, and -2.2% for MUAC).


Germany’s en-route DUC is expected to decrease by -2.1% p.a. over the 2014-2019 period. This is worse than the Union-wide target for RP2 (-3.3% p.a.) but represents a significant improvement compared to the reduction planned in the initial PP (-1.1% p.a.). In addition, the en-route DUC trend for Germany over the 2014-19 period (-2.1% p.a.) is better than the RP2 Union-wide DUC reduction required to reach the Union-wide target when computed using as starting point the 2014 actual costs and SUs (-1.9% p.a.).

Germany’s planned en-route DUC profile over 2014-2019 mainly reflects the fact that DCs are expected to decrease by -1.2% p.a. while the number of SUs is planned to grow by +0.9% per year on average.


Considering the 2014 forecast starting point from the initial PP (i.e. 78.81 €2009) and the 2019 revised target of 65.92 €2009, Germany RP2 DUC trend is -3.5% p.a.. This is better than the 2014-2019 Union-wide target trend (-3.3% p.a.).

If the initial PP inflation index is applied, then the 2019 revised target would become 65.56 €2009, and the RP2 DUC trend would be -3.6% p.a., i.e. also better than the 2014-2019 Union-wide target trend (-3.3% p.a.).

DUC over the combined RP1 and RP2 period:

When assessed over the 2011-2019 period, the en-route DUC trend is planned to be -0.8%p.a. which is worse than the trend underpinning the Union-wide target (-1.7% p.a.) but represents a significant improvement over the DUC reduction provided in the initial PP (+0.7% p.a.).

If the initial PP inflation index is applied, then the 2019 revised target would become 65.56 €2009, and the DUC trend over the combined RP1+RP2 periods would be –0.9% p.a., i.e. also below the 2011-2019 Union-wide target trend (-1.7% p.a.).


Germany en-route DCs for 2015 (972.5 M€2009) are +3.9% higher than 2014 actual en-route costs (936.4 M€2009). This increase mainly reflects higher staff costs (+10.3% mainly reflecting higher pension costs) and other operating costs (+11.7% mainly reflecting higher maintenance costs), while exceptional cost items have been significantly reduced (-139.8%) in the context of the “top-down” approach implemented in the revised RP2 PP.





Germany’s planned en-route DUC for 2019 (65.92 €2009) is +12.6% higher than the average of the comparator group (58.54 €2009), this represents a significant improvement over the deviation observed during the assessment of the initial PP (+26.6% above the comparator group average).

Indeed, the revised DUC planned by Germany for 2019 is -11.4% lower than that provided in the initial RP2 PP. In fact, the revised planned DUC is lower than that provided in the initial RP2 PP for each year of the period (differences ranging between -6.2% and -11.4%). This


45

improvement reflects the combination of a downwards revision of DCs over the RP2 period (see point 3), and the use of a higher en-route SUs forecast for RP2 (see point 1).

As explained above, the downwards revision of the DCs planned for the 2015-2019 periodreflects the impact of a “top-down” approach to reduce the German DCs and DUCs over RP2.

The PRB notes that the revised unit rate to be charged to airspace users in 2015 (88.22 €) is lower than that applied from 1 January 2015 (90.15 €), so this will require a technical adjustment to reimburse airspace users.


Original assessment Not assessed since relevant data was missing


Cost of capital data was provided in the revised PP


Note: The PRB was unable to assess the en-route cost of capital check during Summer 2014 as the required data were not provided for Germany in FABEC RP2 PP (for this reason the left-hand side chart in Figure 10 below does not include data relating to DFS return on equity). Germany provided the missing figures in the revised PP.

Figure 10: Germany: En-route ATSP risk exposure in initial and revised PPs

The pre-tax WACC used to calculate DFS’ en-route cost of capital in the Reporting Tables ranges from 4.6% in 2015 to 5.0% in 2019. This is lower than the range for the notional “efficient” pre-tax WACC using the methodology provided in Annex C of the Additional Information tables.

The Reporting Tables provide a pre-tax rate of return on equity (RoE) that has been capped for DFS at 7.45% for each year of RP2. Taking into account DFS’ capital structure and the amount of total assets used to calculate the cost of capital enables the calculation of the monetary value of the RoE, which in RP2 ranges between 30.4 M€2009 (2015) and 34.8M€2009 (2019). This is in line with the maximum risk exposure which will be borne by DFS (in total over RP2 the monetary value of the RoE is -0.6% lower than the maximum traffic risk exposure).

Overall view of Germany’s en-route cost-efficiency KPI


Key points of the analysis of the revised RP2 en-route cost-efficiency targets submitted by Germany:

- - - - - -

37.1 36.6 35.7 34.8 33.9 35.6

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

2015D 2016D 2017D 2018D 2019D 2015-19average

Mo

net

ary

val

ue

for

AT

SP

Ro

E &

m

axim

um

ris

k ex

po

sure

, €

mill

ion

s (2

009)

Initial (June 2014) PP RP2 DFS

Return on equity Max risk exposure

30.4 31.4 32.5 33.5 34.8 32.5

35.8 33.3 32.4 31.6 30.7

32.7

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

2015D 2016D 2017D 2018D 2019D 2015-19average

Mo

net

ary

valu

e fo

r A

TS

P R

oE

&

max

imu

m r

isk

exp

osu

re,

€m

illio

ns

(200

9)

Revised (July 2015) PP RP2 DFS

Return on equity Max risk exposure


46

Compared to the initial PP submitted in June 2014, the en-route DUC reported for the year 2014 has been revised substantially downwards (-7.2%). This revision is mainly due to the fact that actual en-route SUs are higher (+3.0%) and actual costs are lower (-4.4%) than the planned figures provided in the initial RP2 PP.

The en-route SUs forecast over the 2015-2019 period has been revised upwards compared to the information provided in the initial PP. The planned growth of en-route SUs provided for Germany en-route charging zone over this period (+1.1% p.a.) is in line with STATFOR February 2015 low scenario (+1.1% p.a.).

The planned inflation rates provided for the years 2015-2019 have not been changed compared to the information submitted in the initial PP and are in line with IMF April2014 inflation forecasts.

Considering the 2014 actual starting point, Germany’s en-route DUC is expected to decrease by -2.1% p.a. over the 2014-2019 period. This is worse than the Union-wide target for RP2 (-3.3% p.a.) but represents a significant improvement compared to the reduction planned in the initial PP (-1.1% p.a.). In addition, the en-route DUC trend for Germany over the 2014-19 period (-2.1% p.a.) is better than the RP2 Union-wide DUC reduction required to reach the Union-wide target when computed using as starting point the 2014 actual costs and SUs (-1.9% p.a.). Considering the 2014 forecaststarting point from the initial PP (i.e. 78.81 €2009) and the 2019 revised target of 65.92 €2009, Germany RP2 DUC trend is -3.5% p.a.. This is better than the 2014-2019 Union-wide target trend (-3.3% p.a.).

Germany’s en-route DUC trend for RP2 mainly reflects the impact of a substantial downward revision of the German DCs (ranging from -45.4 M€2009 in 2015 to -87.0 M€2009 in 2019). Cumulatively over RP2, en-route DCs for Germany are -7.3% lower than those provided in the initial PP (-363.1 M€2009). This substantial downwards revision reflects the impact of a “top-down” approach to reduce the German DCs and DUCs over RP2.

Germany en-route DCs for 2015 (972.5 M€2009) are +3.9% higher than 2014 actual en-route costs (936.4 M€2009).

When assessed over the 2011-2019 period, the en-route DUC trend is planned to be -0.8% p.a. which is worse than the trend underpinning the Union-wide target (-1.7% p.a.) but represents a significant improvement over the DUC reduction provided in the initial PP (+0.7% p.a.).

The revised DUCs planned by Germany for RP2 are lower than that provided in the initial RP2 PP for each year of the period with differences ranging from -6.2% in 2015 to -11.4% in 2019. Despite this improvement, Germany’s planned en-route DUC for 2019 (65.92 €2009) is +12.6% higher than the average of the comparator group (58.54€2009).

The pre-tax WACC used to calculate DFS’ en-route cost of capital in the Reporting Tables ranges from 4.6% in 2015 to 5.0% in 2019. This is lower than the range for the notional “efficient” pre-tax WACC using the methodology provided in Annex C of the Additional Information tables.

The assessed monetised contribution provided by Germany’s revised en-route cost-efficiency target for RP2 is a substantial reduction of -495.2 M€2009 compared to the information provided in the initial PP submitted in June 2014. This comprises an amount of -363.1 M€2009 which is attributable to the downward revision of the DCs over RP2, and a


47

contribution of -132.1 M€2009 due to the upward revision of the en-route SUs forecasts.

Conclusions:

The PRB considers that Germany revised en-route cost-efficiency targets for RP2 do not meet the consistency criteria and are not in line with the points identified in EC Decision 2015/347 (Art. 4).

There has been improvement compared to the initial PP, which is due to significant downwards revision in DCs, combined with a higher amended TSU forecast. The reduction in DCs reflects the “top-down” approach, by which the German State has injected €500 million into DFS equity over RP2, with €50 million in 2015 and €112.5 million in each of the following four years. Germany indicates in Annex C of its revised PP that “DFS is fully aware of its responsibility to cover these saving targets with real cost reduction measures during RP2 and has set up a cost reduction program in 2013, which shall generate savings until 2019”. Considering the 2014 forecast starting point from the initial PP and the 2019 revised target, the RP2 DUC trend is –3.5% p.a. This is better than the 2014-2019 Union-wide target trend (-3.3% p.a.). When assessed over the 2011-2019 period, the en-route DUC trend is planned to be -0.8% p.a. which is worse than the trend underpinning the Union-wide target (-1.7% p.a.). In addition, German planned en-route DUC for 2019 is substantially higher (+12.6%) than the average of the comparator group. Finally, the PRB also notes that Germany 2015 DCs are +3.9% higher than the 2014 actual costs. This suggests that the improvements achieved during RP1 and in particular 2014, have not been reflected in RP2 planning.

The PRB also notes that FABEC revised RP2 PP refers to a cost-reduction programme implemented by the DFS as of 2013 “in order to fill the gap between the bottom-up planning and the cost-efficiency trend in RP2” (Five-points Programme). However, based on the available information the PRB considers that it is not clear to which extent this Five-points Programme will lead to effective and sustained structural costs reductions so that the “top-down” approach implemented by Germany materialises into genuine cost-efficiency improvements over RP2 and beyond.

In this context, the PRB suggests that Germany provides further information on theappropriate measures that will be implemented in RP2 to deliver sustainable performance improvements and costs reductions in in preparation for RP3. In particular Germany should provide:

a. a clear narrative and concrete action plan with appropriate milestones for cost reduction to ensure that performance improvement is delivered;

b. Transparent monitoring and reporting of progress against these milestones to stakeholders, including the PRB.



48

4.13 Germany: Terminal charging zone assessment following revised Performance Plan submission


Overview

Figure 11: Germany: Terminal cost-efficiency targets for RP2 initial and revised PPs

Table 17: Germany: Initial and revised terminal cost-efficiency targets for RP2

80

85

90

95

100

105

2015D 2016D 2017D 2018D 2019D

Det

erm

ined

un

it c

ost

in

dex

(20

15=

100)

Germany


Germany (Initial June 2014) Germany (Revised June 2015)


CAGR (%)

Determined costs EUR m (nom) 251.3 251.8 250.2 248.1 251.9 0.1%Inflation rate * annual % change 1.4% 1.6% 1.7% 1.7% 1.7%Inflation index * 2009=100 110.5 112.3 114.2 116.2 118.1 1.7%Determined costs EUR m (2009) 227.3 224.2 219.0 213.6 213.2 -1.6%Terminal SUs '000s 1 274.3 1 292.3 1 301.7 1 310.8 1 323.9 1.0%Determined unit cost EUR (2009) 178.38 173.47 168.27 162.94 161.05 -2.5%Exchange rate EUR:EUR (2009) 1.00 Determined unit cost EUR (2009) 178.38 173.47 168.27 162.94 161.05 -2.5%


CAGR (%)

Determined costs EUR m (nom) 240.9 228.8 227.1 225.5 223.9 -1.8%Inflation rate * annual % change 1.4% 1.6% 1.7% 1.7% 1.7%Inflation index * 2009=100 109.9 111.7 113.6 115.5 117.5 1.7%Determined costs EUR m (2009) 219.2 204.8 199.9 195.2 190.6 -3.4%Terminal SUs '000s 1 332.8 1 357.3 1 362.1 1 376.0 1 392.2 1.1%Determined unit cost EUR (2009) 164.44 150.90 146.77 141.86 136.87 -4.5%Exchange rate EUR:EUR (2009) 1.00 Determined unit cost EUR (2009) 164.44 150.90 146.77 141.86 136.87 -4.5%The 2015-2019 CAGR shown in the tab le is different from the main en-route comparator period (2014-2019),


Total RP2Difference between revised and initial terminal DUC % -7.8% -13.0% -12.8% -12.9% -15.0%Difference between revised and initial terminal DUC EUR (2009) 13.94- 22.58- 21.50- 21.08- 24.17- Revised TNSUs '000s 1 332.8 1 357.3 1 362.1 1 376.0 1 392.2 Assessed monetised contribution EUR m (2009) 18.6- 30.6- 29.3- 29.0- 33.7- -141.2


49

The assessed monetised contribution provided by Germany’s revised terminal cost-efficiency target for RP2 is a reduction of -141.2 M€2009 compared to the information provided in the initial PP submitted in June 2014. This comprises an amount of -87.7 M€2009, which is attributable to the downward revision of the DCs over RP2, and an amount of -53.5 M€2009 due to the upward revision of the terminal SUs forecasts.

