Near the end of last year NAV CANADA completed a rate structure review discussion paper which looks at the current way fees are charged and discusses new ways fees may be charged in the future.
The discussion paper was presented to COPA at a board of directors meeting in April, by Arthur Andreassen, assistant vice-president, Revenue and Commercial Relations NAV CANADA.
The following is a letter from COPA president/CEO Kevin Psutka to Andreassen which summarizes feedback COPA had regarding the discussion paper and its stand on fees currently charged to private aircraft owners.
On behalf of 18,000 pilots and aircraft owners, I would like to formally respond to your letter of Jan. 21, 2005 concerning NAV CANADA’s Discussion Paper concerning the Rate Structure Review.
You have received several inputs from COPA, including written correspondence following the most recent fee increase and direct feedback from our Board of Directors at the recent meeting with you, but I feel it is necessary to summarize all of this feedback into one document for clarity and completeness.
First of all, our long-standing position remains that any fee is unacceptable as long as we continue to be subject to the fuel excise tax. You have ample reasoning for this position so I will not repeat those arguments.
In light of this fundamental position, as always our comments are with a view to minimize the impact on our sector.
The majority of the discussion paper deals with issues for the commercial sector. Our comments are therefore limited to the sections on General Aviation and Aeronautical Publications
The Air Navigation System continues to be primarily for commercial aviation, ultimately to fulfill Canada’s commitments to ICAO for the provision of such services to international air transportation interests.
Indeed, when the ANS was supported through the Air Transportation Tax, private operators and aircraft owners did not contribute to the system. We submit that this was in recognition of the commercial nature of the ANS and that the private sector was, at best, a very minor user of the system.
When the Commercialization Act was developed, we believe the statements made concerning the charging principles for the private aviation sector acknowledged we are incremental users of a system that would largely be in place whether or not we used it, and therefore the concept of making a contribution rather than “paying our way” was understood in the development of the fees.
We therefore support the retention of the current charging methodology for our sector. Although we would prefer to take another run at the fuel levy concept, we acknowledge that the will on the part of the industry does not appear to be there at the moment.
The amount of the annual fee should actually be reduced in light of the fact that the amount of the system we are using is declining for two reasons:
1. NAV CANADA’s level of service review will result in a net reduction of services to our sector.
2. You have already received the results of a study conducted by our Alberta Director, Bob Kirkby, who helped the Alberta Transportation Department understand why, at a time that the number of private aircraft appears to be increasing, movement statistics, as reported by NAV CANADA, appear to be decreasing.
Since movement statistics are only collected at aerodromes served by NAV CANADA, it is logical to conclude that movements at other airports are on the increase.
Bob’s study was performed for Alberta, but the same trend is happening across Canada. From my own experience in the Ottawa area; Rockcliffe, Carp and Smiths Falls airports have seen noticeable increases in aircraft residing there and a significant number of these aircraft came from Ottawa International, where landing fees and other cost increases have forced owners to seek alternatives.
These airports do not have NAV CANADA services. With the move away from aerodromes that are served by NAV CANADA, our sector’s demand on the system is decreasing.
For these two reasons, there appears to be no justification to increase our fees.
At your meeting with the COPA Board of Directors, you presented the results of your investigation of fees in other countries. We acknowledge it is difficult to make an apples-to-apples comparison but we agree with the general path that you chose in making the comparison.
Based on a typical aircraft (Cessna 172) flying a typical number of yearly hours (50), you determined that the U.S. has the lowest fee ($81) of the countries observed, if the fuel tax is considered their contribution to the ANS, and the fees for other countries is into the hundreds of dollars.
Although the NAV CANADA fee of $72 (plus GST) seems comparatively reasonable, the fuel excise tax that we continue to pay to the government must be considered into the calculation since our U.S. counterparts pay a similar tax (but at a lower rate) as their only charge.
On the basis of the same Cessna flying the same number of hours per year, the Canadian fuel excise tax adds $143 to the $72 that we pay to NAV CANADA, therefore, Canadians are paying considerably more than our American counterparts for similar service.
The discussion paper mentions a possible two-tiered fee concept with higher charges at ATC or FSS airports. In our view, this would create a significant safety issue as pilots would deliberately avoid these facilities.
We believe, two-tiered pricing would violate the charging principles.
Owners of multiple private aircraft have asserted from the beginning they should not have to pay for more than one aircraft because they only fly one aircraft at a time and consequently do not use the system any more than a single aircraft owner. This is a logical argument.
Counter-arguments by NAV CANADA against special consideration for these owners have included comparisons with licence fees for owners of multiple automobiles and assertions that more than one pilot can fly these aircraft and therefore the aircraft can be in the system at the same time.
However, there is one fact that should be taken into consideration. The General Aviation sector is the only one that pays whether or not we use the system.
In recognition that this across-the-board treatment is in fact unfair to some owners who truly do not use the system, and the fact that there are relatively few multiple-aircraft owners of private aircraft, consideration should be given to owners of multiple aircraft submitting one fee.
This could easily be achieved by querying the registration database for private aircraft at the same address and sending one invoice listing aircraft at the same address.
Overall, the general aviation sector, which includes private aviation, is recognized as the breeding ground for the aviation industry and it is also recognized as being very cost sensitive.
In order for a change in the contribution of this sector to make a material impact on NAV CANADA’s bottom line, it would be necessary to significantly increase the contribution. This would simply be devastating for this sector.
Its incremental use of the ANS must continue to be recognized with a minimal contribution.
Regarding aeronautical information publications, we believe that the investigation should go beyond simply looking at the pricing. Alternative means of providing the information, in particular subscriptions to electronic versions of the publications, may reduce if not eliminate the current expensive production and distribution process.
If the investigation is not broadened, it may simply result in a conclusion that prices must increase significantly. This would be opposed vigorously on safety grounds.
As we know, there are relatively few current publications being carried on board many aircraft now. A significant increase in price would only exacerbate the potential problem.
We appreciate the opportunity for input on this important issue.