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Mon, Jun 01, 2020

Nav Canada Fees to Rise -- A Lot

Canada is About To Jack Up Aviation Fees... Dramatically

News/Analysis/Opinion By Jim Campbell, ANN CEO/Editor-In-Chief

During the battle over ATC privatization issues a few years back, Canada's aviation regulatory agencies (especially NAV CANADA) were held up (by misguided Pro-ATC Privatization concerns) as a reason why ATC Privatization wasn't a bad thing overall... because NAV CANADA was supposedly reasonable to deal with and cost-effectively priced.

But... that was yesterday... and tomorrow is a whole 'nuther deal.

NAV CANADA is admitting that their budgets are looking thin and that, as 'an essential service' NAV CANADA's 'not-for-profit' status and structure as a private corporation continued to serve Canada's ATC needs, albeit with some slow-downs and interruptions in areas where requirement were reportedly 'minimal' -- and all the while losing money -- or so they say.

Since it comes at a time when everyone in aviation is suffering mightily, the timing (using purely professional terms) kinda sucks.

According to NAV CANADA, "NAV CANADA proposes to increase customer service charge rates, on average, by 29.5%, effective September 1, 2020.

The COVID-19 pandemic has required NAV CANADA to seek additional liquidity. Customer service charge increases are proposed in order to generate the incremental revenues that are required by NAV CANADA to meet the additional indebtedness covenant of its General Obligation Indenture (the “GOI”). This covenant must be met before NAV CANADA can secure additional debt financing to provide it the necessary liquidity. Alternatives to this proposal, including financial assistance from the Canadian Federal Government, have been thoroughly explored and utilized but are not sufficient to meet NAV CANADA’s revenue requirements and obviate the need for this increase. All available alternatives, including further government assistance will however continue to be explored and utilized in order to minimize or avoid the proposed rate increase.

NAV CANADA acknowledges that this proposal comes at a time when its customers are experiencing exceptionally difficult circumstances caused by the COVID-19 pandemic. Accordingly, in order to mitigate the financial impact of this proposal on customers, measures are proposed herein to defer payment of the incremental charges generated by the proposed revisions."

Worse yet, the fee increases are significant... some might say, HUGE.

"NAV CANADA’s costs and revenues relate to four services that it provides: Terminal, Enroute, North Atlantic Enroute Facilities and Services (NAT), and International Communications (Int’l Com). The proposed revisions for each of the services are as follows: Terminal: 30.8% increase, Enroute: 26.4% increase, NAT: 48.5% increase, and Int’l Com: 41.0% increase. Overall, the proposed rate revisions represent an average increase of 29.5% in base rates, which relates entirely to the requirement to achieve the level of revenue required to secure new debt financing. The revisions to rates for service charges are to be effective September 1, 2020, except for the Annual, Daily – Major Airports, and Annual Minimum charges, which are to be effective on March 1, 2021, consistent with the revision cycle for these charges."

Mind you, charges for so-called Recreational services will not see increases until March 1, 2022... but after that, be prepared to dig deep.

More info to follow...

FMI: www.navcanada.ca, https://www.navcanada.ca/EN/Pages/NR-27-2020.aspx

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