Key points for Germany’s terminal charging zone






Compared to the initial PP submission, Germany has revised upwards its TNSU forecast for each of the years during RP2 which is now in line with STATFOR February 2015 low scenario (+1.1% p.a. over 2015-2019). This results in planned terminal SUs over RP2 that are on average +4.9% higher than those provided in the initial PP.





As for en-route, the planned inflation rates provided for the years 2015-2019 have not been changed compared to the information submitted in the initial PP, and are in line with IMF April 2014 inflation forecasts.





Germany has revised downwards the terminal DCs planned for each year of RP2. Cumulatively over the 2015-2019 period, DCs are -8.0% lower than those provided in the initial PP (-87.7 M€2009). As for en-route, this substantial downwards revision reflects the impact of a “top-down” approach to reduce the German DCs and DUCs over RP2.

As a result, Germany’s terminal DUC is expected to decrease by -4.5% p.a. over the 2015-2019 period which is significantly better than the DUC reduction provided in the initial PP (-2.5% p.a.).


Original assessment Not assessed


Cost of Capital and Return on Equity data revised


Note: As for en-route ANS, the terminal cost of capital check could not be assessed by the PRB


50

during Summer 2014 as the required data were not provided for Germany in FABEC RP2 Performance Plan. Germany provided the missing figures in the revised PP.

The rate of RoE used to calculate the cost of capital for terminal ANS is the same as thatused to calculate the en-route cost of capital for the DFS. There are minor differences in the WACC rates planned for RP2, between en-route and terminal ANS reporting (around 0.1 percentage points).

The reporting of similar RoE, interest rate on debt and WACC is consistent with the fact that the traffic risk sharing also applies to the German TCZ.

Overall view of Germany’s terminal ANS cost-efficiency KPI


Key points of the analysis of the revised RP2 TANS cost-efficiency targets submitted byGermany:

Compared to the initial PP, Germany has revised upwards its TNSU forecast for RP2 (around +4.9% on average over the RP).

Germany’s terminal DUC is expected to decrease by -4.5% p.a. over the 2015-2019 period which is significantly better than the DUC reduction provided in the initial PP (-2.5% p.a.).

The assessed monetised contribution provided by Germany’s revised terminal cost-efficiency target for RP2 is a substantial reduction of -141.2 M€2009 compared to the information provided in the initial PP submitted in June 2014. This comprises an amount of -87.7 M€2009, which is attributable to the downward revision of the DCs over RP2, and an amount of -53.5 M€2009 due to the upward revision of the terminal SUs forecasts.


51

4.14 Netherlands: Overview of EC Decision (2nd March 2015) 4.14.1 The assessment carried out by the EC assisted by the PRB has shown that the RP2

cost-efficiency targets submitted by FAB EC for the Netherlands in its initial Performance Plan (July 2014) are not consistent with the relevant Union-wide performance targets.


4.14.3 The EC Decision (see Whereas 12) further specifies the reasons for assessing the Netherlands cost-efficiency targets as not consistent with the relevant Union-wide performance targets and indicates that: “As regard the Netherlands, its targets are based on a planned reduction of its en route determined unit costs over the second reference period by only 0,3% per year on average. This is significantly below the targeted reduction of the average Union-wide en route determined unit costs over the second reference period (–3,3% per year). Also over the combined period of the first and the second reference period the planned en route determined unit costs do not decrease in line with the Union-wide trend (–0,3%, compared to –1,7%). While the target for 2019 is based on planned en route determined unit costs that are slightly lower than the average en route determined unit costs of the Member States having a similar operational and economic environment to the one of the Netherlands (–3,7%), they are around 18% above the Union-wide performance target in 2019”.

4.14.4 The analysis focuses on the changes made to the initial RP2 performance plan and on the elements that were specifically identified in Whereas 6 and 12 of EC Decision 2015/347 and which are listed in paragraphs 4.14.2 and 4.14.3 above. Namely, this analysis is focused, in a first step, on whether the en-route DUC trend is equal or better than -1.7% p.a. over the first and second reference periods combined and -3.3% p.a. over the second reference period. Should the en-route cost-efficiency target not pass the first step, a second step looks at if the DUC level planned for 2019 is markedly lower than the comparator group average.

4.15 Netherlands: Summary of changes in revised Performance Plan (July 2015)


A slightly lower starting point for 2014 in terms of DUC, based on actual data for 2014;


A downwards revision of the DCs provided for the 2015-2019 period when expressed in nominal terms, but higher DCs expressed in real terms due to the revision of the 2014 actual inflation rate.


52

4.17 Netherlands: En-route charging zone assessment following revised Performance Plan submission


Overview

The tables below show three sets of data for the Netherlands:


European Commission Decision (March 2015): showing the PP data as included in the EC Decision. For a number of States, the Decision data included updates to thedata provided in the initial PP (e.g. revision of EUROCONTROL costs, revision of the 2015 data to lower the 2015 unit rate, etc.); and,


Table 18: Netherlands: Initial and revised en-route cost-efficiency targets for RP2

When expressed in real terms, the Netherlands revised en-route DCs are cumulatively +7.3 M€2009 higher than in the initial PP. Since, the en-route SUs forecast provided for RP2 were not changed, the Netherlands’ revised en-route cost-efficiency targets for RP2 contribute to increase the gap with the RP2 Union-wide targets by an amount of +7.3 M€2009.


2014F 2015D 2016D 2017D 2018D 2019D2011-19

CAGR2014-19

CAGR2015-19

CAGR



2014F 2015D 2016D 2017D 2018D 2019D2011-19

CAGR2014-19

CAGR2015-19

CAGR


Revised Performance Plan (July 2015) 2014A 2015D 2016D 2017D 2018D 2019D 2011-19 2014-19 2015-19Determined costs EUR m (nom) 177.1 184.9 184.1 187.4 194.2 198.6 2.8% 2.3% 1.8%Inflation rate annual % change 0.3% 1.0% 1.2% 1.4% 1.5% 1.5%Inflation index 2009=100 109.5 110.6 112.0 113.6 115.3 117.0 1.5% 1.3% 1.4%Determined costs EUR m (2009) 161.7 167.2 164.4 165.0 168.4 169.7 1.2% 1.0% 0.4%Service units '000s 2,767 2,806 2,826 2,846 2,874 2,903 1.4% 1.0% 0.8%Determined unit cost EUR (2009) 58.43 59.57 58.18 57.97 58.60 58.45 -0.2% 0.0% -0.5%Exchange rate (2009) EUR:EUR 1.00 Determined unit cost EUR (2009) 58.43 59.57 58.18 57.97 58.60 58.45 -0.2% 0.0% -0.5%

Total RP2Difference between revised and initial en-route DUC % 1.0% 1.0% 0.7% 0.8% 0.8%Difference between revised and initial en-route DUC EUR (2009) 0.60 0.58 0.43 0.47 0.48 Revised en-route TSUs '000s 2,806 2,826 2,846 2,874 2,903 Assessed monetised contribution EUR m (2009) 1.7 1.6 1.2 1.3 1.4 7.3


53

Figure 12: Netherlands: En-route cost-efficiency targets in RP2 initial and revised PPs


The en-route actual unit cost for 2014 (58.43 €2009) is -0.9% lower than the figure provided in the initial RP2 PP (58.93 €2009). The PRB notes that this lower starting point reflects the latest available actual data in terms of en-route costs and traffic for the Netherlands.

Indeed, the Netherlands has reported actual en-route SUs for 2014 (2,767,312), a figure which is marginally higher (+0.2%) than the value provided in the initial RP2 PP (2,762,000).

In addition, the actual en-route DCs reported for the year 2014 (161.7 M€2009) are -0.7% lower than the figure that was provided in the initial PP (162.8 M€2009).

Important Note:



Key points for the Netherlands en-route charging zone


1. Traffic forecast assumptions: Original assessment Passed with reservations

Revised PP No changes

959799101103105107109111113115

0

10

20

30

40

50

60

70

2011 2012 2013 2014 2015 2016 2017 2018 2019 En

-ro

ute

co

sts

and

ser

vic

e u

nit

s in

dex

(2

011=

100)

Det

erm

ined

un

it c

ost

, €

(200

9)

Revised PP (July 2015) cost-efficiency target for RP2 - Netherlands






54

(July 2015)

Figure 13: Netherlands: En-route service units forecasts overview

Table 19: Netherlands: En-route service units forecast – including STATFOR February 2015


The number of total en-route service units (SUs) planned for the 2015-2019 period has notbeen updated compared to the information reported in the initial Performance Plan. The planned growth of en-route SUs provided for the Netherlands en-route charging zone over RP2 (+0.8% p.a.) is in line with STATFOR February 2014 low scenario (+0.9% p.a.).

According to the forecast provided in the revised PP, en-route SUs are expected to grow by +1.4% in 2015. This is below the information reported in the CRCO’s monthly monitoring which indicates that for the Netherlands actual traffic in the first eight months of 2015 is +2.4% higher compared to the same period in 2014.





90

95

100

105

110

115

120

125

130

2011 2012 2013 2014 2015 2016 2017 2018 2019

Ind

ex o

f en

-ro

ute

SU

s (2

011=

100)

Netherlands




55

Table 20: Netherlands: Economic assumptions


The actual inflation rate provided for the year 2014 was updated to 0.3% (from 2.0% originally), in line with the actual Eurostat HICP published in April 2015, as required in Article 7.1 of the Charging Regulation (391/2013). This mechanically impacts the level of the RP2 en-route DCs when expressed in real terms (see details in point 3 below).


The latest IMF inflation forecasts released in April 2015 for the Netherlands reflect lower inflation rates over the 2015-2018 period than those published in April 2014. As a result, the inflation rates planned by the Netherlands between 2015 and 2018 are higher than the latest IMF forecasts with differences ranging between 0.1 and 1.1 percentage points. The planned inflation rate provided for the year 2019 is the same as the figure recorded in the IMF April 2015 database.

The Netherlands states in the revised PP that “because of the volatility of low inflation rates the inflation rates included in the cost efficiency performance plan of the Netherlands have not been changed”.


Original assessment Not passed with reservations




Compared to the initial PP (see Table 18), the Netherlands has revised downwards the DCs (expressed in nominal terms) planned for each year of RP2. Cumulatively over RP2, total DCs are -0.8% lower than those provided in the initial PP (-7.7 M€) which is a genuine cost-efficiency improvement. However, when expressed in real terms, over RP2 the DCs are cumulatively +0.9% higher (+7.3 M€2009) than those provided in the initial PP.

These differences are due to the fact that the planned inflation rate reported for 2014 in the initial PP (2.0%) was substantially higher than the actual inflation rate (0.3%) which is provided in the Netherlands revised submission. As explained above, this mechanically impacts the whole RP2 DCs series when expressed in real terms.

The en-route cost-base of the Netherlands comprises costs associated with the main ATSP (LVNL), another ATSP (MUAC) which provides ATC services in the Netherlands upper airspace, the MET provider (KNMI), the EUROCONTROL Agency and the Dutch NSA. Except for the EUROCONTROL Agency (-7.6% on average), the en-route real DUCs provided for all the entities were revised upwards compared to the information provided in

Inflation: Netherlands 2012 2013 2014 2015 2016 2017 2018 2019

Initial (June 2014) PP RP2 annual % change 2.8% 2.6% 2.0% 1.0% 1.2% 1.4% 1.5% 1.5%Revised (July 2015) PP RP2 annual % change 2.8% 2.6% 0.3% 1.0% 1.2% 1.4% 1.5% 1.5%Eurostat/IMF avg annual % change 2.6% 0.3% -0.1% 0.9% 1.1% 1.4% 1.5%Difference (Revised (July 2015) RP2 PP vs Eurostat/IMF avg) p.p. difference 0.0% 0.0% 1.1% 0.4% 0.3% 0.1% 0.0%Initial (June 2014) PP RP2 2009=100 106.4 109.2 111.4 112.5 113.9 115.5 117.2 119.0Revised (July 2015) PP RP2 2009=100 106.4 109.2 109.5 110.6 112.0 113.6 115.3 117.0Eurostat/IMF avg 2009=100 106.4 109.2 109.5 109.4 110.3 111.5 113.1 114.8Difference (Revised (July 2015) RP2 PP vs Eurostat/IMF avg) index difference 0.0 0.0 0.0 1.3 1.7 2.1 2.2 2.2


56

the initial PP (on average +1.7% over RP2).


