By Ben Forrest | December 18, 2023 Estimated reading time 3 minutes, 57 seconds.
Nav Canada, the nation’s air traffic control provider, said it is moving ahead with a service charge adjustment to help recover some of its losses from the Covid-19 pandemic.
The agency said customers will see an average temporary rate increase of 3.76 per cent starting Jan. 1, 2024, but those hikes will be at least partially offset by a decrease in base rates.
Nav Canada customers will see an average base rate decrease of 9.33 per cent, while still allowing the agency to cover its anticipated costs for the 2024 fiscal year.
With both changes combined, customers will see an average net decrease of 5.57 per cent. The rate adjustments vary by service category, and are dependent on several other factors.
Despite the short-term rate hike, these changes may be a sign of the aviation industry’s recovery since the height of the pandemic, when air traffic plummeted due to travel restrictions, physical distancing requirements and stay-at-home orders.
Nav Canada’s expenses exceeded its revenue during this period and led to a material shortfall in its rate stabilization account (RSA).
The RSA is a fund the agency uses to manage the immediate effects of unpredictable factors — mainly changes in air traffic levels due to unforeseen events, such as the Covid-19 pandemic.
Nav Canada adjusts service charges based on its RSA balance; a surplus is typically returned to customers, while a shortfall is recovered from customers through rate hikes.
The agency saw a positive RSA balance for 14 consecutive years ending in 2019, followed by three years of negative results.
Still, the pandemic recovery appears to be pushing air traffic back toward normal levels, with predictions for growth.
“Over the past several months the demand for air travel has remained strong, and Nav Canada’s air traffic forecast reflects an assumed return to normal seasonal variation plus incremental growth,” the agency said in a release.
“The revisions to service charges were made taking a balanced approach between Nav Canada rebuilding its financial resilience, investing in safety and service delivery while supporting the industry by recovering the RSA shortfall over an extended timeframe.”
A full breakdown of service charge adjustments is available here.
