The movie opens where a little boy writes a letter to Santa Claus that he wants a remote control flying bug and mails it to the North Pole. At the North Pole, an Inuit Eskimo boy named Tim-Tim picks up the mail to deliver it to Santa's Workshop. Beatrice Lovejoy, Santa's wife, picks up the mail, but she won't allow Tim-Tim to take a peek inside. As Santa is about to make his rounds, Mrs. Lovejoy closes the roof and reminds Santa to celebrate his retirement in Sydney, Australia. As Santa gives Santa's robe and hat to Nicholas, Beatrice and all the elves congratulate him on being the new Santa. After Santa and Mrs. Lovejoy leave, Nicholas takes over the workshop and receives a letter from the little boy who wanted a remote control flying bug. Tim-Tim secretly enters the workshop and Beatrice notices him and decides to show him around. Nicholas asks Tim-Tim why is he in the workshop and asks him to leave, but Beatrice decides to show him around the workshop. On board the airplane, Santa worries about Nicholas as Mrs. Lovejoy convinces to Santa to remind of himself of something. He pulls his blue bunny toy and holds it to his heart.
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