As shown in Table 18, the Netherlands’ en-route DUC is expected to remain fairly constant (+0.01% p.a.) over the 2014-2019 period. This is worse than the Union-wide target for RP2 (-3.3% p.a.) and worse than the reduction planned in the initial PP (-0.3% p.a.). The en-route DUC trend for the Netherlands over the 2014-19 period (+0.01% p.a.) is also worse than the RP2 Union-wide DUC reduction required to reach the Union-wide target when computed using as starting point the 2014 actual costs and SUs (-1.9% p.a.).


Considering the 2014 forecast starting point from the initial PP (i.e. 59.64 €2009) and the 2019 revised target of 58.45 €2009, the RP2 DUC trend is –0.4% p.a.. This is below the 2014-2019 Union-wide target trend (-3.3% p.a.).

If the initial PP inflation index is applied, then the 2019 revised target would become 58.16 €2009, and the RP2 DUC trend would be –0.5% p.a., i.e. also below the 2014-2019 Union-wide target trend (-3.3% p.a.).


When assessed over the 2011-2019 period, the en-route DUC trend is planned to be -0.2% p.a. which is worse than (a) the trend underpinning the Union-wide target (-1.7% p.a.) and (b) the DUC reduction provided in the initial PP (-0.3% p.a.). The Netherlands’ planned en-route DUC profile over 2011-2019 mainly reflects the fact that DCs are expected to increase by +1.2% p.a. in real terms while the number of SUs is planned to grow by +1.4% per year on average.

If the initial PP inflation index is applied, then the 2019 revised target would become 58.16 €2009, and the DUC trend over the combined RP1+RP2 periods would be –0.3% p.a., i.e. also below the 2011-2019 Union-wide target trend (-1.7% p.a.).


The Netherlands en-route DCs for 2015 (167.2 M€2009) are +3.4% higher than 2014 actual en-route costs (161.7 M€2009) and no structural costs reductions are foreseen for RP2 since DCs are planned to increase by +0.4% p.a. between 2015 and 2019.





The Netherlands’ planned en-route DUC for 2019 (58.45 €2009) is slightly higher (+1.3%) than that of Belgium-Luxembourg its comparator (57.71 €2009), while it was found as being -7.2% lower in the assessment of the initial PP.

The revised DUC planned by the Netherlands for 2019 is +0.8% higher than that provided in the initial RP2 PP. In fact, the revised planned DUC is higher than that provided in the initial RP2 PP for each year of the period (differences ranging between +0.7% and +1.0%). These deviations reflect the upwards revision of the en-route DCs (+7.3 M€2009 over RP2) expressed in real terms (see point 2 and point 3 above).


57





The weighted average cost of capital (WACC) rate and asset base used to calculate the cost of capital of LVNL over RP2 are in line with the data reported in the initial PP.

Overall view of the Netherlands en-route cost-efficiency KPI


Key points of the analysis of the revised RP2 en-route cost-efficiency targets submitted by the Netherlands:

Compared to the initial PP submitted in June 2014, the en-route unit cost reported for the year 2014 has been slightly revised downwards (-0.9%). This lower starting point reflects the latest available actual data in terms of en-route costs and traffic for the Netherlands.

The en-route SUs forecasts over the 2015-2019 period have not been updated. The planned growth of en-route SUs provided for the Netherlands en-route charging zone during RP2 (+0.8% p.a.) is in line with STATFOR February 2014 low scenario.

The planned inflation rates provided for the years 2015-2019 have not been changed compared to the information submitted in the initial PP and are in line with IMF April2014 inflation forecasts. The 2014 actual inflation rate was updated to 0.3% (from 2.0% originally planned), in line with the actual Eurostat HICP published in April 2015.

Compared to the initial PP, the Netherlands has revised downwards the DCs (expressed in nominal terms) planned for each year of RP2. Cumulatively, total DCs are -0.8% lower than those provided in the initial PP (-7.7 M€) which is a genuine cost-efficiency improvement. However, when expressed in real terms, the DCs are cumulatively +0.9% higher (+7.3 M€2009) than those provided in the initial PP. These differences are due to the fact that the planned inflation rate reported for 2014 in the initial PP (2.0%) was substantially higher than the actual inflation rate (0.3%) which is provided in the Netherlands revised submission.

In 2019 the Netherlands’ planned en-route DUC (58.45 €2009) is expected to be slightly higher (+1.3%) than that of Belgium-Luxembourg which is its direct comparator (57.71 €2009).

Considering the 2014 actual starting point, the Netherlands’ en-route DUC is expected to remain fairly constant (+0.01% p.a.) over the 2014-2019 period. This is worse than the Union-wide target for RP2 (-3.3% p.a.) and than the reduction planned in the initial PP (-0.3% p.a.). The en-route DUC trend for the Netherlands over the 2014-19 period (+0.01% p.a.) is also worse than the RP2 Union-wide DUC reduction required to reach the Union-wide target when computed using as starting point the 2014 actual costs and SUs (-1.9% p.a.). Considering the 2014 forecast starting point from the initial PP (i.e. 59.64 €2009) and the 2019 revised target of 58.45 €2009, the RP2 DUC trend is -0.4% p.a.. This is below the 2014-2019 Union-wide target trend (-3.3% p.a.).

Moreover, when analysed over the 2011-2019 period which covers both RP1 and RP2, the Netherlands en-route DUC is expected to marginally decrease by -0.2% p.a.


58

which is worse than the trend underpinning the Union-wide cost-efficiency target (-1.7% p.a.), and than the DUC reduction that was provided in the initial PP (-0.3% p.a.).

When expressed in real terms, the Netherlands revised en-route DCs are cumulatively +7.3 M€2009 higher than in the initial PP. Since, the en-route SUs forecast provided for RP2 were not changed, the Netherlands’ revised en-route cost-efficiency targets for RP2 contribute to increase the gap with the RP2 Union-wide targets by an amount of +7.3 M€2009.

Conclusions:

The PRB considers that Netherlands revised en-route cost-efficiency targets for RP2 do not meet the consistency criteria and are not in line with the points identified in EC Decision 2015/347 (Art. 4).

There has been a deterioration compared to the initial PP, due to the fact that the planned inflation rate reported for 2014 in the initial PP was substantially higher than the actual inflation rate which is provided in the revised submission. Considering the 2014 forecast starting point from the initial PP and the 2019 revised target, the RP2 DUC trend is –0.4% p.a. This is below the 2014-2019 Union-wide target trend (-3.3% p.a.). When assessed over the 2011-2019 period, the en-route DUC trend is planned to be -0.2% p.a. which is worse than the trend underpinning the Union-wide target (-1.7% p.a.). In addition, the planned en-route DUC for 2019 is slightly higher than that of Belgium-Luxembourg, its direct comparator.The PRB also notes that Netherlands 2015 DCs are +3.4% higher than the 2014 actual costs. This suggests that the improvements achieved during RP1 and in particular 2014, have not been reflected in RP2 planning. Finally, the PRB also notes that FABEC revised RP2 PP does not comprise detailed information on appropriate measures for reaching the cost-efficiency targets for the Netherlands

However, the PRB is aware that the State is reviewing the ATM set-up in the Netherlands and associated organizational measures in relation to LVNL. In this context, the PRB considers that Netherlands should provide:

a. a clear narrative and a concrete action plan with appropriate milestones for costs reductions to ensure that performance improvement is delivered; and

b. transparent monitoring and reporting of progress against these milestones to stakeholders including the PRB.



59

4.18 Netherlands: Terminal charging zone assessment following revised Performance Plan submission


Overview

Figure 14: Netherlands: Terminal cost-efficiency targets for RP2 initial and revised PPs

Table 21: Netherlands: Initial and revised terminal cost-efficiency targets for RP2

The Netherlands’ revised terminal cost-efficiency targets for RP2 represent an increase of

80

85

90

95

100

105

2015D 2016D 2017D 2018D 2019D

Det

erm

ined

un

it c

ost

in

dex

(20

15=

100)

Netherlands


Netherlands (Initial June 2014) Netherlands (Revised June 2015)


CAGR (%)



CAGR (%)



Total RP2Difference between revised and initial terminal DUC % 1.7% 0.5% 1.3% 2.0% 2.7%Difference between revised and initial terminal DUC EUR (2009) 2.52 0.78 1.83 2.89 3.94 Revised TNSUs '000s 354.5 360.0 361.0 362.0 363.0 Assessed monetised contribution EUR m (2009) 0.9 0.3 0.7 1.0 1.4 4.3


60

+4.3 M€2009 compared to the information provided in the initial PP submitted in June 2014. This comprises an amount of +4.4M€2009, which is attributable to the upwards revision of real DCs over RP2, and an amount of -0.1 M€2009 which reflects a slight revision of the terminal SUs forecasts compared to the initial PP.

Key points for the Netherlands’ terminal charging zone






Compared to the initial PP submission, the Netherlands has revised its TNSUs forecast for RP2. The TNSUs forecast reported for 2015 have not been updated and are in line with the data provided in the initial PP. On the other hand, the TNSUs planned for 2016 and 2017have been revised upwards, while the TNSUs expected for 2018 and 2019 have been slightly revised downwards.

In fact, between 2015 and 2019, the planned growth rate of the revised TNSUs (+0.6% p.a.) is lower than the low scenario of STATFOR February 2014 forecasts (+1.0% p.a.).

On the other hand, the planned number of TNSUs provided in the revised PP for the year 2015 (354,510) is higher than the figure reported in STATFOR February 2014 base scenario (349,300). As a result, over RP2 the number of planned TNSUs is consistently above the figures reported in STATFOR February 2014 database for the low scenario.





As for en-route, the planned inflation rates provided for the years 2015-2019 have not been changed compared to the information submitted in the initial PP, and are in line with IMF April 2014 inflation forecasts. The 2014 actual inflation rate was updated to 0.3% (from 2.0% originally planned), in line with the actual Eurostat HICP published in April 2015.


Original assessment Not passed with reservations



When expressed in nominal terms, the revised terminal DCs provided for the Netherlands TCZ are identical to the figures reported in the initial PP. However, when expressed in real terms, revised terminal DCs are +1.7% higher than those provided in the initial PP (+4.4 M€2009).

As for en-route, these differences are due to the fact that the planned inflation rate reported for 2014 in the initial PP (2.0%) was substantially higher than the actual inflation rate (0.3%) which is provided in the Netherlands revised submission.


61

The Netherlands’ terminal DUC is expected to decrease by -0.5% p.a. over the 2015-2019 period which is slightly worse than the DUC reduction provided in the initial PP (-0.8% p.a.).






Overall view of the Netherlands terminal ANS cost-efficiency KPI


Key points of the analysis of the revised RP2 TANS cost-efficiency targets submitted by the Netherlands:

Compared to the initial PP submission, the Netherlands has revised its TNSUs forecast for RP2. Between 2015 and 2019, the planned growth rate of the revised TNSUs (+0.6% p.a.) is lower than the low scenario of STATFOR February 2014 forecasts (+1.0% p.a.). On the other hand, the planned number of TNSUs provided in the revised PP for the year 2015 (354,510) is higher than the figure reported in STATFOR February 2014 base scenario (349,300). As a result, over RP2 the number of planned TNSUs is consistently above the figures reported in STATFOR February 2014 database for the low scenario.

The Netherlands’ terminal DUC is expected to decrease by -0.5% p.a. over the 2015-2019 period which is slightly worse than the DUC reduction provided in the initial PP (-0.8% p.a.).

The Netherlands’ revised terminal cost-efficiency targets for RP2 represent an increase of +4.3 M€2009 compared to the information provided in the initial PP submitted in June 2014. This comprises an amount of +4.4M€2009, which is attributable to the upwards revision of real DCs over RP2, and an amount of -0.1 M€2009 which reflects a marginal revision of the terminal SUs forecasts compared to the initial PP.


62

4.19 Switzerland: Overview of EC Decision (30th June 2015) 4.19.1 The assessment carried out by the EC assisted by the PRB has shown that the RP2

cost-efficiency targets submitted by FAB EC for Switzerland in its initial Performance Plan (July 2014) are not consistent with the relevant Union-wide performance targets.

