Status Report on ATC Privatization in Canada

In 1996, Bill C-20, "An Act respecting the commercialization of civil air navigation services" was passed by the government of Canada.

Essentially, this piece of legislation allows a new, "not-for-profit" corporation called "NavCanada" to take over responsibility for all of the air navigation services in the country. In the last decade, successive Canadian governments (regardless of political orientation) have pursued the privatization of federally owned and operated aviation services, including the major international airports. The motivation for these policies came in the form of a national debt that exceeded that of the United States on a per capita basis.

On November 1, 1996 legal responsibility for air navigation services was passed to NavCanada, whose Board of Directors is comprised of former airline executives, air traffic control unions, general aviation representatives and others appointed by the government of Canada. The purchase price was $1.5 billion (Can). The agreement includes the services of 6400 employees who move from the public sector to the corporation, and all of the equipment associated with the provision of service.

Air navigation services means all air traffic control, en route and terminal radio navigation services, aviation weather briefings, flight service stations, emergency assistance services and any flight information service such as flight plan filing or other service performed for aircraft in flight or on the ground. The corporation is not permitted to charge fees above and beyond the required amount for breaking even on annual costs and the need for capital expenditures, thus its "not for profit" status.

What will this mean for the average private pilot in Canada as well as those visiting aircraft from other countries? It will mean paying additional costs for the privilege of flying an aircraft in Canadian airspace.

The new law states that "charges in respect of recreational and private aircraft must not be unreasonable or undue." What does "unreasonable" mean? Well, the legislation does not define the term. And despite the requirement for NavCanada to consult all of the users of the system, it will ultimately decide what the fees will be.

It is clearly laid out in the law that fees must not be such that a user might be encouraged to avoid using the system and thereby reduce safety. For example, would you think twice about filing that flight plan if you were charged for every one that you filed? Or, would you be reluctant to talk to a controller if you knew that each time you used ATC it would cost you? That weather briefing that you always sought out might be bypassed if each one were to mean a bill to you.

What could become a nightmare of administration costs associated with billing for each and every use of the system as well as the problems with non-compliance by unhappy aircraft owners has resulted in NavCanada agreeing to look at an annual flat fee for fliers, based on aircraft weight. Specific dollar amounts have not been discussed publicly — NavCanada has been very secretive to date and has given no hints about how large such fees might be — but the best guesses by COPA (the Canadian affiliate of AOPA) range from $150 to $850 (Can.) per aircraft or per pilot every year depending on the aircraft and type of flying done.

The Canadian Owners and Pilots Association (COPA) based in Ottawa, has argued strongly against the imposition of additional fees, saying it will deter people from flying and damage an already price-sensitve general aviation industry. It argues that general aviation currently pays millions of dollars annually in taxes on aviation fuel and because those taxes are not being abolished or re-directed to NavCanada, private operators should not be doubly taxed with new fees.

At the present time, the costs of services in Canada are being funded by transition payments from the federal government. However, NavCanada has announced that by November 1, 1997 user fees will begin. Back in late 1995, Canada began charging commercial operators overflying the country or using oceanic ATC and later this year the commercialization of the system will be near completion with all users expected to assume the cost of the services.

Ideally, private enterprise should be able to streamline it's operations and provide an efficient state-of-the-art service for it's customers. Unrestricted by political concerns, the business of providing air navigation services perhaps can mean the latest in ATC equipment for the controllers, or better aviation weather forecasting, all of which means better service to pilots. This has been a massive undertaking in Canada and will lead to growing pains as the months and years go by. There are parallels with the deregulation of the airline industry both in Canada and the U.S. With the withdrawal of government involvement in the aviation business, there seems to be a long period of adjustment as the dust settles and the market establishes an equilibrium.

The Federal Aviation Administration in the United States has consulted with the government of Canada on the privatization of air navigation services in that country and it is also considering ways of approaching the aviation community there about assuming some of the costs of the system. With governments everywhere facing critical cash shortages it was inevitable that it would come to pass that aviation must take more responsibility for the services that some of us may have taken for granted. We can only hope that the transition will be as painless as possible.