December 12 2007
On the first anniversary of Canada’s Blue Sky policy, the federal government announced the first round of negotiations for an Open Skies-type air transport agreement between Canada and the European Union. This is a welcome development, as an acceleration of the negotiations to achieve a comprehensive Open Skies Agreement with the European Union is essential if there is to be a levelling of the competitive playing field in transatlantic air services.
According to the Blue Sky policy announced in November 2006 (for further details please see "Blue Sky: Canada's New International Air Policy"), the Canadian government decided to pursue proactively opportunities to negotiate more liberalized agreements for international air transport. Negotiating reciprocal Open Skies-type agreements is a primary objective, where it is deemed to be in Canada’s overall interest. Since the Blue Sky policy was articulated, Open Skies-type agreements have been concluded between Canada and Ireland, Iceland and New Zealand. In addition, new or expanded air services agreements have been negotiated with Japan, Kuwait, Jordan, Singapore, Croatia and Serbia. Growth in international air passenger and cargo services between Canada and these countries is expected to follow.
Part of the impetus for Canada’s new policy was the anticipated and now-concluded transatlantic Open Skies Agreement between the United States and the European Union. The agreement, which takes effect on March 30 2008, allows for liberalized travel between the United States and EU member states. The agreement achieves an unprecedented milestone in the global aviation industry. However, Canada is not part of it and is now playing catch up in what has been referred to as “a new chapter in aviation on both sides of the Atlantic”.
The newly acquired rights that US carriers will soon have to fly between countries within the European Union elude Canadian carriers. The agreement allows a US airline to, for example, fly from New York to London, pick up passengers and take them to Rome on the US-originating flight. Canadian carriers are not permitted to offer competing services within the European Union, except in limited cases where such rights have been specifically negotiated. Hence, there is a need for Canada to accelerate the pace of its negotiations for an Open Skies-type Air Transport Agreement with the European Union.
EU member states make up some of Canada’s largest air markets. After the United States, the European Union is Canada’s second largest air transport market. In 2006 there were more than 6.7 million one-way passenger trips between Canada and the European Union. Bilateral agreements are currently in place between Canada and 19 of the 27 EU member states. If successful, the negotiations would result in a comprehensive air services agreement and a single regime governing Canada’s air transport relations with all 27 member states. This would open up new markets, most notably in the Eastern European countries.
Another impetus for Canada’s Blue Sky policy came from Canadian airports seeking international air service opportunities and the business and tourist benefits that they bring. Airports have asked to be included in international air talks on the premise that they have a significant stake in the outcome.
One of the stated objectives of the Blue Sky policy is to “support and facilitate Canada’s international trade objectives”. The new policy makes clear that Canada will seek to secure maximum flexibility for all cargo air services. However, the new policy falls short of unilaterally declaring open skies on all air cargo services, which may have given Canada a competitive advantage in the air-freight sector. A more liberalized Air Transport Services Agreement between Canada and the European Union would at the very least enhance Canada’s ability to participate in the growth of the transatlantic air cargo market.
For further information on this topic please contact Catherine A Pawluch at Gowling Lafleur Henderson LLP by telephone (+1 416 862 7525) or by fax (+1 416 862 7661) or by email (firstname.lastname@example.org).
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Catherine A Pawluch