4.19.2 The EC Decision 2015/1056 published on the 30th June 2015 (see Whereas 6) indicates that: “Concerning the key performance area of cost-efficiency, the targets expressed in en route determined unit costs submitted by Switzerland, as laid down in the FABEC performance plan, have been assessed, in accordance with the principles laid down in point 5, in conjunction with point 1, of Annex IV to Implementing Regulation (EU) No 390/2013, by taking account of the trend of en route determined unit costs over the second reference period and the combined period of the first and the second reference period (2012-2019), the number of service units (traffic forecast) and the level of en route determined unit costs in comparison to Member States having a similar operational and economic environment.”

4.19.3 The EC Decision (see Whereas 7) further specifies the reasons for assessing Switzerland’s cost-efficiency targets as not consistent with the relevant Union-wide performance targets and indicates that: “As regard Switzerland, its targets are based on a planned reduction of its en route determined unit costs over the second reference period by only 1,0% per year on average. This is significantly below the targeted reduction of the average Union-wide en route determined unit costs over the second reference period (-3,3% per year). Also over the combined period of the first and the second reference period the planned en route determined unit costs do not decrease in line with the Union-wide trend (-0,6%, compared to -1,7%). In addition, the target for 2019 is based on planned en route determined unit costs in 2019 that are substantially above (+26,6%) the average en route determined unit costs of the Member States having a similar operational and economic environment to that of Switzerland and around 41% above the Union-wide performance target in 2019.”

4.19.4 The analysis focuses on the changes made to the initial RP2 performance plan (PP) and on the elements that were specifically identified in Whereas 6 and 7 of EC Decision 2015/1056 and which are listed in paragraphs 4.19.2 and 4.19.3 above. Namely, this analysis is focussed, in a first step, on whether the en-route DUC trend is equal or better than -1.7% p.a. over the first and second reference periods combined and -3.3% p.a. over the second reference period. Should the en-route cost-efficiency target not pass the first step, a second step looks at if the DUC level planned for 2019 is markedly lower than the comparator group average.

4.20 Switzerland: Summary of changes in revised Performance Plan (July 2015)

4.20.1 The main differences between the RP2 revised PP and the initial PP are as follows:


An upwards revision of the DCs provided for the 2015-2019 period;

An update of the inflation rates planned for RP2;

An upwards revision of the en-route SU forecast 2015-2019.


63

4.21 Switzerland: En-route charging zone assessment following revised Performance Plan submission


Overview

The tables below show two sets of data for Switzerland:

Initial Performance Plan (submitted in June 2014): showing the initial PP data as published in the PRB Assessment Report of Performance Plans for RP2 on 6 October 2014; and,

Revised Performance Plan (July 2015): showing the data provided in the RP2 revised PP.

Table 22: Switzerland: Initial and revised en-route cost-efficiency targets for RP2

The assessed monetised contribution provided by Switzerland’s revised en-route cost-efficiency target for RP2 is a reduction of -4.1 M€2009 compared to the information provided in the initial PP submitted in June 2014. Indeed, the higher determined costs (+13.6 M€2009cumulatively over RP2) were more than compensated for by a significant contribution of -17.7 M€2009 reflecting the upward revision of the en-route SUs forecasts.


2014F 2015D 2016D 2017D 2018D 2019D2011-19

CAGR2014-19

CAGR2015-19

CAGR

Determined costs CHF m (nom) 153.9 155.4 156.8 158.8 159.1 160.9 0.3% 0.9% 0.9%Inflation rate annual % change 0.2% 0.5% 1.0% 1.0% 1.0% 1.0%Inflation index 2009=100 100.3 100.8 101.8 102.8 103.9 104.9 0.5% 0.9% 1.0%Determined costs CHF m (2009) 153.5 154.1 154.0 154.4 153.2 153.4 -0.2% 0.0% -0.1%Service units '000s 1 401 1 419 1 429 1 440 1 454 1 470 0.3% 1.0% 0.9%Determined unit cost CHF (2009) 109.58 108.64 107.82 107.24 105.36 104.32 -0.6% -1.0% -1.0%Exchange rate (2009) CHF:EUR 1.51 Determined unit cost EUR (2009) 72.62 72.00 71.45 71.07 69.82 69.13 -0.6% -1.0% -1.0%

Revised Performance Plan (July 2015)Key figures: en-route

2014A 2015D 2016D 2017D 2018D 2019D2011-19

CAGR2014-19

CAGR2015-19

CAGR

Determined costs CHF m (nom) 153.5 158.2 156.2 157.9 157.9 159.4 0.2% 0.8% 0.2%Inflation rate annual % change 0.0% -1.0% 0.0% 0.5% 1.0% 1.0%Inflation index 2009=100 100.1 99.1 99.1 99.6 100.6 101.6 0.1% 0.3% 0.6%Determined costs CHF m (2009) 153.3 159.6 157.6 158.6 157.0 156.9 0.0% 0.5% -0.4%Service units '000s 1 427 1 453 1 470 1 491 1 513 1 537 0.9% 1.5% 1.4%Determined unit cost CHF (2009) 107.45 109.89 107.24 106.37 103.79 102.05 -0.8% -1.0% -1.8%Exchange rate (2009) CHF:EUR 1.51 Determined unit cost EUR (2009) 71.21 72.82 71.07 70.49 68.78 67.63 -0.8% -1.0% -1.8%

Total RP2Difference between revised and initial en-route DUC % 1.1% -0.5% -0.8% -1.5% -2.2%Difference between revised and initial en-route DUC EUR (2009) 0.82 0.38- 0.58- 1.04- 1.50- Revised en-route TSUs '000s 1 453 1 470 1 491 1 513 1 537 Assessed monetised contribution EUR m (2009) 1.2 0.6- 0.9- 1.6- 2.3- -4.1


64

Figure 15: Switzerland: En-route cost-efficiency targets in RP2 initial and revised PPs


The real en-route unit cost reported by Switzerland for the year 2014 in the body of the revised PP (74.96 €2009) does not reflect the actual en-route unit cost but the ratio of the determined costs for 2014 (107.0 M€2009) with the actual number of SUs (1,427,068), which is different than the figure reported in Table 1 above (71.21 €2009). For the purposes of assessing the cost-efficiency targets provided in RP2 revised PPs, the PRB considers preferable to take into account the actual en-route unit cost in 2014 as starting point for the RP2 cost-efficiency targets. This methodology was applied to all the charging zones for which revised cost-efficiency targets were submitted in July 2015.

As a result, the PRB computes that the en-route actual unit cost for 2014 amounts to 71.21 €2009 and is -1.9% lower than the figure provided in the initial RP2 PP (72.62 €2009).This deviation is mainly due to the fact that actual en-route SUs for 2014 (1,427,068) are +1.9%higher than the value provided in the initial RP2 PP. The actual en-route costs reported for the year 2014 (101.6 M€2009) are in the same order of magnitude as the estimated figure that was used in the assessment of the initial RP2 PP (101.7 M€2009).

Important Note:



Key points for Switzerland’s en-route charging zone

In the following section, five assessment criteria are considered in line with Annex IV of the Performance Scheme regulation (390/2013). For each of these criteria, the results of the original assessment are presented along with the changes arising from the revised PP

80

85

90

95

100

105

110

115

120

0

10

20

30

40

50

60

70

80

2011 2012 2013 2014 2015 2016 2017 2018 2019 En

-ro

ute

co

sts

and

ser

vic

e u

nit

s in

dex

(2

011=

100)

Det

erm

ined

un

it c

ost

, €

(200

9)

Revised PP (July 2015) cost-efficiency target for RP2 - Switzerland






65

submission.





Figure 16: Switzerland: En-route service units forecasts overview

Table 23: Switzerland: En-route service units forecast – including STATFOR February 2015


The number of en-route service units (SUs) planned for the 2015-2019 period in the revised PP have been revised upwards compared to the information reported in the initial PP (a difference ranging from +2.4% in 2015 to +4.5% in 2019). In fact, between 2015 and 2019, the planned growth rate of the revised en-route SUs (+1.4% p.a.) is between the low (+1.0% p.a.) and the base case (+2.4% p.a.) scenarios of STATFOR February 2015 forecasts.

According to the forecast provided in the revised PP, en-route SUs are expected to grow by +1.8% in 2015. This is in line with the information reported in the CRCO’s monthly monitoring which indicates that for Switzerland actual traffic in the first eight months of 2015 is +1.7% higher compared to the same period in 2014.





90

95

100

105

110

115

120

2011 2012 2013 2014 2015 2016 2017 2018 2019

Ind

ex o

f en

-ro

ute

SU

s (2

011

=10

0)

Switzerland




66

Table 24: Switzerland: Economic assumptions


The inflation rate for 2014 was updated (i.e. 0.0% instead of 0.2% as provided in the initial PP), in line with the actual Eurostat HICP published in April 2015, as required in Article 7.1. of the Charging Regulation (391/2013).

The planned inflation rates provided by Switzerland for RP2 in the initial PP were in line with IMF April 2014 inflation forecasts. The latest IMF inflation forecasts released in April 2015 for Switzerland reflect lower inflation rates over the 2015-2018 period than those published in April 2014.

The planned inflation rate provided by Switzerland for the years 2015-2019 in the revised PP have been updated, but slightly differ from the latest IMF inflation forecasts (a cumulative difference of 0.9 p.p. over RP2). This difference does not significantly change the results of this assessment.





Switzerland Charging Zone has one specificity to take into account when computing trends over RP2, as documented in Annex C to the FABEC revised PP (Additional Information to the Reporting Tables for Charging purposes). The en-route cost-base reported by Switzerland in the RP2 PP is netted-off by an income which is expected to be received as part of the international Franco-Swiss Treaty on delegation of ANS provision over French airspace. Switzerland has reported that the planning assumptions related to this income significantly changed following the unforeseen and substantial appreciation of the Swiss Franc (CHF) on 15 January 2015. As a result of the CHF appreciation, the income received by Switzerland is now significantly lower when expressed in CHF. Since this income is used to reduce Switzerland en-route cost-base, all else equal, the lower amount expressed in CHF contributes to higher CHF DCs than those reported in the initial RP2 PP.

This specificity complexifies the analysis as it requires an adjustment to the data, which is not reflected in the en-route Reporting Tables submitted for the purpose of the Charging Regulation. In order to reflect this adjustment, an assumption was taken concerning the impact of the sudden and unexpected exchange rate appreciation on Switzerland revised DCs for RP2.


Switzerland has revised upwards the DCs planned for each year of RP2 (see Table 5). Cumulatively over RP2, total DCs for Switzerland are +2.7% higher than those provided in the initial PP (+13.6 M€2009). This difference is mainly due to higher staff costs than provided in the initial PP (a cumulative amount of +24.7 M€2009), which cancel the impact of the lower other operating costs (-8.1 M€2009) planned over RP2. The upwards revision of the DCs

Inflation: Switzerland 2012 2013 2014 2015 2016 2017 2018 2019

Initial (June 2014) PP RP2 annual % change -0.7% 0.1% 0.2% 0.5% 1.0% 1.0% 1.0% 1.0%Revised (July 2015) PP RP2 annual % change -0.7% 0.1% 0.0% -1.0% 0.0% 0.5% 1.0% 1.0%Eurostat/IMF avg annual % change 0.1% 0.0% -1.2% -0.4% 0.4% 0.8% 1.0%Difference (Revised (July 2015) RP2 PP vs Eurostat/IMF avg) p.p. difference 0.2% 0.4% 0.1% 0.2% 0.0%Initial (June 2014) PP RP2 2009=100 100.0 100.1 100.3 100.8 101.8 102.8 103.9 104.9Revised (July 2015) PP RP2 2009=100 100.0 100.1 100.1 99.1 99.1 99.6 100.6 101.6Eurostat/IMF avg 2009=100 100.0 100.1 100.1 98.9 98.5 98.9 99.7 100.7Difference (Revised (July 2015) RP2 PP vs Eurostat/IMF avg) index difference 0.2 0.6 0.7 0.9 0.9


67

reported by Switzerland over RP2 is mainly due to the unforeseen and substantial appreciation of the CHF on 15 January 2015. Cancelling the impact of the CHF appreciation,over RP2 the Swiss revised DCs would be cumulatively some -20.2 M€2009 lower than in the initial PP.


Switzerland’s en-route DUC is expected to decrease by -1.0% p.a. over the 2014-2019 period. This is lower than the Union-wide target for RP2 (-3.3% p.a.) and in line with the level of reduction planned in the initial PP (-1.0% p.a.). The en-route DUC trend for Switzerland over the 2014-19 period (-1.0% p.a.) is also worse than the RP2 Union-wide DUC reduction required to reach the Union-wide target when computed using as starting point the 2014 actual costs and SUs (-1.9% p.a.).

