9 December 2008

EU and Canada open aviation market

This article is excerpted from the 9 December 2008 edition of “Toronto Star”.

The European Union and Canada have reached a deal that will open up their aviation markets to each other, removing restrictions on ownership and direct flights, EU officials said Tuesday.

EU Transport Commissioner Antonio Tajani said the pact will lead to more trans-Atlantic trade and spur competition.

"The new agreement makes the EU-Canada market one of the most open in the world," Tajani said in a statement.

Under the deal, which is expected to come into force in the first half of 2009, airlines based in the 27-nation bloc will be able to operate direct flights to Canada from anywhere in Europe. It also removes restrictions on routes, prices and the number of flights allowed between the two sides. Similar access rights will be enjoyed by Canadian carriers to fly to the European market.

Airlines will also be able to launch new code-sharing agreements – which let them book passengers on one another's planes…

While the deal is likely to be good for more competitive airfares, it could spell trouble for Canada's two dominant airlines, Air Canada and its low-cost rival WestJet Airlines Ltd.

Air Canada went through bankruptcy earlier this decade, and when it emerged in 2004 it was losing customers to WestJet. The two airlines rely heavily on U.S.-bound routes.

The deal is estimated to bring economic benefits of at least euro72 million ($92.6 million) and more than 1,000 new jobs in its first year, the European Commission said. An EU study said an EU-Canada aviation pact could generate an additional 500,000 passengers a year on routes between Canada and the EU.