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The dilemma of NAVCAN fees

 

NAVCAN has embarked on a review of its fee structure (a discussion paper can be found at www.navcanada.ca) and of course COPA will provide input throughout the exercise.

Many members have expressed the view over the years that our sector should not pay fees, claiming that they neither use nor want any services. So, as we work our way through the review and consider the options available to our sector, it is worth it to review where we came from and what our real options are for change.

First of all, COPA remains opposed to any fee. This has been our position from the start of NAVCAN because we have always considered our contribution to be the government-imposed 11 cent per liter fuel excise tax - which remains in place to this day.

When the fee was being proposed, COPA managed to convince the entire aviation industry, including NAVCAN, that a levy on aviation fuel was the fairest way to collect a fee, considering one of the charging principles in the Commercialization Act, which addresses safety.

The principle states that fees cannot be charged in such a way as to discourage use of the system. So, any fee per service used would be unsafe.

In fighting for your freedom to fly, COPA also has to consider cost and safety. Frequently, these three concepts are in conflict and this was certainly the case when fees for NAVCAN were being developed.

A levy on fuel seemed to be the logical solution because it was the best method to meet the principle and it was the closest proxy to actual use of the system. If you do not fly, you do not pay.

COPA was in favour of a levy on fuel as long as the fuel excise tax was reduced by at least an equivalent amount. That would be fair, considering that the air transportation tax that passengers paid on their tickets was being eliminated in favour of a NAVCAN fee.

However, the government refused to permit a levy on fuel or to transfer any tax to NAVCAN. So, NAVCAN developed what they considered to be the best alternative, in line with the principles, including one that states that they have the right to charge for the availability rather than actual use of services.

Another principle is, the fees must not be “unreasonable or undue” although this was not defined.

COPA responded to the initial proposal of a $750 fee per pilot that this, or any fee, was unreasonable, considering that any fee would be double taxation as long as the fuel excise tax remained.

In the end, we managed to negotiate a reduction in the fee to $60 per year per active, registered aircraft, and exempted ultralights, balloons, gliders, aircraft weighing less than 600 kg as well as having the same fee apply all private aircraft more than 600 kg, regardless of weight, and foreign private aircraft paying one-quarter of the fee per 90-day period.

For this fee, we were entitled to use the system as much as we want, IFR or VFR, so it would encourage use of the system for maximum safety.

The dilemma for COPA, representing by far the largest number of pilots and aircraft owners, was how to represent everyone’s interests and consider the safety issues. In the end, some would be happy, some very unhappy, but all issues and real options considered, the fee seemed to be the best that could be expected. But that depends on who you talk to.

Given that we were going to pay a fee anyway, was an annual fee fair and should it apply to virtually every private aircraft?

For those private pilots who fly frequently and use the system extensively, especially IFR, it was quite a “deal,” except that it is double taxation. For those who fly aircraft weighing more than 600 kg from aerodromes not served by NAVCAN, it seemed to be unfair because they said they never used the system.

It may be true that they never used the system, but is that a safe way to fly? Even for those who claim they only fly locally and depend on the public weather to make their decisions, there is one service NAVCAN provides that all pilots should use and cannot get be any other means – NOTAMS.

Ask the fellow who flew from a private airstrip during the Bush visit to Ottawa and was intercepted by two CF-18s last December.

He had no way of knowing that the airstrip was in the no-fly zone unless he checked NOTAMs. The only way to do that was to call a NAVCAN FIC or go online to the NAVCAN web site.

Up until September 2001, the fee structure seemed to be working for NAVCAN, except of course, we were being charged an unfair fee.

At least there were two price reductions, to $58 and $55 because NAVCAN was covering its costs quite well. COPA even negotiated an increase in the minimum weight to 617 kg in order to capture more exempt aircraft.

However, the company has had difficulty meeting its costs in recent years. The rate stabilization fund, set up to weather financial storms, was quickly drained by a perfect storm of 9/11, SARS and Mad Cow.

Airlines have adjusted in many ways to the new economic reality, including bankruptcy and flying smaller aircraft, all of which affect the amount NAVCAN can collect from these customers. And all airlines are suffering from lower yields from cost-conscious travelers.

In responding to the most recent increase, which will see our sector pay $72 in March 2005, COPA pressed for a review of the charging structure and indeed called upon the government to step back into the air navigation system, at least financially.

It is clear we are headed in the wrong direction. NAVCAN has embarked on a cost-cutting Level of Service Review which will result in cuts to airports and services used primarily by general aviation.

The air transportation infrastructure must not be systematically dismantled; it is too important to this vast country. However, our sector cannot afford to pay the entire burden for its retention.

So, as the charging structure review unfolds, COPA is seeking your input. I am asking you to consider what would be fair, safe and realistic, not only for you, but for all of us.

Keep in mind; any fee should not be charged so as to discourage use of the system,  NAVCAN has the right to charge a fee for availability of services, the government continues to refuse to reduce or transfer the fuel excise tax and they refuse to step back in financially to help retain the system.