Switzerland’s planned en-route DUC profile over 2014-2019 mainly reflects the fact that DCs are expected to slightly increase by +0.5% p.a. while the number of SUs is planned to grow by +1.5% per year on average.

As documented above, these trends are significantly impacted by the unforeseen and substantial appreciation of the CHF on 15 January 2015. Based on information on planned exchange rate provided by Switzerland in Annex C of the revised PP, neutralising the impact of the CHF appreciation would lead to a DUC decrease of -2.1% p.a. over RP2 which is better than the effort required to reach the Union-wide target when computed using as starting point the 2014 actual costs and SUs (-1.9% p.a.).


Considering the 2014 forecast starting point from the initial PP (i.e. 109.58 CHF2009) and the 2019 revised target of 102.05 CHF2009, the RP2 DUC trend is -1.4% p.a.. This is below the 2014-2019 Union-wide target trend (-3.3% p.a.). Neutralising the impact of the change in the exchange rate would lead to a DUC decrease of -2.5% p.a. over RP2 which is also below the Union-wide target trend.

If the initial PP inflation index is applied, then the 2019 revised target would become 98.84 CHF2009, and the RP2 DUC trend would be -2.0% p.a., i.e. also below the 2014-2019 Union-wide target trend (-3.3% p.a.). In this case, neutralising for the impact of the CHF appreciation would lead to a DUC decrease of -3.2% p.a. over RP2.


When assessed over the 2011-2019 period, the en-route DUC trend is planned to be -0.8%p.a. which is better than the DUC reduction provided in the initial PP (-0.6% p.a.) but worse than the trend underpinning the Union-wide target (-1.7% p.a.). Neutralising the impact of the change in the exchange rate would lead to a DUC decrease of -1.6% p.a. which is in line with the trend underpinning the Union-wide target.

If the initial PP inflation index is applied, then the 2019 revised target would become 98.84 CHF2009, and the DUC trend over the combined RP1+RP2 periods would be -1.2% p.a., i.e. also below the 2011-2019 Union-wide target trend (-1.7% p.a.). In this case, neutralising for the impact of the CHF appreciation would lead for Switzerland to a DUC decrease of -1.9% p.a. over RP1+RP2.


Switzerland en-route DCs for 2015 (159.6 MCHF2009) are +4.1% higher than 2014 actual en-route costs (153.3 MCHF2009). En-route DCs are then planned to slightly reduce by -0.4% p.a. between 2015 and 2019. However, Switzerland 2015 DCs are -0.8% lower than the 2014 actual costs when neutralising the impact of the CHF appreciation.

4. En-route DUC level: Original assessment Not passed


68



Switzerland’s planned en-route DUC for 2019 (67.63 €2009) is +28.1% higher than the average of the comparator group (52.78 €2009). In Switzerland there are specific monetary circumstances that need to be taken into account when benchmarking with the comparator group (Austria and Denmark), in particular the CHF appreciation and relative cost of living. When combining these different factors and adjusting for differences in cost of living (PPPs) and exchange rates, the gap between the DUC planned by Switzerland and the average of the comparator group is lower for each year of RP2 (a gap ranging from +12.7% in 2015 to +16.7% in 2019).

In addition, the revised DUC reported by Switzerland for 2019 is -2.2% lower than that provided in the initial RP2 PP. In fact, the revised planned DUC is lower than that provided in the initial RP2 PP for each year of the period except 2015. This improvement is due to the fact that the upwards revision of the en-route SU traffic forecast more than compensated for the upwards revision of DCs over RP2.

As explained in box 3 above, the higher DCs reported by Switzerland in the revised PP forRP2 mainly reflect the impact of the unforeseen and substantial appreciation of the CHF on 15 January 2015 on Switzerland re-planning assumptions. Cancelling the impact of the CHF appreciation leads to a DUC amounting to 63.88 €2009 in 2019, which is -7.6% lower than the figure provided in the initial RP2 PP.





The rate of RoE, the interest rate on debt and the WACC reported for Skyguide are in line with the figures provided in the initial PP (2.6%, 2.2% and 2.5%, respectively). In fact, Switzerland explains in the PP that Skyguide WACC (originally computed at 3.3-4.6% using the CAPM methodology) has been capped at 2.5% for each year of RP2. This is below the lower bound of the range of values (after tax) calculated with the methodology laid down in Annex C guidance.

The asset base used to compute the cost of capital planned for RP2 has been slightly revised. It is lower than in the initial PP for 2015 (-3.6%), 2016 (-2.2%) and 2017 (-0.4%) but higher in 2018 (+4.3%) and 2019 (+9.5%). As a result, the cost of capital reported for RP2 is cumulatively higher (+1.5% or 0.2 M€2009) than in the initial RP2 PP. This marginal difference does not change the result of this check.

Overall view of Switzerland en-route cost-efficiency KPI


Key points of the analysis of the revised RP2 en-route cost-efficiency targets submitted by Switzerland:

The en-route actual unit cost for 2014 of 71.21 €2009 is -1.9% lower than the figure provided in the initial RP2 PP (72.62 €2009).This deviation is mainly due to the fact that actual en-route SUs for 2014 (1,427,068) are +1.9% higher than the value provided in


69

the initial RP2 PP.

The en-route SUs forecast over the 2015-2019 period has been revised upwards compared to the information provided in the initial PP. The planned growth rate of the revised en-route SUs (+1.4% p.a.) is between the low (+1.0% p.a.) and the base case (+2.4% p.a.) scenarios of STATFOR February 2015 forecasts.

The planned inflation rate provided by Switzerland for the years 2015-2019 in the revised PP have been updated, but slightly differ from the latest IMF inflation forecasts released in April 2015 (a cumulative difference of 0.9 percentage point over RP2).

At the moment of revising its RP2 cost-efficiency target, Switzerland has experienced a monetary choc with the instantaneous and unforeseen appreciation of the CHF (some 20%) on 15 January 2015. As Switzerland uses the income received by France for its provision of ANS over the French airspace to net-off its en-route cost-base, the CHF appreciation, all else equal, results in lower income expressed in CHF and higher CHF DCs than those reported in the initial RP2 PP.

Considering the 2014 actual starting point, Switzerland’s en-route DUC is expected to decrease by -1.0% p.a. over the 2014-2019 period. This is worse than the Union-wide target for RP2 (-3.3% p.a.). The en-route DUC trend for Switzerland over the 2014-19 period (-1.0% p.a.) is also worse than the RP2 Union-wide DUC reduction required to reach the Union-wide target when computed using as starting point the 2014 actual costs and SUs (-1.9% p.a.). However, these trends are significantly impacted by the unforeseen and substantial appreciation of the Swiss Franc on 15 January 2015. Based on information on planned exchange rates provided by Switzerland in Annex C of the revised PP, neutralising the impact of the Swiss Franc appreciation would lead to a DUC decrease of -2.1% p.a. over RP2 which is better than the effort required to reach the Union-wide target when computed from the 2014 actual starting point (-1.9% p.a.).

Considering the 2014 forecast starting point from the initial PP (i.e. 109.58 CHF2009) and the 2019 revised target of 102.05 CHF2009, the RP2 DUC trend is -1.4% p.a.. This is below the 2014-2019 Union-wide target trend (-3.3% p.a.). Neutralising the impact of the Swiss Franc appreciation would lead to a DUC decrease of -2.5% p.a. over RP2 which is also below the Union-wide target trend.

When analysed over the 2011-2019 period which covers both RP1 and RP2, Switzerland’s en-route DUC is expected to decrease by -0.8% p.a. which is worse than the trend underpinning the Union-wide cost-efficiency target (-1.7% p.a.), but better than the DUC reduction that was provided in the initial PP (-0.6% p.a.). If the additional costs relating to the substantial appreciation of the Swiss Franc were excluded from the Swiss DCs, then the en-route DUC trend would be -1.6% p.a. over the 2011-2019 period. This is much better than the DUC reduction provided in the initial PP (-0.6% p.a.) and in the same order of magnitude as the trend underpinning the Union-wide cost-efficiency target (-1.7% p.a.).

The revised DUCs reported by Switzerland are lower than that provided in the initial RP2 PP for each year of the period except 2015. This improvement is due to the fact that the upwards revision of the en-route SU traffic forecast (+3.5% on average over RP2) more than compensated for the upwards revision of DCs over RP2 (+2.7% on average). The gap between the DUC planned by Switzerland and the average of the comparator group is also reduced for each year of RP2, a gap ranging from +12.7% in 2015 to +16.7% in 2019, after accounting for exchange rates and cost of livingdifferences. The higher DCs reported by Switzerland in the revised PP for RP2 mainly reflect the impact of the Swiss Franc appreciation on Switzerland re-planning


70

assumptions. Cancelling the impact of the CHF appreciation leads to a DUC amounting to 63.88 €2009 in 2019, which is -7.6% lower than the figure provided in the initial RP2 PP.

The assessed monetised contribution provided by Switzerland’s revised en-route cost-efficiency target for RP2 is a reduction of -4.1 M€2009 compared to the information provided in the initial PP submitted in June 2014. Indeed, the higher DCs (+13.6 M€2009 cumulatively over RP2) were more than compensated for by a significant contribution of -17.7 M€2009reflecting the upward revision of the en-route SUs forecasts.

As explained above, the upwards revision of the DCs reported by Switzerland over RP2 is mainly due to the unforeseen and substantial appreciation of the CHF on 15 January 2015. Cancelling the impact of the CHF appreciation, over RP2 the Swiss revised DCs would be cumulatively some -20.2 M€2009 lower than in the initial PP.

Conclusions:

The PRB considers that Switzerland revised en-route cost-efficiency targets for RP2 do not meet the consistency criteria and are not in line with the points identified in EC Decision 2015/1056 (Art. 4).

There has been an improvement compared to the initial PP, due to a higher amended TSU forecast which more than compensate the upwards revision in DCs. The PRB is aware that the upwards revision in DCs reported by Switzerland over RP2 is mainly due to the unforeseen and substantial appreciation of the CHF on 15 January 2015. Cancelling the impact of the CHF appreciation, over RP2 the Swiss revised DCs would be cumulatively some -20.2 M€2009 lower than in the initial PP. For the sake of completeness and fairness, Switzerland en-route DUC trends over RP2 and both RP1 and RP2 have also been adjusted to neutralize the impact of the CHF appreciation on 15 January 2015. Considering the 2014 forecast starting point from the initial PP and the 2019 revised target, the RP2 DUC trend is –1.4% p.a. This is below the 2014-2019 Union-wide target trend (-3.3% p.a.). However, neutralising the change in the exchange rate would lead to a DUC decrease of -2.5% p.a. over RP2. When assessed over the 2011-2019 period, the en-route DUC trend is planned to be -0.8% p.a. which is worse than the trend underpinning the Union-wide target (-1.7% p.a.).However, neutralising the change in the exchange rate would lead to a DUC decrease of -1.6% p.a. which is in the same order of magnitude as the Union-wide target. Finally, the PRB also notes that Switzerland 2015 DCs are -0.8% lower than the 2014 actual costs when neutralising the impact of the CHF appreciation. This suggests that the improvements achieved during RP1 and in particular 2014, have been reflected in RP2 planning.

The PRB considers that it is important in view of RP3 that Switzerland implementsappropriate actions in order to mitigate exchange rate risks in view of future contractual arrangements for delegation of service provision.

In addition, the PRB also notes that Switzerland indicates in FABEC Revised RP2 PP that “RP2 will be dedicated to launch the virtual centers that should be the trigger to further improve cost-efficiency over RP2”. The PRB considers that Switzerland should provide:

a) further details about the virtual centre programme and its link to deliver improved cost-efficiency beyond RP2,

b) a list of any other appropriate measures (comprising a clear narrative and a concrete action plan with quantitative, credible and transparent evidence), with a view to further improve en-route cost-efficiency performance over RP2 in preparation of RP3, and

c) a review of the situation by 2017.


