At the weekend summit in Montebello, hosted by the International Air Transport Association (IATA), governments from around the world met to discuss liberalization of world air markets. Seven parties signed the multilateral statement, including Canada’s biggest trading and tourism partners, the European Union. The policy principles address three main areas:
•Freedom to access capital markets: States agreed on principles that would open the possibility for airlines to access global capital markets. This would be achieved with an agreement not to exercise bilateral rights that could allow them to block international services from airlines with non-national ownership structures. States also agreed to consider the possibility of a multilateral agreement to waive ownership restrictions.
•Freedom to do business: States agreed on principles that seek to reduce restrictions on market access and to expedite the further opening of markets in future bilateral negotiations.
•Freedom to price services: States agreed on principles that would allow greater freedom to price airline services in line with market realities.
Airports have long contended that a liberalized approach to international air service would have a far greater economic benefit for Canada than maintaining a protectionist stance. Canada has recently negotiated several liberalized air agreements with important markets, such as South Korea and the European Union. However the government maintains a protectionist stance with key transit markets like the United Arab Emirates and Singapore – effectively limiting the ability of Canadians to benefit from improved access to markets in Asia and Africa.
“As we told attendees of the recent Open Skies Summit in Vancouver, in no other industry is such a high level of interference tolerated,” said Mr. Facette. “Can anyone imagine Ikea being told it cannot sell furniture in Canada because it is a Swedish company and the Swedes already sell too much furniture for a country its size? Canada doesn’t keep out Starbucks in order to protect Tim Horton’s, either.”
Background on Bilateral Air Service Agreements
Bilateral air service agreements, negotiated between nations of the world, outline the conditions by which airlines from the two countries can operate service between the two countries. Open Skies agreements generally contain few restrictions while more restrictive agreements may limit destinations that can be served, the size of the aircraft or even how many flights a week that can be operated.
Studies have shown that where bilateral relationships have been liberalized, traffic grows 12-35%. This includes Canada’s own experience with liberalization with the United States in 1995, which resulted in traffic growth of 30%.
Air service liberalization benefits both Canadian and foreign carriers and introduces greater competition in the market. Economic impact studies show that new service by foreign carriers also brings Canadian jobs. A study conducted for Vancouver International Airport, for example, found that each time one of its Asia-Pacific carriers lands at the airport with a local crew, it generates 795 hours of employment. Over a year, the carrier’s twice daily service is estimated to generate 369 person years of employment.
About the Canadian Airports Council
The Canadian Airports Council (CAC) is the voice for Canada’s airports. Its 47 members represent more than 200 airports, including all of the National Airports System (NAS) airports and most significant municipal airports in every province and territory. Together, CAC members handle virtually all of the nation’s air cargo and international passenger traffic and 95% of domestic passenger traffic. They create in excess of $45 billion in economic activity in the communities they serve. And more than 200,000 jobs are directly associated with CAC member airports, generating a payroll of more than $8 billion annually.
