Thank you, Mr. Chair.
Nav Canada is the not-for-profit corporation that owns and operates the world's first privatized air navigation system, ensuring the safest, most efficient movement of aircraft from the Pacific to the Arctic to the mid-Atlantic, 24 hours a day, seven days a week. Nav Canada operates the world's second-largest air navigation system. To support our 45,000 customers, we employ 4,000 people and are deploying groundbreaking technologies to keep the skies safe. Safety is why we exist, and our safety record is one of the best in the world.
Nav Canada is a critical part of the supply chain infrastructure, which keeps people, goods and services moving by air to and from communities large and small across Canada and around the world.
NAV CANADA would like to thank the committee for its invitation to discuss reducing red tape and costs on Canadian airports.
Nav Canada's customers are the airlines and private aircraft operators that fly in Canadian airspace. As a not-for-profit, we charge our customers using a fee-for-service model. We have delivered multiple decreases to our customers since our inception to help them reduce costs for air travel, while investing more than $2 billion to improve the air navigation system transferred to Nav Canada by the federal government in 1996.
Even with the latest rate increase in September 2021, our service charges and increases on average have run below the rate of inflation since our inception. Our cost structure is heavily weighted to fixed costs. For example, if the number of flights in Canadian airspace drops by 80%, Nav Canada must still maintain 100% service coverage in Canadian airspace. This weighting towards fixed costs is illustrated when you realize that labour costs make up approximately 70% of our operating costs.
During the pandemic, we saw passenger air traffic, as measured by revenue, drop significantly. In fiscal 2021, our revenues were down by 55.7% compared to those from prepandemic traffic. As most of our costs are fixed, our revenue model was put to the test. On the operational side, I'm very pleased to report that Nav Canada and its employees managed the pandemic without any airspace closures due to infection rates.
Nav Canada's model and favourable credit rating allowed us to borrow at record-low rates in the debt market to continue our seamless operations. Unfortunately, a rate increase was necessary to meet the covenants of our earlier bond issuance. As we understood that our customers were also dealing with challenging business realities, the 29.5% increase in fees was only to meet covenant requirements, not to recover Nav Canada's revenue shortfall. To further assist our customers, Nav Canada implemented a fee-deferral program for the next five years.
Nav Canada was pleased that the federal government brought in business assistance programs during the pandemic. The Canada emergency wage subsidy provided critical support. However, after two years of the pandemic, Nav Canada, similar to other industry organizations, such as airports and airlines, has increased its debt levels. Currently, we have a $600-million deficit in our rate stabilization account, which represents the amount that will need to be recovered over time and in consultation with our customers.
Nav Canada empathizes with air travellers who have seen an increase in delays over the past three months. Air service represents a complex ecosystem, with many different partners and factors influencing operations. We work actively to minimize impacts such as weather, equipment repairs and, at times, unplanned absences, including COVID-related absences. However, delays related to airport construction, COVID testing, customs, security processing, ground services or aircrew staffing are beyond the scope of our mandate.
Where we can have an impact, we will. Our long-term strategic direction will result in more efficient airspace use and reduced greenhouse gas emissions, and will drive significant savings for our airline customers through reduced fuel consumption.
I am happy to answer any questions the committee may have.
Thank you very much.