NAV CANADA proposes increase to service charges

NAV CANADA is proposing an average 1.92 per cent increase to customer service charges effective Sept. 1, as it looks to manage cost pressures and continue recovering from pandemic-related losses.

The proposal includes an average base rate increase of 2.04 per cent and a temporary rate decrease of 2.25 per cent compared with existing rates.

NAV CANADA provides air traffic control, airport advisory services, weather briefings and aeronautical information services, and a rate increase would result in higher operational costs for cargo flights, which could be passed down to supply chain customers.

The organization says geopolitical tensions, including conflict in the Middle East, energy price volatility and broader economic uncertainty are affecting air traffic demand and its cost structure.

NAV CANADA said it must continue investing in service delivery, training and modernization to maintain safety and reliability while improving long-term efficiency.

The agency is also continuing to recover a deficit in its rate stabilization account caused by a sharp drop in air traffic during the COVID-19 pandemic. It has adopted a multi-year approach to restore the balance while maintaining rate stability for customers.

The proposal includes two components: an increase to base rates to recover anticipated costs and rebuild the stabilization account, and a decrease to temporary rates to adjust how pandemic-related shortfalls are recovered.

NAV CANADA said it is using a long-term approach to rate setting to smooth out short-term fluctuations and avoid passing the full impact of current cost pressures onto customers.

A projected $65-million shortfall in the stabilization account at the end of fiscal 2027 will be addressed over future periods.

“We know airlines currently face intense cost pressures. That is why we manage the air navigation system with strict financial discipline and apply our governing service charge principles judiciously, even as we make critical investments in staffing and infrastructure renewal,” said Mark Cooper, president and CEO of NAV CANADA.

“As NAV CANADA approaches its 30th anniversary as Canada’s air navigation service, our unique not-for-profit model has stood the test of time. NAV CANADA maintains one of the top safety records globally while its cost efficiency and productivity consistently rank in the top quartile amongst leading ANSPs.”

The proposal is subject to a mandatory 60-day consultation period, after which feedback will be reviewed by management and the board before a final decision is made.