NAV Canada releases proposal to decrease service charges
by CM staff
The proposal calls for decreased service charges averaging 5.57 per cent across its service categories.
OTTAWA — NAV Canada released a proposal to revise customer service charges, effective January 1, 2024. The proposal calls for decreased service charges averaging 5.57 per cent across its service categories.
The pandemic had a significant negative impact on global air traffic and on the aviation industry. Due to NAV Canada’s safety and essential service mandate, the majority of its costs are fixed and as a result, NAV Canada was not able to fully offset the significantly lower revenues during the pandemic. An average increase in service charges of 29.5 per cent was implemented effective September 1, 2020 to allow NAV CANADA to comply with its debt covenants and obtain additional debt financing to allow it to sustain its operations throughout the pandemic.
The significantly lower air traffic volume during the pandemic resulted in the accumulation of a material deficit balance in its Rate Stabilization Account (RSA) as NAV Canada’s costs exceeded its revenue.
In recent months however, NAV Canada’s air traffic forecast reflects the fact that demand for air travel has remained strong despite mounting economic concerns and growth is increasingly attributable to normal seasonal variation plus incremental growth.
There are two elements in the proposal to revise rates: (i) a base rate adjustment to recover NAV Canada’s anticipated fiscal 2024 costs, by service; and (ii) a temporary rate adjustment to recover a portion of the remaining cumulative RSA shortfall estimated to be approximately $346 million at August 31. The overall average net decrease in service charges of 5.57 per cent includes an average base rate decrease of 9.33 per cent and an average temporary rate increase of 3.76 per cent.
“The Rates Proposal takes a balanced approach between NAV Canada rebuilding its financial resilience, investing in safety and service delivery while supporting the industry by recovering the RSA shortfall over an extended timeframe” said Raymond Bohn, President and CEO, NAV Canada “As part of our rate setting process, we welcome the input of our valued customers and stakeholders.”
The proposal is now subject to the mandatory 60-day consultation period required by legislation. Input received during the consultation period will be considered by NAV Canada’s management and board of directors, prior to a final decision being made on the proposal.
