by Doug Ashbury
Northern News Services

NNSL (Nov 10/97) - Privatization of Canada's air navigation system means airfares in the North will be climbing to a new altitude.

"For major carriers, the net average impact is three per cent in the North," NAV Canada director of rates and revenues Arthur Andreassen said.

NAV Canada is a non-profit private corporation created in 1996 to run Canada's air navigation systems.

On March 1, it will go ahead with phase 1 of its new fee schedule, which covers commercial aircraft. Phase 2, to be implemented Nov. 1, 1998, will cover aircraft under eight metric tonnes.

The new fees mean the federal air transportation tax -- seven per cent of ticket price plus $6 to a maximum of $55 -- will be eliminated.

As well as passenger rates, the privatization has significant implications for air cargo.

Many Northern communities rely on air as the only form of personal transportation and air is vital to the supplying of goods.

Currently, there is no federal aviation tax on cargo. But, said Andreassen, there "can't be a major category not contributing."

First Air has estimated cargo costs could rise 20 per cent in the North. The carrier also predicted the new fee schedule will cost the company $3.8 million, not including costs to NWT Air, which First Air recently bought.

NWT Air president Scott Bateman said, "Based on existing schedule, with existing fleet, the estimated impact will be $1.9 million in costs to the company over 12 months."

"In an ideal world, I could recoup that from customers. This is what I am struggling with right now."

Canadian North regional manager Bob Davies said there will be increased costs to customers but to what degree he doesn't know.

"The charges are one component. We're very concerned about levels of service in the NWT and Yukon. We don't want to see degradation of existing services," he said.

"The fact that there is any increase because of ownership change (the privatization) is difficult for us to accept."

It appears carriers can do nothing about phase 1 of the fee schedule. Phase 1 was accepted in principle by federal transportation minister David Collenette in September.

"The results of NAV Canada's fee changes will be catastrophic to remote Northern communities," Inuvik mayor and NWT Association of Municipalities president George Roach said.

Ottawa has not "taken into account the Northern economy," said Bob Brooks, Yellowknife alderman and chair of the city's financial, legislative and administrative subcommittee.

The subcommittee is recommending Yellowknife council write to the transportation minister protesting increases.

Northern air carrier officials are to meet with NAV Canada representatives in Yellowknife Nov. 26. The changes are also expected to front and centre at the Northern Air Transport Association meeting Dec. 4 in Whitehorse.