Nav Canada announced it will proceed with its proposal to change customer service charges consistent with the Notice issued Sept. 20, 2024.
Context
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, continuing downside uncertainties for the aviation industry necessitated a downward adjustment to our medium-term air traffic forecast. Taking this revised forecast into account, the budgeted growth in costs in fiscal 2025, which are due in large part to investments in operational training and staffing, is projected to exceed revenue generated by the volume of air traffic. This necessitates an increase in Base Rates.
As a partially mitigating factor, cost management efforts and higher than planned other revenue in fiscal 2024, enabled Nav Canada to allocate a portion of the recovery of its RSA to partially offset the impact on service charge rates in fiscal 2025.
Revised Service Charges
The revised service charges have two components: (i) a Base Rate adjustment to recover Nav Canada’s anticipated fiscal 2025 costs less a portion of the RSA surplus in fiscal 2024, by service; and (ii) an average Temporary Rate decrease to reduce the amount of the historical RSA shortfall to be recovered in fiscal 2025.
The overall average net increase in service charges of 3.73 percent includes an average Base Rate increase of 4.99 percent and an average Temporary Rate decrease of 26.73 percent compared to existing rates.
The rate adjustments vary by service category, depending on how much the revenue generated by each charge deviates from its breakeven level for fiscal 2025 after reflecting a portion of the higher than planned RSA recovery in fiscal 2024, as well as how much it has contributed to the remaining RSA shortfall balance. These revised charges will become effective on January 1, 2025 except as otherwise noted.
The proposal to revise charges was released on September 20, 2024 and Nav Canada provided 60 days to receive representations from users.
Details of Nav Canada’s revised service charges are available here:
This press release was prepared and distributed by Nav Canada.
