EU, Canada Sign Open Skies Agreement - Business Travel News

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EU, Canada Sign Open Skies Agreement

May 06, 2009 - 12:00 AM ET

Canada and the European Union this week officially signed a bilateral open skies agreement that enables European carriers to operate direct flights to Canada from any European point while "gradually" removing restrictions on foreign investment.

"These agreements make the EU-Canada aviation market one of the most open in the world and a milestone for EU-Canada relations," said Antonio Tajani, European Commission vice president responsible for transport, in a statement this week. "It is an important sign in the current economic turmoil that the EU and Canada are acting, not to close down their markets, but to remove barriers and improve links between people and businesses."

The European Council in March unanimously endorsed the bilateral air transport agreement with Canada to replace a patchwork of separately held agreements with European states. The EC said the agreement "removes all restrictions on routes, prices or the number of weekly flights between Canada and the EU. Other traffic rights will be liberalized gradually in parallel with the opening up of investment opportunities."

The EC noted that under the agreement European Union nationals would be able to establish operations in Canada and "freely invest in Canadian airlines and vice versa."

Though the EU said there is "no change of current regimes" in terms of foreign ownership in the first phase of the agreement, the second phase will increase foreign ownership stakes to 49 percent and eventually lift all such restrictions, though no timeframe was given.

The EU said the second phase takes effect "as soon as Canada has taken the steps necessary to enable European investors to own up to 49 percent of a Canadian carriers' voting equity. Since Canada already introduced the possibility in March to allow up to 49 percent investment by foreigners, it is possible that the rights associated with phase two of the agreement will be applied from the start."

The agreement also sets the stage for the EU and Canada to jointly work on other aviation initiatives, from security to the environment. On security, the agreement "envisages mutual recognition of standards and one-stop security," which would help to "reduce hassles" for travelers. Meanwhile, the EU and Canada also expect further cooperation "in order to mitigate the effects of aviation on climate change."

The EC said the deal could yield "consumer benefits of at least €72 million through lower fares," while creating up to 3,700 jobs.
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