Nav Canada fee reduction will save airlines millions
TORONTO Canada’s air traffic controller is lowering its service charges by an average of 7.6 per cent, a move it says will save airlines about $100 million next fiscal year.
Nav Canada announced Monday that it will reduce its base rates by 3.9 per cent on an ongoing basis and will add a temporary one-year reduction of 3.7 per cent beginning Sept. 1. This is the third time the company has lowered its fees.
Ottawa-based Nav Canada was founded 20 years ago when it purchased the country’s civil air navigation system from the federal government for $1.5 billion. Its mandate states that it can only charge airlines enough to recover its costs. “These charges enable us to meet our cost-recovery mandate by aligning our revenues with our costs going forward,” CEO Neil Wilson said in a statement. “Strong traffic growth, coupled with cost controls and targeted strategic investments in the air navigation system have put us in a position to deliver savings to customers while increasing our planned investments in people, technology and facilities.”
Nav Canada charges airlines that take off and land in Canada, as well as those that pass through Canadian airspace, for the use of its services. Charges are based on aircraft weight and distance flown.
For example, a Boeing 747-400 en route from Seattle to London weighs 395 tonnes and will pass through 3,787 kilometres of Canadian airspace. Under the new fee structure, that airline will pay $4,657.84 to Nav Canada for a round trip, a drop of 10.9 per cent.
By comparison, a smaller Airbus A319 en route from Calgary to Vancouver weighs 70 tonnes and passes through 555 kilometres of billable airspace. That airline will pay $1,674.36 for a round trip, a decline of 4.3 per cent.
The National Airlines Council of Canada (NACC), which represents the country’s largest airlines, said it welcomed the move.
“Canada’s user-pay approach and downloading of government taxes, fees and other charges on airfares has resulted in Canada having a very expensive aviation infrastructure,” NACC executive director Marc-André O’Rourke said in an email.
Nav Canada served as a model for U.S. politicians who argued the country should consider privatizing its own air-traffic control network earlier this year. That proposal died in the Senate, but could revive next year when the Federal Aviation Administration’s mandate comes up again for reauthorization. Since it was privatized in 1996, Nav Canada has invested more than $2 billion in infrastructure, cut staffing levels by 25 per cent, improved its safety record and become a global leader in technology.