Page 179 - ENAV eng_Relazione_Finanziaria_Annuale_2014

Notes to the Financial Statements of ENAV SpA 177

Balance

At an international level, until 31 December 2011 Eurocontrol member
countries used a cost recovery route charge system. This system is based
on the concept that revenues should be proportional to the costs incurred
for route air navigation control services. By virtue of this principle, charges
were calculated on the basis of the forecast amount that would lead to
economic break-even. At the end of the year, if revenues exceeded the costs
incurred this would lead to a “negative balance” (over-recovery), giving rise
to an adjustment to profit or loss for the extra revenues and the recognition
of a “balance” liability. If on the other hand revenues were lower than the
costs incurred, an increase in revenues would be recognized together with
a “positive balance” (under recovery). In accordance with the cost recovery
principle, the “balance” was the result of the correcting mechanism used to
adjust revenues to the actual amount of the costs incurred and subject to
charges. The effects of this mechanism were included for charge purposes
from the second year following that of reference and accounted for in profit
or loss with a sign opposite to that of their recognition.

Starting in 2012, and as the result of the introduction of the route air
navigation services system, a new management system was introduced
in accordance with EU Single European Sky legislation that is based on
measuring and optimizing operating and economic performance, with
the resulting decision to abandon the full cost recovery system. The
means for implementing the service scheme is the National Performance
Plan approved for the three-year period 2012-2014 which sets out the
actions and targets to be achieved in the reference period. The efficiency
targets provide for the introduction of risk elements to be borne by the
provider relating to both traffic and costs. More specifically, the traffic risk
mechanism envisages the sharing of the traffic risk between providers and
users of the air space, for which variations, positive and negative, of up to
2% of actual traffic compared to plan are fully borne by the providers, while
variations between 2% and 10% are shared, with 70% of these being borne
by the airline companies and 30% by the providers. In accordance with the
above-mentioned rules, any positive or negative difference with respect to
the traffic risk leads to an adjustment to route revenues, recognized under
the line item “balance charge adjustment for the year”.

As far as the cost risk is concerned, the possibility of passing on to air space
users the full amount of any differences between the budgeted amount
and the actual figure at the end of the year has been eliminated. These
variations, either negative or positive, are still borne by the providers in
their financial statements.

Since 2010, for terminal services the balance is determined within the
meaning of Regulation (EC) no. 1794/06, which amended the system for
determining charges, equating it to what was already happening from a
route perspective, calculated using a cost-cap logic in accordance with
the program agreement entered into with the competent ministries; any
difference between the planned and actual figures leads to an adjustment
to terminal revenues recognized under the line item “balance charge
adjustment for the year”.