Nav Canada has proposed hiking user service charges by an average of 29.5 percent effective September 1 due to lower air traffic volume and a resulting decrease in collected fees stemming from the Covid-19 pandemic. The proposal also includes provisions to ease the cash flow impact of the increase on its customers through payment deferral mechanisms. Specifically, Nav Canada wants to increase terminal fees by 30.8 percent; en route by 26.4 percent; North Atlantic Track by 48.5 percent; and international communications by 41 percent.
Since most of its costs are fixed, Nav Canada cannot fully offset significantly lower revenues and cash inflows due to recent pandemic-related decreases in air traffic volume. While the privatized ATC provider is seeking additional debt financing to offset Covid-related lower revenues, it cannot do so without achieving a minimum level of revenue in Fiscal Year 2021—precisely why it has proposed the higher service charges.
“Nav Canada is proposing this rate action only after having actively pursued all available alternatives, including government assistance,” said Nav Canada president and CEO Neil Wilson. “All available alternatives, including further government assistance will continue to be explored and utilized to minimize or avoid the proposed rate increase.”
The proposal is now subject to a mandatory 60-day consultation period.