Nav Canada has released for consultation a proposal to revise customer service charges, effective Jan. 1, 2025.
The proposal calls for increased service charges averaging 3.73 percent across its service categories. The overall average net increase in service charges includes an average base rate increase of 4.99 percent and an average temporary rate decrease of 26.73 percent compared to existing rates.
On Jan. 1, 2024, Nav Canada implemented an average net decrease in service charges of 5.57 percent consisting of a base rate decrease averaging 9.33 percent and a new temporary rate averaging 3.76 percent to recover the rate stabilization account (RSA) shortfall over a five-year period.
Since that rate change was implemented, the medium-term air traffic forecast was adjusted downwards, reflecting the impact of continuing downside uncertainties for the aviation industry.
As a result of cost management efforts and higher than planned other revenue, our financial results in fiscal 2024 are projected to be $62.7 million better than planned.
This additional RSA recovery was considered in the determination of service charge rates in fiscal 2025. Notwithstanding these positive results, the budgeted growth in costs in fiscal 2025, due mainly to investments in operational training and staffing, is projected to exceed the expected growth in air traffic.
There are two elements in the proposal to revise rates: (i) a base rate increase by service to recover Nav Canada’s anticipated fiscal 2025 costs less a portion of the RSA surplus in fiscal 2024; and (ii) a temporary rate decrease to adjust the portion of the remaining cumulative RSA shortfall to be recovered in fiscal 2025.
With this proposed service charge revision, the RSA shortfall balance is projected to decline to $155.7 million by the end of fiscal 2025, which is aligned with Nav Canada’s plan to recover the RSA shortfall over an extended period of time.
Despite the proposed increase, Nav Canada remains competitive on cost efficiency in comparison to other air navigation service providers globally. It is also worth noting that cumulative increases to Nav Canada’s service charges continue to compare favourably to increases in the Consumer Price Index over the past 10 years and over the period since our charges were fully implemented in 1999.
“The rates proposal reflects a range of factors, including a weaker forecast for air traffic growth, our continued focus on cost management, our gradual approach to rebuilding our financial position following the Covid pandemic, and the need for critical infrastructure renewal and modernization,” said Raymond Bohn, president and CEO, Nav Canada.
“Our team looks forward to garnering feedback on the proposal from our valued customers and stakeholders.”
The proposal is now subject to the mandatory 60-day consultation period required by legislation. Input received during the consultation period will be considered by Nav Canada’s management and board of directors, prior to a final decision being made on the proposal.
Details of Nav Canada’s proposed revised service charges are available here:
View: – Notice of Revised Service Charges [PDF]
View: – Details and Principles Regarding Proposed Revised Service Charges [PDF]
This press release was prepared and distributed by Nav Canada.
