May 30, 2017
Rate reductions and customer refunds
NAV CANADA unveiled a rate revision proposal that would reduce its base rates for the second year in a row, effectively continuing the current one year 3.9 per cent temporary reduction in charges.
The three-part proposal would decrease base service charge rates by an average of 3.5 per cent, put in place a temporary one-year reduction of 0.4 per cent, and give customers a one-time 4.6 per cent refund on total charges billed for fiscal 2017.
Under the Company’s charging principles we set our charges at a level that generates revenues sufficient to meet our financial requirements for providing civil air navigation services. So when traffic growth exceeds that of our financial requirements, charges are adjusted and money is returned to customers through rate actions.
The strong traffic results this year and forecasts for next year have enabled us to make this proposal. This is the second year in a row that base rates will have been reduced. The three elements of the proposal are each designed to accomplish specific objectives:
- a base rate reduction of 3.5 per cent would adjust revenues to the appropriate level required to recover NAV CANADA’s anticipated costs for fiscal 2018
- a temporary one-year rate reduction of 0.4 per cent would return approximately $5.7 million to customers, and
- a 4.6 per cent one-time refund would return approximately $60 million to customers thanks to higher than anticipated revenues in fiscal 2017.
The reduced base rate and the temporary reduction would both become effective on September 1, 2017, the beginning of NAV CANADA’s fiscal year. This revised base rate would come into effect just as the 3.9 per cent one-year temporary rate reduction that is currently in place is set to expire.
While the proposed rate changes vary by service charge, on average NAV CANADA’s customers will pay about the same rates in fiscal 2018 as they did in fiscal 2017. Over and above these rate changes; NAV CANADA will return approximately $60 million to customers through a one-time refund of 4.6% of fiscal 2017 charges.
NAV CANADA has always believed that keeping the growth in costs below the growth in traffic would enable us to reduce rates over time. Traffic growth, particularly on the North Atlantic has been strong this year and we are forecasting it to remain fairly strong through next year. This has put us in a position to deliver savings to customers while increasing our investments in people, technology and facilities.
For more details of NAV CANADA’s proposed service charges see information at links below: