Doug Ashbury
Northern News Services

NNSL (Aug 31/98) - Nav Canada's soft sell on $7.5 million in rate increases proposed for the North is stirring up fierce opposition in government and the private sector.

Northern Air Transport Association's Bob Davies said Thursday Nav Canada has "done nothing for the North."

Davies was reacting to Nav Canada's claim that it listened to the North and responded with "substantial savings."

Davies' initial reaction to the news that Nav Can was going to defer the increases for a year was positive because he thought there would be time to re-address the fees.

But he has since learned that Federal Transport Minister Collenette has only 30 days to accept, amend or reject the proposed fee schedule.

"We're scrambling," Davies said.

Once the minister approves a fee structure, there is no legal or political mechanism in the Act for subsequent changes.

"We're hoping to meet with the federal Transport Minister Monday (today)," Davies said.

Territorial Transportation Minister Jim Antoine said he is "more than disappointed" with Nav Canada's proposal to postpone but not resolve the issue of fees.

"I wanted substantive changes in the fee structure. The objections I have raised over and over with Nav Canada have to do with the inequity in the basic fee structure and not with implementation dates," Antoine said.

Antoine added that he will ask federal Transport Minister David Collenette to withhold his approval pending amendments to the fee structure.

More expensive to fly

If efforts to get changes to the proposed fees fails, Davies expects there will be higher prices for airline tickets and hikes in rates for shipping cargo. The $7.5 million increase breaks down to $600 in additional costs annually for every NWT family.

Airlines might also look at the routes they fly. If they find the fees have made some routes too expensive, the result could be less service.

Nav Canada is the not-for-profit organization that took over the country's air traffic control services from the federal government.

While Northern costs are rising, with new service fees and efficiencies introduced into Canada's air infrastructure, Nav Can expects to cut fees in the south by $100 million dollars.

Northern carriers have told Nav Canada the new fee schedule is not fair and it does not reflect the North's unique situation.

For many Northern communities, air transport is the only option and most cargo goes one way. As much as 90 per cent of a Northern airline's cargo revenues are generated by transporting of goods just one-way.

Unlike east-west routes in Southern Canada, when a Northern air carrier ships everything from trucks to food to many Northern communities, there's little, if any, revenue from cargo on the return flight.

Makes fee structure fairer

Nav Canada's fees are intended to make up for the elimination of the Air Transportation Tax which was charged to passengers when they purchased their tickets.

But "by Nav Canada's own calculations, Northerners will pay $7.5 million more a year over and above what they used to pay under the Air Transportation Tax," the GNWT said in a news release.

Nav Canada's rates and revenues director Arthur Andreassen said that under the old system, there were users of the system which were not paying any air transportation tax yet still using the services.

They included non-commercial aircraft and commuter aircraft -- those with 19 seats or less, such as the Twin Otter.

Nor was there any tax on cargo, he added.

"If there is to be full recovery of costs, all users need to contribute."

Asked why some of Nav Canada's estimated $100 million in extra money could not be used to keep Northern costs at current levels, Andreassen said some of that money was applied to Northern costs to keep the increase at $7.5 million.

The rest stays in the company's surplus fund. This could be used for future expenditures, such as infrastructure costs.