NavCanada Comments on Jetsgo

[Trader]

NAV CANADA ONLINE

An electronic bulletin for NAV CANADA employees

#39/05

Update On Jetsgo Situation

This is a brief update for all employees on the impact of the recent decision by discount carrier Jetsgo Corporation to cease operations and file for bankruptcy protection under the Companies’ Creditors Arrangement Act (CCAA).

The news media have been covering this story extensively, and NAV CANADA for the most part has not been a factor in the coverage. However, some news reports did note, correctly, that NAV CANADA was one of the creditors engaged in discussions with Jetsgo regarding credit terms in the weeks prior to their bankruptcy filing.

These media reports noted, also correctly, that NAV CANADA was considering the seizure of Jetsgo aircraft as a protection against the potential non-payment of debt owed to us for air navigation services provided to Jetsgo. However, due to successful discussions and agreement with Jetsgo, we withdrew an application to the Courts in this matter on Monday, March 7, 2005.

As a result of this action, the previous outstanding debt was reduced somewhat. As of Jetsgo’s bankruptcy filing on March 10, 2005, the total amount owed to NAV CANADA amounted to approximately $1.6 million.

While this is a significant sum, it is not considered material in the overall context of the company. In other words, our financial foundation remains as strong as ever, with this event having no effect whatsoever on our ability to fund the business or cover our costs on an ongoing basis. Nevertheless, the Company will make every effort to recover this amount in the context of the CCAA proceeding.

Finally, another immediate impact of this event is a temporary decrease in overall air traffic. However, as we have seen in the past, this is usually followed by capacity increases as the remaining air carriers in the market take steps to address the new unserved demand.

We do not expect that there would be a material revenue impact on the Company, especially given the healthy growth conditions in the industry at present. We will keep you informed of any further developments on this issue as they arise.

John Crichton

President & CEO

[Flapsforty]

No problem, they'll just charge AC and WJ cutomers for it. Must be nice not to have to account to anyone.

Cheers

[Vsplat]

Have a look at the days leading up to the last several airline bankruptcies in Canada. Nav Canada has been a factor in all of them, one of the more aggressive hair triggers when the subject of fin seizures came up

This privatisation thing sure seemed like a good idea at the time....

Vs

[Guest MikePapaKilo]

Flapsforty said

"Must be nice not to have to account to anyone"

---Why would you say that ? NAV CANADA is entirely accountable, in a variety of ways to the the industry and to government.

Here's a cut and paste from their website:

NAV CANADA is governed by a stakeholder Board of Directors with representation from the four founding members of the company: air carriers (four directors), general and business aviation (one director), the federal governments (three directors) and bargaining agents (two directors) representing employees. In addition, four independent directors are elected by the core board, and the Board appoints the President and Chief Executive Officer.

The NAV CANADA Advisory Committee is comprised of 18 members, all of whom are aviation professionals, representing the Company's stakeholders across Canada. The Committee reports to the Board of Directors. '

Is that not enough accountability ? Our association is regularly consulted with, and NAV is quite approachable and responsive thru' the Customer Service people.

Vsplat wrote:

"Have a look at the days leading up to the last several airline bankruptcies in Canada. Nav Canada has been a factor in all of them, one of the more aggressive hair triggers when the subject of fin seizures came up"

"This privatisation thing sure seemed like a good idea at the time...."

It strikes me that NAV CANADA may have taken the measures it did, at the time it did, to try to ensure that other customers (perhaps the company you work for) would not have fees increased to cover the 44 million that Air Canada failed to remit at the time. And now Jetsgo is in arrears by at least 1.6 million. What did one of the airport authorities call it as JetsGo failed to pass on fees that it had leveied in the way of AIF's and ANS fees ? - misappropriation of funds ?

One could hold the view that NAV CANADA was not, as you seem to propose "a factor in all of them". NAV CANADA did not drive Air Canada's fall into financial disarray, nor did it do anything to drive JetsGo's fare settings. NAV CANADA appears to be just another creditor, a provider of a servce, that extended a line of credit, but only to a point. Amazingly, it extended, or at least somehow permitted Air Canada to rack up, 44 million in charges that went unpaid, until a settlement was reached. That's pretty generous. To carry on, and not attempt to protect the costs of services extended, without taking action, would be poor business practice, no matter the corporation and its services, no matter who the customers are.

What would you prefer - that NAV CANADA take no action, and well... do what to cover the loss ?