71

4.22 Switzerland: Terminal charging zone assessment following revised Performance Plan submission


Overview

Figure 17: Switzerland: Terminal cost-efficiency targets for RP2 initial and revised PPs

Table 25: Switzerland: Initial and revised terminal cost-efficiency targets for RP2

87

89

91

93

95

97

99

101

103

2015D 2016D 2017D 2018D 2019D

De

term

ined

un

it c

ost

in

dex

(20

15=

100)

Switzerland


Switzerland (Initial June 2014) Switzerland (Revised June 2015)


CAGR (%)

Determined costs CHF m (nom) 98.9 99.5 100.9 101.5 103.1 1.1%Inflation rate * annual % change 0.5% 1.0% 1.0% 1.0% 1.0%Inflation index * 2009=100 100.8 101.8 102.8 103.9 104.9 1.0%Determined costs CHF m (2009) 98.1 97.8 98.1 97.7 98.3 0.1%Terminal SUs '000s 265.6 270.1 274.7 280.7 286.1 1.9%Determined unit cost CHF (2009) 369.47 361.91 357.22 348.09 343.71 -1.8%Exchange rate CHF:EUR (2009) 1.51 Determined unit cost EUR (2009) 244.85 239.84 236.73 230.68 227.77 -1.8%


CAGR (%)

Determined costs CHF m (nom) 98.7 91.8 93.2 93.8 95.4 -0.8%Inflation rate * annual % change -1.0% 0.0% 0.5% 1.0% 1.0%Inflation index * 2009=100 99.1 99.1 99.6 100.6 101.6 0.6%Determined costs CHF m (2009) 99.6 92.7 93.6 93.2 93.9 -1.4%Terminal SUs '000s 263.7 267.8 270.2 275.9 281.7 1.7%Determined unit cost CHF (2009) 377.55 346.01 346.31 337.94 333.42 -3.1%Exchange rate CHF:EUR (2009) 1.51 Determined unit cost EUR (2009) 250.20 229.30 229.50 223.96 220.96 -3.1%The 2015-2019 CAGR shown in the table is different from the main en-route comparator period (2014-2019),


Total RP2Difference between revised and initial terminal DUC % 2.2% -4.4% -3.1% -2.9% -3.0%Difference between revised and initial terminal DUC EUR (2009) 5.35 10.54- 7.23- 6.73- 6.81- Revised TNSUs '000s 263.7 267.8 270.2 275.9 281.7 Assessed monetised contribution EUR m (2009) 1.4 2.8- 2.0- 1.9- 1.9- -7.1


72

The assessed monetised contribution provided by Switzerland’s revised terminal cost-efficiency target for RP2 is a reduction of -7.1 M€2009 compared to the information provided in the initial PP submitted in June 2014. Indeed, the lower determined costs (-11.3 M€2009cumulatively over RP2) could more than compensate for the impact of the downward revision of the terminal SUs (+4.2 M€2009).

Key points for Switzerland terminal charging zone






The number of terminal service units (SUs) planned for the 2015-2019 period have been revised downwards compared to the information reported in the initial PP. Switzerland terminal SUs forecast (+1.7% p.a.) is close to STATFOR February 2015 low scenario (+1.8% p.a. between 2015 and 2019). This results in planned terminal SUs over RP2 that are on average -1.3% lower than those provided in the initial PP.






The inflation rates planned for the period 2015-2019 were revised and are in line with those reported for en-route ANS.





Except for 2015, Switzerland has revised downwards the terminal DCs planned for each year of RP2. Cumulatively over the 2015-2019 period, total terminal DCs are -3.5% (or -11.3 M€2009) lower than those provided in the initial PP. The PRB notes that the terminal DCs are not impacted by the monetary factors (appreciation of CHF) which affect the level of RP2 en-route DCs (see above item 4).

Switzerland’s terminal DUC is expected to decrease by -3.1% p.a. over the 2015-2019 period which is significantly better than the terminal DUC reduction provided in the initial PP (-1.8% p.a.).





73


The WACC, rate of RoE and interest on debt used to compute the terminal cost of capital for RP2 in the revised PP are (a) in line with the information provided in the initial PP and (b) the same as those applied for en-route ANS.

Overall view of Switzerland’s terminal ANS cost-efficiency KPI


Key points of the analysis of the revised RP2 TANS cost-efficiency targets submitted by Switzerland:

The number of terminal service units (SUs) planned for the 2015-2019 period have been revised downwards compared to the initial PP (-1.3% on average over the RP).

Switzerland’s terminal DUC is expected to decrease by -3.1% p.a. over the 2015-2019 period which is significantly better than the terminal DUC reduction provided in the initial PP (-1.8% p.a.).

The assessed monetised contribution provided by Switzerland’s revised terminal cost-efficiency target for RP2 is a reduction of -7.1 M€2009 compared to the information provided in the initial PP submitted in June 2014. Indeed, the lower determined costs (-11.3 M€2009cumulatively over RP2) could more than compensate for the impact of the downward revision of the terminal SUs (+4.2 M€2009).


74

Annex 1: En-route Capacity considerations In preparation for the PRB to present conclusions to the Commission, the PRB reviewed any additional information that was submitted beyond the FAB performance plan. As previously referred to in 3.3 of the main report, more information on the considerations of the PRB can be found in this annex.

LEGISLATION Regulation (EC) 549/2009 Article 11.3c states:







REVISION OF EN-ROUTE CAPACITY TARGETS: Despite the recommendation of the European Commission, the revised FABEC performance plan did not contain revised capacity targets. The FABEC RP2 en-route capacity targets remain inconsistent with the union-wide targets for each year from 2015 – 2018 inclusive.


75

APPROPRIATE MEASURES FOR REACHING IMPROVED EN-ROUTE CAPACITY TARGETS No new information about improving capacity was provided in the revised FABEC performance plan.

ADDITIONAL INFORMATION (1): As part of the submission of information presented to stakeholders in public consultation, the DSNA strategy plan 2014-2016 (revised edition January 2015) was presented. However, when compared to the original DSNA Master plan 2014-2016 edition December 2013 (prior to submission of the original FAB performance plan for RP2), there is no additional information regarding improving capacity.

(2): A letter was sent from the Director of Air Transport (France), Marc BOREL, to the Director of Air Transport, DG-MOVE (European Commission) Margus RAHUOJA, on 2/7/2015. The letter is regarding the Revised FABEC performance plan RP2 .

As discussed during an informal meeting 12th June 2015 between your services and DTA/ MCU, accompanied by operational experts, DSNA is currently working on preparing the commissioning by the year 2019 of a new version of the air traffic control systems for en-route French ACCs (ERATO and 4-flight), in order to deliver major operational efficiencies, some immediate, others progressively. RP2 will be for DSNA a transition phase. Every implementation in an ACC will require 2 years from the initial training to commissioning, generating some additional ATFM delays from 2015 to 2018, as capacity has to be reduced temporarily. In that perspective, DSNA contribution to FABEC delays will be higher than NM indicative values for French ACCs1 , mainly from 2015 to 2018 but a resulting first decrease of delays is then expected in 2019 and full benefits of this system renewal are expected to take place in RP3. 1 According to regulation 390/2013, the words « reference values » relate to targets at FAB level only

[Comment: Both ERATO and 4-flight were included in the French capacity plans for all ACCs in the NOP 2014-2018/2019. However, in the updated capacity plans for the NOP 2015-2019, 4-flight has been delayed by 2 years in Marseille and Reims ACCs (only starting in 2019 instead of 2017) and it no longer appears for Bordeaux, Brest or Paris ACCs.]

Moreover, DSNA carried out a study, under a process involving the trade unions, to amend the ACC rostering rules and methods for delivering a more efficient use of air traffic controllers' working time.

The first positive impact on operational efficiency may be noticeable by the year 2016.

However, major discussions and negotiations between DSNA management and the DGAC support services on the one hand and with trade unions on the other hand on these two points should not be achieved before the end of 2015. This should lead to the signature of a social agreement for three or four years (to take effect from 2016).

Therefore, taking account of this already tense social climate regarding those major issues, any early announcement of deadlines or precisely quantified operational benefits on French ACC capacity, or of a cost impact would, in DTA view, entail a high risk to seriously impair the social dialogue. This could in t urn jeopardize future operational benefits delivery and therefore economic benefits that could be provided as of reference period RP3, including regarding unit costs.

Subsequently, the representatives of the DTA in the FABEC group responsible for the preparation and drafting of the revised performance plan advocated keeping the forecast capacity and therefore the targets of en-route ATFM delays as submitted in the first version of the FABEC performance plan in June 2014. Other FABEC ANSP are not in a position to


76

commit now for another increase in the operational capacity beyond initial plans. Thus, FABEC targets have not been amended in order to stick to the FABEC reference values.

[Comment: See evolution of FABEC ACCs capacity plans later in this section.]


Comparison of the NOP 2014-2018/2019 (June 2014 edition) with the NOP 2015-2019 (May 2015 edition) reveals that there are no additional capacity enhancement measures planned for the FABEC ACCs, in response to the recommendation of the European Commission.

REMEDIAL MEASURES In Section 10.2 of the Network Operations Plan, the Network Manager has identified several reasons for capacity constraints at four ACCs within the FABEC area. Furthermore, the Network Manager has suggested remedial actions that, if implemented, could significantly improve capacity performance at those ACCs.

France–BordeauxACC:

Reasons for lack of capacity

Training and implementation of a new ATM system – ERATO

Proposed NM measures

Improved ATFCM techniques

Flexible Transition Plan for the new ATM system, coordinated with NM, to include appropriate mitigation measures.

DSNA confirmed measures:


Lower capacity plan for the period 2017-2019: due to a lack of social agreement, benefits of measures previously planned are cancelled

France–BrestACC:


Training and implementation of a new ATM system - ERATO

Sector opening schemes could be better adapted to traffic demand


Implementation of re-sectorisation proposals


Flexible configurations opening, according to the traffic flows





77


Implementation of re-sectorisation proposals


NM assessment

Due to a lack of social agreement, the performance outlook has degraded. NM will work with DSNA to mitigate to the largest possible extent the impact of this performance degradation. Nevertheless, more structural solutions need to be put in place by DSNA.

France‐MarseilleACC


Lack of capacity on week-ends due to non-adapted sector opening schemes (2015-2016)

Training and implementation of a new ATM system - 4Flight (2018-2019)


Flexible rostering allowing better alignment between traffic demand and sector opening times, especially at week-ends



Actions for route design and sectorisation, with focus at the interface with Barcelona ACC




Actions for route design and sectorisation, with focus at the interface with Barcelona ACC


NM assessment


France‐ReimsACC


Training and implementation of a new ATM system – 4Flight

Traffic distribution with higher traffic demand on shortest routes

Lack of predictability of traffic demand in some sectors


Actions for route design and sectorisation


78









NM assessment


[Comment: The proposed NM measures of ‘Flexible transition plan for new ATM systems, coordinated with NM to include appropriate mitigation measures’; ‘Flexible configurations opening, according to traffic flows’ have not been addressed by DSNA in the Network Operations Plan.]

[Comment: No remedial measures have been suggested for the other FABEC ACCs since they are not identified, by the Network Manager, as presenting capacity bottlenecks for the network, in RP2.

OTHER CONSIDERATIONS Interdependencies

Extract from section 3.3 of the revised FABEC RP2 performance plan

It is commonly recognized that interdependencies between all KPAs and related targets exist.

The key performance indicators in this Performance Plan should not be considered in isolation, as performance in one area will affect performance in other areas. A balance should be found, specifically between the KPAs on capacity and cost efficiency. Capacity investments will in most cases result in cost increases and should only be considered if a capacity shortage is expected. Whereas a higher target for cost-efficiency will have an effect on capacity as this would most likely result in the reduction of the number of ATCOs or reducing investments. The lack of a model to properly analyse and address the interdependencies between KPAs/KPIs causes an important limitation in the maturity of this performance scheme. As a consequence, FABEC has carried out only a qualitative assessment as was also done with the EU-wide targets. In setting FABEC targets the States were conscious of the need to ensure that Safety does not get compromised.

[Comment: FABEC recalls that an assessment of the interdependencies between capacity and cost-efficiency and safety was already performed at EU-wide level when the union-wide targets were being determined. Despite this, FABEC is trying to justify not being consistent with the union-wide target on en-route capacity by performing a separate interdependency assessment, and without providing any evidence of their workings.]

FABEC Incentive scheme for en route capacity


79

…the scheme for en route ATFM delay is based on the FABEC CRSTMP target. This target is set at FABEC level as a ratio (78%) of the FABEC ATFM delay target (all causes).

[Comment: Firstly, the FABEC delay target is not consistent with the union-wide targets. Secondly, it is difficult to reconcile how the figure of 78% of the (delay all causes) value was selected, since there has been huge fluctuation in this figure from 46% - 65% in the last three years alone.

ENTITY FABEC CRSTMP analysis

MONTH (All)

64,9% 50,3% 46,0% 55,0%

Sum of DLY YEAR

AGG_FLT_REGU_REAS 2.012 2.013 2.014Grand Total

C 42,2% 34,7% 35,7% 38,0%

R 0,0% 0,0% 0,0% 0,0%

S 16,8% 9,9% 3,8% 11,0%

T 1,7% 2,4% 3,1% 2,3%

M 2,0% 2,0% 1,4% 1,8%

P 2,3% 1,2% 2,0% 1,9%


80

Worked example:

Adopting a target of 78% of the FABEC target (0.49 for 2016) gives a value of 0.38 minutes per flight CRSTMP. A bonus will be payable on any CRSTMP delay figure below 0.34 minutes.

If, similarly to 2014, the CRSTMP is 46% of the delay all causes figure, then the total en-route delays experienced by the airspace users will be 54% higher.

