Fliers might pay Air Canada's tab Troubled airline owes millions in fees for air-traffic control, airport improvement SHEILA McGOVERN The Gazette Friday, April 04, 2003 Air Canada owes the country's air navigation system $44 million in unpaid fees and if it doesn't pay up, other airlines and airline passengers might have to make up the loss. Nav Canada, a non-profit corporation that provides air-traffic control and weather services to airlines travelling in Canada, confirmed yesterday that is an unsecured creditor of Air Canada, which is now restructuring under bankruptcy protection. Unsecured creditors are the last to be paid, and often get little or nothing of what they are owed. NavCan's Louis Garneau said the agency is considering all options to mitigate its losses, including hiking fees to all airlines. "We've indicated that we would be prepared to increase service charges this year so that we would break even in the next fiscal year," Garneau said. In the past, airlines have passed increases in NavCan charges on to customers. And customers might get hit on another front. Larry Berg, chairman of the Canadian Airports Council, estimates Air Canada owes the country's airports about $80 million in unpaid fees. A large chunk of that amount is airport-improvement fees that the airline collected on behalf of the airports, he said. The rest is landing fees, rents and other items. Airports are also unsecured creditors, he said, and it's safe to assume most are now reviewing their plans to expand or improve their facilities. Berg, head of Vancouver International Airport, said he's rethinking his airport's plans and Christiane Beaulieu, an Aeroports de Montreal official, said ADM is rethinking its long-term plans to renovate Dorval's domestic terminal. ADM is just completing a $250-million expansion of its U.S. jetty, and intends to go ahead with its $300-million project to build a new arrivals area in 2004 and a new international jetty in 2005. The money for those projects has already been secured and the contracts awarded, she said, but plans to improve and add a jetty to the domestic wing are being thought. Beaulieu could not say exactly how much ADM is owed, but it could be less than other airports. Until March 31, Montreal and Vancouver collected their airport improvement taxes themselves. On the alleged $80 million in cash owed to airports, Stephen Markey, Air Canada vice-president of government relations, said the only payments Air Canada is holding back to airports involve airport-improvement fees paid by travellers. He said there is "a problem" with the arrangement whereby Air Canada's employees collect the fees on tickets and then pay the airports. "The reason we're holding it back is because another airline is choosing not to charge its employees the same way that we do," he said. He did not name the company. "So we're saying until all of the airlines are back on the same page, we're simply going to hold these funds in escrow. And that's exactly where they are." All fees are now collected by the airlines as part of the ticket price, but when it announced the change last January, ADM said it was increasing its fees to $17.50 from $15 as a kind of insurance protection against airlines going bankrupt. Berg said he finds it particularly annoying that despite the airports' urging, the government refused to insist that the fees be set aside in a special fund and protected in the event of bankruptcy. The government did protect its $12 security fee, he said, so Ottawa will be getting its money. The losses for airports, along with the current slowdown in the airline industry and potential cutbacks by Air Canada as it emerges from bankruptcy, prompted bond-rating agencies to issue warnings that they are watching, though not downgrading the credit ratings of NavCan and the airports. It's still too soon to determine the exact impact, said Paul Judson at Dominion Bond Rating Service. And the airports do have a means of recovering the loss, he said: They could raise their fees. Clive Beddoe, president and CEO of WestJet Airlines Ltd., is not happy to see his chief rival's debts being downloaded onto others. "That's a hell of a lot of money to take out of the (airports) system," Beddoe said. "They've got debts to pay. " Beddoe said there is now a danger the airports "will be back at the government saying, 'we're going to go bankrupt unless you bail us out.' " Berg said the airports have written to Ottawa asking the government for some relief from the about $270 million they pay the federal government in rents. "This is not a $270-million industry," he said. NICOLAS VAN PRAET contributed to this report *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@xxxxxxxxx Trinbago site: www.tntisland.com Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/ Steel Expressions www.mts.net/~ejames/se/ Site of the Week:http://www.ttsailing.org/ TnT Webdirectory: http://search.co.tt *********************************************************