Nav Can rate hikes: Not so bad after all?
IQALUIT Increases in cargo and passenger fares on northern air carriers won’t be as high as first suggested by First Air several months ago, but the president of the corporation that owns the airline is still waving a red flag.
“Whether you are a northern resident, a small, non-profit organization, a larger government department, or a yet-to-be-born arm of the Nunavut bureaucracy, these increases will touch your daily lives and make life in the arctic region that much more difficult and costly,” warns Makivik president Zebedee Nungak in a letter dated Sept. 29.
Nunagak sent the letter to more than 60 northern politicians and airline heads cautioning them against complacency in the face of higher air navigation fees charged by Nav Canada.
“When the annual inflation rate and wages are stable, this represents a considerable cost increase to all northerners,” Nunagak said.
Nav Canada, a private corporation, paid Transport Canada $1.5 billion for the air navigation system in 1996. It plans to charge airline companies for the service, phasing in the first part of its fee structure next March, followed by a second round of increases in November, 1998.
Over the same period, the federal government will phase out its air passenger tax and the subsidy it currently provides to Nav Canada. By next November Nav Canada expects to have recovered the entire cost of the system through fees to users.
Several months ago, officials from Makivik-owned airlines First Air and Air Inuit, which services northern Quebec, warned that rates could jump 20 to 30 per cent because of Nav Canada’s fees.
But that’s a far cry from the figure Nav Canada’s director of rates and revenues touted in Iqaluit last week. Arthur Andreassen told members of Iqaluit’s chamber of commerce that the average increase to First Air’s northern consumers will be about three per cent.
“What can I say about those percentages that were out there?” Andreassen said in an interview. “They certainly didn’t come from Nav Canada. Looking at the whole northern operation of First Air, the net figure is in the order of three per cent.”
After an outcry from northern airlines and businesses, Nav Canada revised its initial rate structure, exempting fees for flights in and out of many northern airports. The new fee structure was also delayed by several months.
A First Air representative was also in Iqaluit last week to address Iqaluit business people and outline its plan to deal with the fees. That plan includes increases in freight and passenger fares of less than ten per cent, less than one-third of what was predicted.
GNWT Transportation Minister Jim Antoine told MLAs that his office continues to lobby for a fairer rate structure for the North.
“The Nav Canada fees will have a greater impact on low traffic routes in the North than they will on high traffic routes in the South,” Antoine told MLAs, adding Nav Canada fees are calculated on the carrying capacity of aircraft, not the number of passengers or amount of freight.
He added that Nav Canada “conceded that the effect on northern air routes had been an oversight.”
“They also agreed to better consultations for the second phase of the implementation that begins November 1, 1998, and extends the fee structure to smaller aircraft.”
Andreassen said Nav Canada consulted widely before coming up with its fee structure, but that those consultations will be widen for phase two discussion expected to begin this winter.
Mike Hine, president of the Iqaluit Chamber of Commerce, said Andreassen cleared up some misunderstandings, but didn’t offer any hope of exemptions for northern carriers.
Nav Canada’s position is that it can’t give “preferential treatment to the North,” Hine said.
“It’s not as large an impact as we thought, but any increase in freight rates has an impact.”
Hine said the chamber would continue to push for lower rates for northern carriers.