This means that the FABEC ANSPs could get a financial bonus whilst airspace users see an average ATFM en-route delay of (0.34 x 1.54=) 0.52 minutes per flight. 0.52 minutes delay per flight for 2016 is 0.1 minutes per flight (25%) more delay that the level asked of FABEC to be consistent with the union wide targets (0.42 FABEC reference value).

The additional cost faced by FABEC airspace users for 0.1 minutes additional delay in 2016 is €83 x 0.1 x 5.8 million flights = €48 million.]



FABEC 2012 2013 2014 Observations Reference value

0.52 0.47 0.4

FAB Target 0.77 0.68 0.5 Actual performance

0.6 0.47 0.56

[Comment: FABEC easily achieved their FAB targets in both 2012 and 2013. In 2014 significant delays arose because of industrial action in France. The PRB annual monitoring report for 2013 commented on the variation between the FAB targets and actual performance, as well as the concern about the lack of planned capacity improvements.]


81

CAPACITY PLANNING IN FABEC ACCS

[Comment: Despite significant decreases and postponements in planned capacity, the Network Manager does not expect Brussels ACC to have any capacity problems over RP2.]

[Comment: Despite significant decreases and postponements in planned capacity, the Network Manager does not expect Maastricht UAC to have any capacity problems over RP2.]

125

135

145

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019


Brussels ACC

300

320

340

360

380

400

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019


Maastricht UAC


82

[Comment: Persistent decreases and postponement in planned capacity are visible since 2009. The Network Manager now expects Bordeaux ACC to have capacity problems between 2015 and 2017.]

[Comment: Persistent decreases and postponement in planned capacity are visible since 2009. Coupled with an expected increase in traffic, the Network Manager now expects Brest ACC to have capacity problems for the entire RP2.]

190

210

230

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐20162013‐2017 2014‐2019 2015‐2019RP1 Reference RP2 Reference

Bordeaux ACC

190

210

230

250

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016 2013‐2017

2014‐2019 2015‐2019 RP1 Reference RP2 Reference

Brest ACC


83

[Comment: Persistent decreases and postponement in planned capacity are visible since 2009. Coupled with an expected increase in traffic, the Network Manager now expects Marseille ACC to have capacity problems for the entire RP2.]

[Comment: Despite significant decreases and postponements in planned capacity, the Network Manager does not expect Paris ACC to have any capacity problems over RP2.]

230

250

270

290

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016 2013‐2017

2014‐2019 2015‐2019 RP1 Reference RP2 Reference

Marseille ACC

240

260

280

300

320

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015

2012‐2016 2013‐2017

2014‐2019 2015‐2019

Paris ACC


84

[Comment: Persistent decreases and postponement in planned capacity are visible since 2009. Coupled with an expected increase in traffic, the Network Manager now expects Reims ACC to have capacity problems for the entire RP2.]

[Comment: Despite significant decreases and postponements in planned capacity, the Network Manager does not expect Bremen ACC to have any capacity problems over RP2.]

170

190

210

230

250

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019


Reims ACC

140

150

160

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019


Bremen ACC


85

[Comment: The Network Manager does not expect Karlsruhe UAC to have any capacity problems during RP2.

[Comment: Despite continual postponement of capacity increases, the Network Manager does not expect Langen ACC to have any capacity problems during RP2.]

250

300

350

400

450

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019


Karlsruhe UAC

220

240

260

280

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019


Langen ACC


86

[Comment: Following restructuring and the allocation of airspace to Karlsruhe UAC, in 2012, the Network Manager does not expect Munich ACC to have any capacity problems during RP2.]

[Comment: Despite continual postponement of capacity increases, the Network Manager does not expect Amsterdam ACC to have any capacity problems during RP2.]

200

250

300

350

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019


Munich ACC

120

140

160

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019


Amsterdam ACC


87

[Comment: The Network Manager does not expect Geneva ACC to have any capacity problems during RP2.]

[Comment: Despite continual postponement of capacity increases, the Network Manager does not expect Zurich ACC to have any capacity problems during RP2.]

120

130

140

150

160

170

180

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019


Geneva ACC

140

150

160

170

180

190

200

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019


Zurich ACC


88

DOCUMENTS USED DURING CAPACITY ANALYSIS: 2013 SES performance scheme Annual Monitoring Report

2014 SES performance scheme Annual Monitoring Report (draft)

FABEC RP2 performance plan;

FABEC revised performance plan;

Network Operations plan 2014-2018/2019, June 2014 edition;

Network Operations plan 2015-2019, June 2015 edition;

Regulation (EC) 549/2004

Regulation (EU) 390/2013

DSNA strategy plan 2014-2016 (revised edition January 2015)

DSNA Master plan 2014-2016 (edition December 2013)

Letter from the Director of Air Transport (France), Marc BOREL, to the Director of Air Transport, DG-MOVE (European Commission) Margus RAHUOJA, on 2/7/2015


89

References i COMMISSION IMPLEMENTING REGULATION (EU) No 390/2013 of 3 May 2013 laying down a performance scheme for air navigation services and network functions ii COMMISSION IMPLEMENTING DECISION (EU) 2015/347 of 2 March 2015 concerning the inconsistency of certain targets included in the national or functional airspace block plans submitted pursuant to Regulation (EC) No 549/2004 of the European Parliament and of the Council with the Union-wide performance targets for the second reference period and setting out recommendations for the revision of those targets (notified under document C(2015) 1263) iii COMMISSION IMPLEMENTING DECISION (EU) 2015/1056 of 30 June 2015 concerning the inconsistency of certain targets included in the national or functional airspace block plan submitted by Switzerland pursuant to Regulation (EC) No 549/2004 of the European Parliament and of the Council with the Union-wide performance targets for the second reference period and setting out recommendations for the revision of those targets (notified under document C(2015) 4407) (Only the French, German and Italian texts are authentic) (Text with EEA relevance).

PRB Assessment Report of RP2 FAB Revised Performance Targets – SW FAB

1

Version 3.1


PRB Assessment of RP2 FAB Revised Performance Targets SW FAB


2




3

Table of Contents

1 INTRODUCTION ................................................................................................................................... 4


3 CAPACITY ............................................................................................................................................. 6

3.1 EN‐ROUTE DELAY LEVEL ............................................................................................................................... 6 3.2 RECOMMENDATIONS .................................................................................................................................. 8 3.3 PRB CONSIDERATIONS ................................................................................................................................ 8 3.4 PRB CONCLUSIONS .................................................................................................................................... 9

ANNEX 1: EN‐ROUTE CAPACITY CONSIDERATIONS. ..................................................................................... 10

REFERENCES ............................................................................................................................................... 19


4

1 INTRODUCTION 1.1.1 Pursuant to Commission Implementing Regulation (EU) No 390/2013i, the SW FAB

delivered its Performance Plan on 1 July 2014.


1.1.3 Following the ad-hoc Single Sky Committee meeting on 24 October 2014, the SW FAB was invited to reconsider their RP2 Performance Plan submitted for the 1 July 2014 deadline, in order to see how they could address the recommendations and observations made by the PRB.

1.1.4 As a result, the SW FAB submitted significant and detailed corrigenda/amendments to their RP2 Performance Plan via the EU-PRB SharePoint repository on 11 and 14 November 2014.

1.1.5 The PRB assessed the new information received and provided to the Commission a report reflecting the changes to the content of the recommendations in the FAB assessment report for the key performance area of cost-efficiency. This updated version of the PRB assessment report was submitted to the Commission on 12 January 2015.

1.1.6 Further on, the Commission Implementing Decision (EU) 2015/347ii established that targets in the key performance area of Capacity submitted by the SW FAB are not consistent with the relevant Union-wide performance target.

1.1.7 The Commission therefore asked the SW FAB Member States to revise their capacity targets downwards. As a minimum, those targets should be in accordance with the respective FAB reference values set out in the Network Operations Plan (NOP).

1.1.8 The SW FAB submitted revised targets on 2 July 2015. The PRB has assessed these revised targets including all other relevant information provided and presented its conclusions on the new targets in this report.


2 CONTENT OF THE SUBMISSION 2.1.1 The SW FAB submitted a revised Performance Plan on 2 July 2015.


The body of the plan, including only those parts which were changed;

Updated Annex C (Reporting Tables)

Updated Annex E (RP2 SOWEPP – PRB Template version).


2.1.4 The PRB notes that the SW FAB has provided updates on the following points:

Minor changes related to naming of the Portuguese NSA and dates for data submission

Changes are introduced in the executive summary, chapter 4 (Capacity), chapter 5 (cost efficiency) and 9 (comparison with previous performance plan) due to revision of capacity and cost efficiency targets.

The en-route capacity incentive scheme is modified.

Estimates made on the cost of delay referred to en-route capacity targets are revised.


5

Revision of the yearly terminal unit rate calculation of Spain, without affecting the targets.

Revision of Portugal and Spain total costs is addressed in the relevant section of this report.



6


that: "The performance targets in the key performance area of capacity submitted by […]Spain and Portugal as regards SW FAB should be revised downwards. As a minimum, those targets should be in accordance with the respective FAB reference values set out in the Network Operations Plan. Where the Network Operations Plan specifies remediation or mitigation measures, account should be taken of those measures when revising the performance targets.”

2015 2016 2017 2018 2019

SW FAB reference values (NOP March 2014)

0.30 0.31 0.31 0.30 0.30

Original FAB Target (June 2014) 0.52 0.52 0.52 0.52 0.52


Shortfall 0.05 0.04 0.04 0.05 0.05

Consistency check


Primary check:

For en route capacity, is the FAB target consistent with the respective FAB reference value (Annex IV section 4(a))?

3.1.2 The SW FAB targets are not consistent with the respective FAB reference values for the entire second reference period. The additional cost to airspace users, due to the capacity shortfall is expected to be approximately €35 Million during RP2, as shown in Table 2.

2015 2016 2017 2018 2019



Additional minutes of delay (000’s) 86 71.1 73.2 94.2 96.9


Table 2: cost of additional delay to airspace users

Secondary check:



7

3.1.3 No other FAB has adopted capacity targets to ameliorate the significant capacity shortfall being proposed by SW FAB.



3.1.4 The Network Operations Plan 2015-2019 (June 2015 edition) provides a delay forecast for the SW FAB, based on existing capacity plans together with STATFOR baseline traffic forecast (February 2015). It is important to note that the delay forecast does not include delays for disruptions such as industrial action or technical failures.


Year 2015 2016 2017 2018 2019



Table 3: Extract from the Network Operations Plan 20015-2019

3.1.5 Both the Commission and the PRB raised concerns about capacity planning in the SW FAB, particularly Spain, as far back as 2011. Despite repeated requests to ensure that the SW FAB ANSPs develop and implement suitable capacity plans, capacity plans were continuously downgraded and/or postponed. Although capacity plans have been improved since 2014, they are still below the minimum capacity levels required to be consistent with the union-wide targets for en-route capacity.

3.1.6 The latest ANSP capacity plans (from the NOP 2015-2019 June version) indicate that a capacity deficit is planned in two ACCs: Barcelona & Palma for the entire reference period. Canarias ACC and Lisbon ACC are expected to present problems during the winter season: in Canarias ACC problems are blamed on a lack of capacity (that was already available back in 2010) whilst in Lisbon ACC problems are blamed on the inability to deploy existing capacity to meet traffic demand.

3.1.7 The Network Manager has highlighted remedial actions that can be taken to improve capacity plans at the four ACCs mentioned above, in section 10.2 of the Network operations Plan 2015-2019.



Year 2015 2016 2017 2018 2019


8


FAB target 0.35 0.35 0.35 0.35 0.35

ANSP

contribution

ENAIRE 0.3 0.3 0.3 0.3 0.3

NAV Portugal 0.19 0.19 0.19 0.19 0.19

Aggregation of contribution 0.34 0.34 0.34 0.34 0.34


3.1.8 Although the aggregation of the individual ANSP contributions is consistent with the FAB target, they are inconsistent with the effort required to meet the union-wide en-route capacity targets of 0.5 minutes ATFM delay per flight.

3.2 En route Capacity Recommendations 3.2.1 In accordance with Regulation (EU) No 390/2013 Article 15 (3): since the en-route

capacity part of the revised performance plans for SW-FAB are not consistent with the union-wide targets for en-route capacity, the PRB recommends that the Commission decides that the respective States (Portugal and Spain) should take corrective measures.

3.2.2 In accordance with Regulation (EU) No 390/2013 Article 15 (4), the PRB recommends that the FAB en-route capacity targets for SW-FAB are revised to meet the respective reference values as published in the Network Operations Plan (2014-2018/2019) June 2014 edition. The rationale for this recommendation is that the binding union-wide targets for en-route capacity cannot be achieved unless FABs adopt binding en-route capacity targets consistent with their respective reference values.

