Last April, Canada and the United Kingdom announced an “Open Sky” agreement which, when concluded, will represent another major step in the liberalization process of the air transport market between the two countries.
The agreement was reported to provide for unlimited so-called “Fifth Freedom Rights” for both countries to enable Canadian airlines to carry traffic to and from third countries through the U.K. The same reciprocal rights are to be available, of course, to British carriers through Canada.
It remains to be seen whether the European Commission, which has successfully contested the rights of the European Union members to negotiate air bilateral deals independently of Brussels, will choose to challenge this agreement.
While every step taken to further liberalize air markets should be welcomed, one wonders why we continue to use such timid steps. A large part of the world aviation continues to operate under a bureaucratic system of intergovernmental agreements which pretend to know better than the market, and thus dictate which carriers are allowed to fly to what destination, how often and still, in some cases, at what tariffs.
Opening skies between the two largest aviation markets in the world, the U.S. and Europe, would constitute a major breakthrough in this liberalization process. The aim is to do away with the existing patchwork of bilateral agreements existing between the various EU members and the U.S., and to set up one system to regulate Trans Atlantic air transport.
The efforts by the European Union to achieve an air bilateral agreement with the Americans have however not been successful thus far, in large part because of American concerns for security and sovereignty. This situation could, however, present Canada with an opportunity to further provide leadership to the liberalization process.
The continuous drive towards freer trade would suggest that sooner or later, the North American Free Trade Agreement will also cover the air transport market and that a common air market area will be brought about over the Atlantic between Europe and North America.
If the premise is valid, it would be to the advantage of Canada to keep playing an active role in bringing about such market integration. Given the currently seeming impasse in the negotiations between Europe and the U.S., Europeans could perhaps be interested in a discussion with Canada along the lines of their proposal to the Americans.
The advantages to both the European Community and Canada are obvious. The result would be the replacement of some 25 air bilateral agreements by one covering the total European Common Aviation Market. Canada would gain “Open Skies” access to a market of some 450 million people. For its part, the European Union would have achieved successful implementation of its Common Atlantic Air Market approach with a major North American partner.
The experience learned in such a Canada–EU Open Skies Agreement would be useful to all parties and, in time, could help overcome some of the reluctance expressed by the Americans to further Trans Atlantic liberalization.
Pierre Jeanniot is the Former President and CEO of Air Canada, Director General Emeritus of the International Air Transport Association (IATA), and Senior Fellow at the Montreal Economic Institute.