What is your best recommendation for a way to deal with airlines and other ANS customers that somehow neglect to pass on the monies they collect from their passengers in the name of air navigation fees ?

Just the thoughts from a not-Airbus-nor-Boeing airplane driver......

MPK

[Vsplat]

Without putting a lot of dirty laundry on the line, let me simply say that I was there before, during and after the departure of ANS operations from Transport and the formation of Nav Canada.

The concerns then were that we were taking an essential infrastructure item and trying to make it a self-sustaining business, and in so doing focussing the cost on the last part of the food chain to touch it - the airlines and aircraft operators. In fact the rest of the country that took benefit as a direct result of cargo, mail, personnel, etc, etc were only affected if the airlines could charge them directly. A huge shift in cost burden.

It's a bit like the police service being privatised, and charging only those people they directly assist. Before long, the well runs dry and they take action to stay in business. Why did the well run dry? Taking more water out than was coming in, for too long.

The privatisation model for Nav Can, as for airports, has lead to cost imbalances. If the old approach was too broad, we have perhaps swung too far the other way.

We have, as you note, a system where the costs of Nav Can can get carved up only so many ways. With Jetsgo gone, who will pay? I don't expect there to be layoffs at Nav Can, so...

Your points are valid in today's operational context. Good to see both views expressed, that is what this forum is best at. My comments pertain to yet another spun-off federal infrastructure, so a bit more historical.

Vs

[shockwave]

Great Post Vsplat

AIF fees, Nav Can fees, and the beloved security tax. The download economics of the liberal party has hit the aviation sector to hard, period. And dont get me started on obsolete airport rents. I really wonder if the security tax collected and pooled into general revenues isnt subsidizing security for other modes of transport. If anyone knows please enlighten us....

[Guest long keel]

Long Keel's Canadian definition of a non profit corporation: A corporation which ensures that all who use its services will never make a profit. If the corporation fails and allows a commercial user to profit, it adjusts its fees accordingly to prevent any further profit for the users company.

[Seeker]

I really wonder if the security tax collected and pooled into general revenues isnt subsidizing security for other modes of transport.

Well, of course it is, just like the gas tax you pay subsidizes health care.

[Guest 06L06R]

Without putting a lot of dirty laundry on the line, let me simply say that I was there before, during and after the departure of ANS operations from Transport and the formation of Nav Canada.

The concerns then were that we were taking an essential infrastructure item and trying to make it a self-sustaining business, and in so doing focussing the cost on the last part of the food chain to touch it - the airlines and aircraft operators. In fact the rest of the country that took benefit as a direct result of cargo, mail, personnel, etc, etc were only affected if the airlines could charge them directly. A huge shift in cost burden.

It's a bit like the police service being privatised, and charging only those people they directly assist. Before long, the well runs dry and they take action to stay in business. Why did the well run dry? Taking more water out than was coming in, for too long.

The privatisation model for Nav Can, as for airports, has lead to cost imbalances. If the old approach was too broad, we have perhaps swung too far the other way.

We have, as you note, a system where the costs of Nav Can can get carved up only so many ways. With Jetsgo gone, who will pay? I don't expect there to be layoffs at Nav Can, so...

Your points are valid in today's operational context. Good to see both views expressed, that is what this forum is best at. My comments pertain to yet another spun-off federal infrastructure, so a bit more historical.

Vs

It's early so maybe I am not getting you. Are you saying every person in this country should pay fay air navigation? To compare Nav Can to the police does not make sense to me. If you fly you pay, if you send a letter you pay. We all need police protection. The goverment is always giving billions to VIA for a service that most people in the country don't use. Why doesn't anyone complain about that?

[Vsplat]

Hi 06L06R.

To be clear, I'm not advocating a free ride for anyone. The former system needed changing because it was totally driven by the tax base. The current system is too much the other way.

What I see today is an artificially short cycle between cause and effect. We are seeing this in so many ways. Have a look at the steady rate of decommissioning of surface-based navaids. We are casting our lot with GPS, a system not controlled within our country. Certainly an excellent system and a safe way to navigate, but... Another example, for a time Nav Can began stepping away from RVR installations, until it became clear the the new approach ban regulations would rely on same. Things are being targetted that are good for the business instead of what might be better overall for safety.

Nav Can is running a business and that's a fact. As was posted above, they must act in good faith and protect their bottom line. I have many friends there, who quite frankly work their tails off to deliver the best they can. Nor do I believe they are reckless in their spending ways, quite the opposite, I believe the process is being hampered as the revenue pie shrinks. My quarrel is with the decision to insert the bottom line approach into what is first and foremost a public safety infrastructure.

