The events of 2020, which have unfortunately bled into 2021, have undoubtedly had a tremendous impact on aviation. While we have mainly focused on airlines, airports, as well as the world’s largest planemakers, air traffic controllers have also been negatively affected by travel restrictions and fewer flights.
Case study: NAV Canada
To see how the aviation downturn as affected air navigation service providers, let’s look at Canada’s civil air navigation service – NAV Canada. This entity one of the largest Air Navigation Service Providers (ANSPs) by total Instrument Flight Rules (IFR) flight hours. Prior to 2020, the group handled 3.3 million flights a year for 40,000 customers in over 18 million square kilometers.
On January 13th, the organization released its latest round of financial results. Reporting a net loss of $138 million in the first quarter of fiscal 2021, NAV Canada experienced a loss of $100 million as compared to a net loss of $36 million for the first quarter of fiscal 2020.
This certainly would have been much worse if not for staffing cuts and rate increases:
“Since the beginning of the pandemic, NAV CANADA has taken unprecedented measures to drive our operating expenses down. In fiscal 2021, we continued to implement cost-containment measures to manage the significant downturn in air traffic in the ever-changing landscape of this pandemic. This includes announcing an optimal staffing strategy, launching rigorous, safety-focused reviews of the level of service for air traffic control towers and aerodromes and restructuring efforts that will impact approximately 900 jobs across the country,” -Neil Wilson, President and CEO, NAV Canada
NAV Canada represents a slightly different business model than might be found in some other countries, where air traffic control services are government-run. However, NAV Canada is a private company whose revenues come from its aviation customers and not the government.
The situation is made worse for NAV Canada as it is not allowed to operate as a typical business and for-profit entity. In accordance with Canada’s Civil Air Navigation Services Commercialization Act, the organization “may not set its service charges at a level exceeding what is required to meet the cost of providing civil air navigation services.”
Other parts of the world
In other countries, government-funded air navigation service providers might be a little more sheltered from the financial reality of reduced air traffic, but there are still impacts from COVID-19.
Australia’s air navigation service provider, Airservices, recently reported an 80% reduction on revenue year-on-year, stating:
“While the events of 2019-20 have had a significant impact on financial performance…Airservices moved quickly to identify $30 million in savings in the final quarter of the year alone. Delivery of another $100 million is expected in 2020-21…These cost reduction initiatives and other efficiency measures are ongoing, as we continue to provide our customers with value at a time when they need it the most,” -Jason Harfield, CEO, Airservices
In the United States, the coronavirus is having a more direct impact on operations. Several air traffic control facilities have had to close due to outbreaks. More recently, an air traffic control center in Jacksonville (Florida) had to close for COVID-19 cleaning. This has caused flight delays across the state.
What do you think of the situation for air navigation service providers? Let us know in the comments.
