ENAV

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regulated business

Our Core Business

ENAV’s core business is to manage regulated Air Traffic Control Services (ATCS), 24 hours a-day, 365 days a year. The main components of the core business are:

  • En-route services: handling of air traffic crossing Italian airspace managed from the 4 Area Control Centers;
  • Terminal services: providing assistance during the phases of approach, takeoff and landing from 45 control towers located throughout Italy.

 

Terminal Route Terminal

Core Business numbers

  • ENAV provides ATCS to more than 2.05 million flights per year (with peaks of up to 7,300 per day).
  • ENAV generates regulated revenue by charging the users of its airspace (planes departing and arriving at Italian airports, as well as flights crossing Italian airspace) a regulated tariff on the volume of airspace used.

Traffic volume is expressed in service units, which are a function of distance travelled within the airspace and certified aircraft weight for en-route services (formula: (D/100)*√(P/50), where D is the distance travelled and P is the certified weight) and of aircraft certified weight for terminal services (formula: (P/50)^0.7, where P is the certified weight).

AN OVERVIEW OF THE REGULATION

Reference Regulation – Key Principles of Tariffs

  • The system adopted by all Air Navigation Service Providers of the Member States provides for the payment of a tariff for both en-route and terminal services
  • Tariffs are determined as planned costs divided by planned traffic volumes (measured as “Service Units”)
Tariffs are calculated as a result of the ratio between costs of the relevant entities (ENAV, Eurocontrol, ITAF and ENAC) and Service Units.
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Costs include personnel, other operating costs and D&A, plus the agreed cost of capital. This applies to both en-route and terminal services.
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Service Units (“SU”) are a conventional indicator, that considers, for en-route the product between distance flown and aircraft’s weight, and for terminal the weight factor only.
  • Over the 5-year regulatory period (currently RP3: 2020-2024) tariffs are determined on the basis of a cost efficiency target level agreed with the European Commission, taking into account also expected inflation and traffic expected growth
  • Tariffs, multiplied by actual traffic volumes (actual SU) lead to regulated revenues

Total Cost Base calculation
(chargeable costs)

A ENAV Determined Costs
  • Labour + Other Opex + Eurocontrol Costs
  • D&A
  • Cost of capital
B Non-ENAV Determined costs (ITAF + ENAC)
C=A+B Total Determined Costs
D Balance reversal
E=C+D Chargeable costs

Determined costs breakdown

Total Determined Costs ÷ Planned SU = Determined Unit Costs (DUC)
Chargeable Costs ÷ Planned SU = Applicable tariff

The traffic risk

Basic principles

The difference between the traffic planned in the "Performance Scheme" and the traffic actually managed involves a risk called "traffic" for:

  • ENAV for 100%, if the delta is within the range +/- 2%
  • ENAV for 30% and airlines for 70%, if the delta is in the range -2% / - 10% or +2% / + 10%
  • Airlines for 100%, if the delta is in the range < -10% or > +10%

Impact deviation of planned and actual traffic

RP2 En-route Planned Traffic vs Actual Traffic

Balance from Traffic Risk Sharing Mechanism

YEAR N

STEP 1

Define the applicable tariff as:

 

Planned costs

Planned traffic

STEP 2

Planned costs

Planned traffic

VS

Planned costs

Actual traffic

(At the closure of the Financial Statements)

Balance (e.g. +10 under recovery)

Profit & Loss
Other revenues Balance +10
Cash flow impact
Cash flow Balance 0

YEAR N+2

Balance (e.g. +10 under recovery)

STEP 1

Applicable tariff as:

 

Planned costs + balance (+10)

Planned traffic

STEP 2

Report in the P&L and Cash Flow the balance accounted two years before

(At the closure of the Financial Statements)
Profit & Loss
Other revenues Balance N - 2 -10
Cash flow impact
Cash flow Balance N - 2 +10