It is simply too simplistic to suggest that only the people on board an aircraft benefit from its safe passage. If that were true, we would not be seeing small towns fighting to keep their airport open. The fact is, these things generate benefits for the community, not because they sit there, but because they can be used by aircraft. The circles widen from there.

The bottom line is, some things you can charge directly for, like a pack of gum. Some things you ought not to, like those things that have to do with everyone's safety and have long, sometimes difficult to quantify paybacks. This is where it is everyone's responsibility to ensure that the core does not dissolve in financial, corporate arguments.

Sorry for the long diatribe. BTW, I'm not saying that a controller is the same as a police officer, but when the chips are down, I'd rather be talking to a good controller than a good cop any day

Cheers

Vs

[J.O.]

Well said VSplat. The airways are an integral element of our economic infrastructure, and they're just as much a public infrastructure as our railroads and highways. Yet, the control of our airspace is the only element which is funded entirely by the users. The same is not true for roads and railroads, which are funded not just from license fees and taxes, but from general revenues and from infrastructure investments by all levels of government.

When was the last time the government funded an improvement to NavCan's services and/or facilities? Yet, they regularly pump billions into highway upgrades and the railroad system.

[newgirl]

VIA who? Must be some eastern company. A train company you say?

Geez in my city we haven't had passenger train service for 20 years. So you mean my federal taxes are paying for passenger service that only services Eastern Canadian cities like Toronto and Montreal when I live in Sask ? Even the grain farmers here are paying freight costs to ship their grain to YVR or YQT terminals.

So in Oct. this year when AC replaces the A320/A319's with RJ's in my station will NAVCAN reduce the landing costs? Or will it decide that the larger RJ's 705? will have to pay the same fees as a A319 in order to keep the costs similar ?

In my mind , the small bases are in a losing situation. To those of you who have a much better understanding of the situation please clarify.

Thanks.

[shockwave]

Just like my buddy said when i asked why he was so miffed at the 407...... "I paid for it through the nose with my tax dollars and now i have to pay for it again....."

The taxpayers paid for the ANS and the airports so my question to 06L06R is how much money did we get back from the feds now that we are all paying on a user fee basis for the infrastructure our tax dollars payed for in the first place? Its all a bunch of download economic smoke and mirror policies from the feds and now you know where part of that 8 billion dollar suplus is coming from. Ontarion sells the 407 to avoid a deficit and the feds just keep raking it in....

[ceesix]

"No problem, they'll just charge AC and WJ cutomers for it."

Does this mean our few measly, insignificant, disproportionate, uncaccountable, insignificant, poor, indigent and modest passengers get to skip the fee???? You do remember there's still a 3rd choice, don't you? Sorry, feel I have to keep reminding you!

[mo32a]

So in Oct. this year when AC replaces the A320/A319's with RJ's in my station will NAVCAN reduce the landing costs?

It is the airport that charges the landing fees - and yes they are usually tied to the size/capacity of the aircraft so you should see a reduction.

[mo32a]

The taxpayers paid for the ANS and the airports so my question to 06L06R is how much money did we get back from the feds now that we are all paying on a user fee basis for the infrastructure our tax dollars payed for in the first place?

The ANS fees paid to NavCanada are still approximately 30% less than what airlines paid to the government for the same service almost 10 years ago.

The landing fees you pay to airports go, amongst other things, to pay YOW the exorbitant rents they charge for the privilege of running an airport, so I guess the "taxpayer" is getting this money back now. Unfortunately it is probably being used to fund a daycare or firearm registry but then you get what you vote for

[Guest 06L06R]

Just like my buddy said when i asked why he was so miffed at the 407...... "I paid for it through the nose with my tax dollars and now i have to pay for it again....."

The taxpayers paid for the ANS and the airports so my question to 06L06R is how much money did we get back from the feds now that we are all paying on a user fee basis for the infrastructure our tax dollars payed for in the first place? Its all a bunch of download economic smoke and mirror policies from the feds and now you know where part of that 8 billion dollar suplus is coming from. Ontarion sells the 407 to avoid a deficit and the feds just keep raking it in....

I know "we" did not get anything but you can be sure the feds spent the money that Nav Can gave them was well spent.

My thanks to mo32a for his reply.

And now to stir the pot.....

Our contract expires at the end of the month! For updates go to CATCA.

See Nav Canada needed the JetsGo money to pay us.