NAV CANADA unveiled a rate revision proposal that would decrease rates by an average of 3.9 per cent from existing base rates. This effectively continues a temporary rate reduction that was implemented last year. Rates will be further reduced by an across the board one-time refund totalling approximately $60 million.
Strong traffic growth prompts NAV CANADA to propose service charge reductions and customer refund
The strong traffic results in the current fiscal year (2017) and forecasts for fiscal 2018 have enabled the Company to propose these changes, the second year in a row that base rates will have been reduced.
The changes being proposed contain three elements, each designed to accomplish the following different objectives:
- A base rate reduction of 3.5 per cent would adjust revenues to the appropriate level required to recover the Corporation’s anticipated costs for fiscal 2018,
- A temporary one-year rate reduction of 0.4 per cent would return approximately $5.7 million to customers,
- A 4.6 per cent one-time refund would return approximately $60 million to customers from higher than anticipated revenues in fiscal 2017.
The reduced base rate and the temporary reduction would both become effective on September 1, 2017; the beginning of the Company’s fiscal year. For general aviation charges (Annual, Quarterly and Daily - Major Airport charges), the reduction would be implemented on March 1, 2018 consistent with the revision cycle for these charges.
The lower base rates would come into effect just as the 3.9 per cent temporary rate reduction, which is currently in place, is set to expire. In 2016, NAV CANADA implemented that one-year rate reduction in effect from September 1, 2016 to August 31, 2017.
While the proposed rate changes vary by service charge, on average our customers will pay about the same rates in fiscal 2018 as they did in fiscal 2017. “This is good news for our customers,” said Neil Wilson, President and CEO. “Service charges were set to rise on September 1 when an existing temporary one-year rate reduction expired, which would have increased costs for customers. Not only does this rate proposal supersede that increase, it also returns $60 million to our customers.”
Under the charging principles of the Civil Air Navigation Services Commercialization Act, NAV CANADA must ensure that its service charges are not set at a level that, based on reasonable and prudent projections, would generate revenues exceeding the Corporation’s current and future financial requirements for providing civil air navigation services.
“Traffic growth over the past year has been higher than expected, considering the actual GDP growth rates of major world economies,” said Neil Wilson, President and CEO. “This growth has been driven primarily through the expansion of low cost carrier operations, particularly on the North Atlantic. We are forecasting that traffic growth will remain fairly strong through fiscal 2018, putting us in a position to deliver savings to customers while increasing our planned investments in people, technology and facilities.”
These proposals are subject to the mandatory notice and consultation period required by legislation. Input received during the consultation period will then be reviewed by the Company’s Board of Directors.
For more details of NAV CANADA's proposed revised service charges:
View: Fact Sheet
- NAV CANADA has not increased its service charges in 13 years.
- In that period, the Company has reduced its average service charges three times.
- September 1, 2006 – a reduction of 1.8 per cent
- August 1, 2007 – a reduction of 4 per cent saving customers $75 million
- September 1, 2016 – a 7.6 per cent reduction consisting of a 3.9 per cent ongoing base-rate reduction and a 3.7 per cent temporary one-year decrease from the 2016 base rates (3.9% decrease from the revised 2017 base rates) saving customers $100 million for the fiscal year.
- NAV CANADA now proposes to effectively continue the 3.9 per cent temporary reduction that was due to expire on August 1, 2017 with a base-rate reduction of 3.5 per cent and a one-year temporary decrease of 0.4 per cent. The Company is also proposing a refund of $60 million, representing 4.6 per cent of fiscal 2017 revenues.
- The current proposal would result in an overall decrease in service charges of more than 13 per cent, on average, since September 2006.
With this proposal, NAV CANADA service charges would be 3 per cent lower than they were when fully introduced in March 1999 – 45 per cent below the rate of inflation.
About NAV CANADA
NAV CANADA is a private, not-for-profit company, established in 1996, providing air traffic control, airport advisory services, weather briefings and aeronautical information services for more than 18 million square kilometres of Canadian domestic and international airspace.
The Company is internationally recognized for its safety record, and technology innovation. Air traffic management systems developed by NAV CANADA are used by air navigation service providers in countries worldwide.
We are a founding partner of Aireon LLC, an international joint venture deploying a space based Automatic Dependent Surveillance-Broadcast (ADS-B) system that will expand air traffic surveillance to all regions of the globe.