Talks to liberalize air service between Canada and Europe are still on track.
If successful, the new 'open skies' agreement between Canada and the European Union (EU) is expected to generate thousands of jobs, create millions of dollars in consumer benefits and allow Canada to remain on a level playing field with the United States.
The U.S. signed the first stage of an open skies pact with the EU last year, which is slated to take effect on March 30.
Under the proposed agreement, the number of passengers flying between the EU and Canada is expected to increase to 14 million by 2011 - from a level of eight million in 2007 - and result in consumer benefits of at least $110 million through lower fares for both Canada and the EU, according to a study from the European Commission (EC), the EU's executive branch.
|Larry MacDougal, Business Edge|
|A British Airways Boeing 777 lands at Calgary International Airport.|
The EC also says 3,700 jobs would be created in the first year of the deal, although it is not specific where these jobs would be located.
A new accord would also replace bilateral air agreements Canada has with 19 of the 27 EU member states. Instead, one single and less restrictive arrangement would take their place.
Jim Facette, president and CEO of the Canadian Airports Council (CAC), a group representing Canada's airports, does not think that a Canadian accord will take anywhere near as long to negotiate as the U.S. version.
"The U.S.-EU deal took three years to nail down, I believe," says Facette. "We are hopeful and confident that it will be much easier to negotiate an agreement between Canada and the EU. It would be wonderful if we could get this done by mid-2008, but we'll have to wait and see."
The U.S. deal can be used as a template, he adds.
"Canada already has open skies with the U.S. open skies with Europe is the logical next step."
The EU is Canada's second-biggest trading partner after the U.S., with about $70.1 billion in imports and exports.
The current bilateral deals restrict airlines on where they can fly and what they can carry, among other issues.
"These bilaterals are back from the days when government tried to protect an industry," says Reg Milley, president and CEO of Edmonton Airports. "What we operate under now is extremely antiquated.
"If we had the same restrictions on software that we have with air carriers, Microsoft would not be able to come into Canada to sell software unless we had a bilateral agreement and also had a company that could go into Redmond, Wash. (Microsoft's headquarters) to sell software there."
|File photo by Jack Dagley, Business Edge|
|Edmonton Airports CEO Reg Milley says EU agreement will get rid of current ‘antiquated’ deals.|
Even though passenger growth is already surging to record levels at Edmonton International Airport, Milley says this deal is still important.
"It would also afford us the opportunity to compete effectively on a cargo basis. Since the U.S. has a deal, it makes it imperative we have a similar agreement so we can compete as a country," he says.
"We are by far the fastest-growing major airport in Canada and if you take airports with over five million passengers (into account), we're the fastest-growing airport in North America.
"It would give us a lot more opportunities to develop a business case to get European players to fly into Edmonton," Milley adds.
For employee-starved businesses - particularly those in Alberta - it would also make it simpler to recruit Europeans to come to work in Canada.
"In the economy we're finding ourselves right now, we have a lot of companies recruiting from European countries," says Milley.
As well as giving workers direct access to labour markets in Canada, such an agreement would also boost tourism activity when their friends and families come to visit, he adds.
Officials at the Greater Toronto Airport Authority (GTAA), which operates Toronto Pearson International Airport, are also strongly in favour of a Canada-EU Open Skies deal.
"The thought of a more liberal agreement should mean more flights and more routes, which means more opportunities for airlines and more choice for passengers," says Scott Armstrong, manager media relations for the GTAA.
"The more passengers we have, the better it is for our business - airplanes landing here mean more jobs for people in this community."
Passengers have also told the GTAA that they would prefer to travel through Canada, as opposed to connecting through the U.S.
Armstrong says a new open skies deal could mean Canadian airports would play larger roles as jump-off points for travel to other parts of the world such as Europe.
Pearson handled 31 million passengers in 2006 and has capacity for 38 million on an annual basis.
Canada's tourism sector is also hopeful a new deal can be concluded.
"We're very much in favour of it," says Christopher Jones, vice-president of public affairs for the Tourism Industry Association of Canada (TIAC). "It would be a significant benefit to the (tourism) industry. The industry is traversing difficult times right now."
Those difficulties include a robust Canadian dollar, a drop in American tourists and more Canadians heading to the U.S. instead of travelling in their home country.
"Visitations from our main inbound market (the U.S.) have fallen 34 per cent from 2000 to 2006 and (it continued) to drop in each quarter in 2007," says Jones.
"This is now seen in the travel deficit, which has ballooned in the last couple of years to its current level of a negative of $6.7 billion - with Canadians spending more (while travelling outside the country) than foreigners are spending here."
Jones says that even if an open skies agreement with the EU is reached, it's not going to mean an end to all of the tourism sector's problems, despite the fact that Europeans generally stay longer and spend more.
Other challenges, he adds, include the need to reduce airport rents, fees and taxes that make Canadian carriers less competitive - at a time when heightened competition is being eyed.
However, "we commend the government for getting this negotiation off the ground," says Jones.
"We're encouraging them to do more of these agreements."
(Laura Severs can be reached at email@example.com)