3.2.3 In accordance with Regulation (EU) No 390/2013 Article 15 (4), the PRB recommends that the level of performance, for en-route capacity, expected for Portugal and Spain, as members of SW-FAB, should be, as a minimum, the SW-FAB reference values as published in the Network Operations Plan (2014-2018/2019) June 2014 edition. Adoption of such targets will allow the States concerned to take the appropriate corrective measures.

3.2.4 In accordance with Regulation (EU) No 390/2013 Article 15 (4), the PRB suggests that Portugal and Spain, as members of SW-FAB, should implement the remedial measures listed by the Network Manager in section 10.2 of the Network Operations Plan (2015-2019). The PRB suggests that those Member States should agree with the Network Manager, as a matter of priority, an action plan to resolve any outstanding capacity issues. The PRB recommends that the implementation of these local actions plans should be monitored by the NSAs of the relevant FABs.

3.3 PRB Considerations 3.3.1 In preparation for the PRB to present findings to the Commission, the PRB reviewed


3.3.2 For the SW FAB, additional information submitted to the Commission included the email from Mr Paulo DE ANDRADE, ANAC Member of the Board, to Mr Maurizio CASTELLETTI, European Commission, dated 2nd July 2015 @ 18:23 “Informal SW FAB Capacity Target RP2 SOWEPP”


9

3.3.3 The PRB also considered the remedial measures presented by the Network Manager in the NOP 2015-2019, at the SW FAB ACCs that were identified as having capacity constraints during RP2.

3.3.4 The PRB considered the submission by the SW FAB of an attempt to justify the setting of SW FAB targets that were not consistent with the union-wide targets for capacity.

3.3.5 The PRB considered the FAB-wide en-route capacity incentive scheme presented in the SW FAB performance plan, and how it proposes to function.

3.3.6 Finally, the PRB considered the actual capacity performance during RP1 and the evolution of capacity planning at SW FAB ACCs.

3.3.7 More information on these considerations can be found in annex to this report.

3.4 PRB findings 3.4.1 The PRB finds that the performance plan of SW FAB, with regards to capacity, does

not contribute adequately to the overall EU wide target and therefore fails. It could pass, provided that the following terms are delivered and committed:

3.4.2 The Commission should invite SW FAB to provide a FAB wide consolidated capacity plan with clear milestones and a firm commitment to deliver improved en-route capacity performance to airspace users over RP2. This will have to be coordinated FAB internally and with the Network manager and will have to be reflected with an updated NOP plan.

3.4.3 The SW FAB information to trade off the cost of additional delay against interdependencies in cost efficiency caused some discussion within the PRB as to whether this information is real and tangible. The PRB also queried whether the airspace users agree with the SW FAB study and whether they accept SW FAB targets as being adequate during RP2.

3.4.4 The Commission should invite SW FAB to provide a FAB wide en-route capacity incentive scheme with the following characteristics:


(ii) Dead-band between SW FAB reference values and SW FAB Targets.

(iii) Bonuses paid when SW FAB capacity performance is better than respective SW FAB reference value;

(iv) Penalties paid when SW FAB capacity performance is worse than proposed SW FAB Targets.

3.4.5 The Commission should conduct a mid-term review of the SW FAB Performance Plan at the end of 2017. This could be carried-out by by the PRB assessing the overall contribution to the EU wide target for the full RP2 time period.

3.4.6 Since the FAB capacity reference values were derived from the union-wide target of 0.5 minutes ATFM delay per flight, it is evident that accepting FAB performance plans that are not consistent with the relevant reference values will impact the possible achievement of the union-wide target.

3.4.7 The PRB considers that the Commission should address this issue, if relevant, once the final adopted FAB targets for en-route capacity are known.


10

Annex 1: En-route capacity considerations. LEGISLATION Regulation (EC) 549/2009 Article 11.3c states:







REVISION OF EN-ROUTE CAPACITY TARGETS: The revised SW FAB performance plan did contain revised en route capacity targets, although they are still not consistent with the union-wide targets for the entire RP2 period.

APPROPRIATE MEASURES FOR REACHING IMPROVED EN-ROUTE CAPACITY TARGETS Despite a significant revision of the en-route capacity targets, no new information about improving capacity, i.e. on the appropriate measures, was provided in the revised SW FAB performance plan.


11

ADDITIONAL INFORMATION: Email from Mr Paulo de Andrade, ANAC Member of the Board, to Mr Maurizio Castelletti, European Commission: dated 2nd July 2015 @ 18:23. “Informal SW FAB Capacity Target RP2 SOWEPP”

This email contains only revised targets and a copy of the revised incentive scheme. It does not contain any reference to appropriate measures.


Comparison of the NOP 2014-2018/2019 (June 2014 edition) with the NOP 2015-2019 (May 2015 edition) reveals that there are no additional capacity enhancement measures planned for the SW FAB ACCs, in response to the recommendation of the European Commission.

REMEDIAL MEASURES: In Section 10.2 of the Network Operations Plan, the Network Manager has identified several reasons for capacity constraints at various ACCs within the SW-FAB area. Furthermore, the Network Manager has suggested remedial actions that, if implemented, could significantly improve capacity performance at those ACCs.

PORTUGAL‐LISBONACC


Lack of capacity during Winter seasons


Flexible rostering allowing better alignment between traffic demand and sector opening times, especially during Winter seasons;


Improved ATFCM techniques.

NAV Portugal confirmed measures:


Flexible rostering allowing better alignment between traffic demand and sector

Opening times, especially during Winter seasons


NM assessment

The measures confirmed by NAV Portugal will ensure a level of performance close to the network requirements. NM and NAV Portugal will continue to work together to implement any additional mitigation measures if required.

SPAIN‐BARCELONAACC


Lack of capacity on week-ends due to non-adapted sector opening schemes and traffic peaks.


Measures to address staff availability during week-ends


12

Gradual availability of additional staff


Measures for airspace design and balanced traffic distribution at the interface with Bordeaux and Marseille ACCs

Addressing civil/military cooperation aspects

Improved ATFCM techniques.

ENAIRE confirmed measures:


Measures for airspace design and balanced traffic distribution at the interface with Bordeaux and Marseille ACCs


Re-sectorization in the TMA affecting two sectors (TGR and XAL, that will be converted in TGR2015 and XAR)

Split the central sector into Upper and Lower, opening of a new sector

A re-sectorization of the BALSE and the MED sectors by re-assigning volumes of the BALSE to the MED when needed

An increase of the capacity in some of the en-route sectors, specially in the P1U.

NM assessment

The measures confirmed by ENAIRE will ensure a level of performance close to the network requirements for the entire Spanish airspace. NM and ENAIRE will continue to work together to implement any additional mitigation measures if required for Barcelona ACC. It is to be noted that, over the past years, capacity performance in the Spanish airspace has considerably improved.

SPAIN‐CANARIASACC


Lack of capacity during Winter Seasons




SPAIN‐PALMAACC


Traffic peaks



ENAIRE confirmed measures:


Increase of capacity in one of the Palma APP configurations

Increase of capacity in two other sectors (GXX and IRX)


13

NM assessment

The measures confirmed by ENAIRE will ensure a level of performance close to the network requirements for the entire Spanish airspace. NM and ENAIRE will continue to work together to implement any additional mitigation measures if required. It is to be noted that, over the past years, capacity performance in the Spanish airspace has considerably improved. [Comment: The proposed NM measures of staff availability (especially at weekends), additional staff and improved civil military coordination aspects have not been addressed by ENAIRE in the Network Operations Plan.]

OTHER CONSIDERATIONS Proposal of Spain to allow trade-offs: (Extract from page 31 of revised RP2 revised performance plan consolidated version) “… in response to a request for assistance by the Commission, the SJU launched a study aimed at the development of a model for interdependencies between KPAs. This study resulted in the “Study on an ATM Performance Model and supporting methodology” of 27th September 2013 (jointly developed by EADS, ALG and ENAC). Among the purposes of this study was to support the balancing of performance plans at FAB level in terms of targets, incentive scheme and associated details. This study identified for instance, relationships between as traffic complexity and air traffic controller (ATCO) cost, as well as between traffic complexity and delay. Nevertheless, the general conclusion is that the model is still incomplete in several ways, mainly due to the lack of time, data available and expert judgement. Therefore, no specific conclusions can be worked out.” (Extracts from pages 42-43 of revised performance plan (consolidated version)) “According to the tool facilitated by the European Commission, both Spain Continental and Spain Canarias targets go beyond the values resulting from the breakdown the EU wide target on cost efficiency area. This over-performance is quantified at 262 MEuros (2009 prices) throughout all RP2 for Spain (Continental + Canarias charging zones). This extra cost saving in the cost-efficiency targets is significantly higher than the cost of the extra delay. Even including the extra cost of delay as a share of the determined unit costs, aggregated Spain targets would represent a global save (total cost value save) of 245 MEuros (2009 prices) for all RP2. In addition, DUC target would also be met every year of RP2.”


14

“Furthermore, the total cost of delay with 0.30 targets is 204 MEuros in 2009 prices for all RP2 (estimated on the basis of the same methodology used above). This means over-performance in cost efficiency, quantified at 262 MEuros 2009 prices is able to cope with all the cost of delay (from the first minute of delay) and still produce an extra saving for the users of 57 MEuros in RP2 (2009 prices). Considering inter-dependencies between capacity and cost-efficiency, quantitatively analysed above, the SW FAB en-route capacity targets and in particular the Spanish contribution, are consistent with the EU-wide targets as a whole.” [Comment: SW FAB is using an incomplete model, which they admit cannot be used to give a specific conclusion to draw a conclusion which is contrary to the legislated requirement for all binding targets to be met.] [Comment: PRB calculation of cost of additional delay]

“The additional cost to airspace users, due to the capacity shortfall is expected to be approximately €35 Million during RP2, as shown below.

2015 2016 2017 2018 2019



Additional minutes of delay (000’s) 86 71.1 73.2 94.2 96.9



15

Incentive scheme for en-route capacity

Original RP2 performance plan:

Revised RP2 performance plan:

The trigger FAB value for penalties in regards to poor en-route performance remains at 0.54 for the SW FAB. The trigger FAB value for bonuses in regards to high en-route performance has moved from 0.50 to 0.16 minutes per flight. There is no financial impact on the respective ANSPs of setting the FAB RP2 targets at 0.30 minutes per flight (consistent with the union-wide targets) instead of the less ambitious 0.35 minutes per flight.


16



Spain 2012 2013 2014 Observations

Reference value

0.52 0.42 0.31

National Target

0.8 0.75 0.5

Actual performance

0.48 0.41 0.3

Spain achieved their required capacity performance during each year of RP1. The PRB commented that the national targets for Spain, during RP1, were so far removed from the operational reality. PRB capacity assessment from PRB Annual Monitoring Report 2013

CAPACITY PLANNING IN SW FAB ACCS

Following significant postponements, the latest capacity plans for Lisbon ACC lead the Network Manager to state “With the measures planned in Lisbon ACC during the planning period, no capacity gap is expected.”


17

Despite persistent downgrades and postponements, the latest capacity plans for the Spanish ACCs leads the Network Manager to expect capacity performance to be at, or close to, the level of capacity requirements at four of the Spanish ACCs. Based on the latest capacity plans, Barcelona ACC is expected to have a capacity gap during the full RP2 period.

DOCUMENTS USED IN CAPACITY ANALYSIS 2013 SES performance scheme Annual Monitoring Report 2014 SES performance scheme Annual Monitoring Report (draft) SW FAB RP2 performance plan; SW FAB revised performance plan; SW FAB revised performance plan (consolidated); Network Operations plan 2014-2018/2019, June 2014 edition; Network Operations plan 2015-2019, June 2015 edition; Email from Mr Paulo de Andrade, ANAC Member of the Board, to Mr Maurizio

Castelletti, European Commission: dated 2nd July 2015 @ 18:23. “Informal SW FAB Capacity Target RP2 SOWEPP”


18

Extract from PRB assessment of SW FAB RP2 performance plan 2014: 1.2.7 As depicted in Figure 4, IFR traffic in Spanish airspace decreased in 2012 and 2013.

According to the February 2014 STATFOR baseline scenario, traffic levels will not return to those experienced in 2007 before 2016 for Spain Canarias and 2020 for Spain Continental, therefore showing a shift in traffic demand of 9 and 13 years respectively.

1.2.8 The traffic figures used in the FAB Performance Plan for the overall Spanish airspace (Continental and Canarias) are those estimated by Aena under the assumption that traffic will evolve following the trend of February 2014 STATFOR low scenario for Spain Continental.


19


european commissionec.europa.eu/transport/sites/transport/files/ses-performance-library... · prb...

Documents