PUTTING NEW OPEN SKIES POLICY INTO ACTION (2007)
British Columbia’s social and economic development has always been achieved in tandem with its transportation system.
Our future economic prosperity rests on our ability to capitalize on our role as the Gateway to Asia Pacific. As part of its strategy, the federal government said that it would tackle the roadblocks that stood between Canada and a “seamless, matchless flow of trade” with Asian countries. One of these roadblocks continues to be the lack of progress on Canada’s international aviation policy.
The Chamber recognizes and welcomes the progress that has been made over the past year in terms of advancing truly open skies.
Recently the federal government has taken steps that begin to dismantle the roadblock by liberalizing individual bilateral aviation agreements. Most notably, a new Open Skies agreement between Canada and the United States comes into effect in March 2007. Canada also has recently liberalized bilateral aviation agreements with China, India and Portugal and negotiated an Open Skies agreement with the United Kingdom.
Further to this progress, The Chamber welcomed the announcement of the federal government’s new “Blue Sky” international air policy as a significant step in the right direction.
The new policy states clearly that “as a primary objective, Canada will seek to negotiate reciprocal ‘Open Skies’ type agreements, similar to the one negotiated with the US.” These agreements would cover the following elements for scheduled and all cargo service:
• Third, fourth, fifth, sixth and seventh freedom rights;
• No limit on the number of airlines permitted to operate;
• No limit on the permitted frequency of service or aircraft type; and
• Open and flexibility for the operation of code-sharing services
While The Chamber agrees that these must be the foundation of all air agreements, our members have expressed concern regarding certain conditions placed on the negotiating priorities of the federal government.
Primary among these concerns is the continued focus on serving the needs of Canadian airlines. Historically, air agreements have been characterized by bilateral agreements that have focused on securing reciprocal rights for national carriers and which are characterized by significant pricing and service restrictions.
While Canada has a number of agreements in place with other countries, these have traditionally been focused on Eastern Canada. Of the agreements currently in place, only 40% of these agreements allow foreign carriers’ access to Vancouver, compared to 75% for Toronto and 90% for Montreal.
Many of these allow access but place significant restrictions on route rights and frequencies which effectively makes a potential service unviable. Recent examples of carriers that have expressed an interest in Vancouver but cannot come here are the United Arab Emirates, and Air Tahiti Nui (an airline of France). In this instance, this service now utilizes e of YVR, while Vancouver is specified on route schedules they cannot replace services dropped by Air Canada when it chose to reduce its service to Asia or attract services from new markets that Air Canada or another Canadian carrier do not want to serve.
The Chamber is also concerned with the seeming lack of urgency placed on the need to immediately enter negotiations with key markets. BC has a history of suffering under the legacy of restrictive agreements with some of our most important markets for tourism and trade. With this in mind, The Chamber believes it is incumbent on the federal government to move aggressively to utilize the new framework to negotiate new agreements, placing significant emphasis on Singapore, Taiwan; the Philippines; South Korea; France and the United Arab Emirates.
The Chamber was also disappointed to note the lack of action on the issue rights of establishment in the new policy.
It must be recognized that the airline industry is very capital intensive and to have arbitrary barriers to foreign investment in an age of increasing integration of the global economy is anachronistic, to say the least.
With this in mind, The Chamber believes that rights of establishment are the most effective way to immediately introduce significant new investment and competition into the market. The granting of rights of establishment will bring increased competition and choice as companies look to establish a Canadian presence.
This increased investment will inevitably bring increased employment, as the sector grows and foreign carriers establish operations in Canada they will, by definition, employ Canadians.
It seems clear that the approach to international aviation taken to date has failed and there is a new consensus developing on how to move forward. There are new markets and new sources for growth in a truly liberal aviation environment if policymakers begin to approach the issue with the primary focus being the importance of the airports and the businesses they serve rather than on an outdated, protectionist focus on protecting routes and services for national carriers.
The Blue Sky policy is a welcome recognition of this fact; it is now time for the federal government to put the policy into immediate action.
THE CHAMBER RECOMMENDS
That the federal government:
1. immediately pursue liberalization with other jurisdictions focusing on the key markets above;
2. review all existing agreements to determine which can be enhanced to Open Skies agreements in an expedited manner;
3. ensure that in all negotiations there is no requirement for reciprocity; and
4. immediately allow the establishment of foreign-owned but Canadian-domiciled carriers (the “right of establishment”) in Canada.
British Columbia’s social and economic development has always been achieved in tandem with its transportation system.
Our future economic prosperity rests on our ability to capitalize on our role as the Gateway to Asia Pacific. As part of its strategy, the federal government said that it would tackle the roadblocks that stood between Canada and a “seamless, matchless flow of trade” with Asian countries. One of these roadblocks continues to be the lack of progress on Canada’s international aviation policy.
The Chamber recognizes and welcomes the progress that has been made over the past year in terms of advancing truly open skies.
Recently the federal government has taken steps that begin to dismantle the roadblock by liberalizing individual bilateral aviation agreements. Most notably, a new Open Skies agreement between Canada and the United States comes into effect in March 2007. Canada also has recently liberalized bilateral aviation agreements with China, India and Portugal and negotiated an Open Skies agreement with the United Kingdom.
Further to this progress, The Chamber welcomed the announcement of the federal government’s new “Blue Sky” international air policy as a significant step in the right direction.
The new policy states clearly that “as a primary objective, Canada will seek to negotiate reciprocal ‘Open Skies’ type agreements, similar to the one negotiated with the US.” These agreements would cover the following elements for scheduled and all cargo service:
• Third, fourth, fifth, sixth and seventh freedom rights;
• No limit on the number of airlines permitted to operate;
• No limit on the permitted frequency of service or aircraft type; and
• Open and flexibility for the operation of code-sharing services
While The Chamber agrees that these must be the foundation of all air agreements, our members have expressed concern regarding certain conditions placed on the negotiating priorities of the federal government.
Primary among these concerns is the continued focus on serving the needs of Canadian airlines. Historically, air agreements have been characterized by bilateral agreements that have focused on securing reciprocal rights for national carriers and which are characterized by significant pricing and service restrictions.
While Canada has a number of agreements in place with other countries, these have traditionally been focused on Eastern Canada. Of the agreements currently in place, only 40% of these agreements allow foreign carriers’ access to Vancouver, compared to 75% for Toronto and 90% for Montreal.
Many of these allow access but place significant restrictions on route rights and frequencies which effectively makes a potential service unviable. Recent examples of carriers that have expressed an interest in Vancouver but cannot come here are the United Arab Emirates, and Air Tahiti Nui (an airline of France). In this instance, this service now utilizes e of YVR, while Vancouver is specified on route schedules they cannot replace services dropped by Air Canada when it chose to reduce its service to Asia or attract services from new markets that Air Canada or another Canadian carrier do not want to serve.
The Chamber is also concerned with the seeming lack of urgency placed on the need to immediately enter negotiations with key markets. BC has a history of suffering under the legacy of restrictive agreements with some of our most important markets for tourism and trade. With this in mind, The Chamber believes it is incumbent on the federal government to move aggressively to utilize the new framework to negotiate new agreements, placing significant emphasis on Singapore, Taiwan; the Philippines; South Korea; France and the United Arab Emirates.
The Chamber was also disappointed to note the lack of action on the issue rights of establishment in the new policy.
It must be recognized that the airline industry is very capital intensive and to have arbitrary barriers to foreign investment in an age of increasing integration of the global economy is anachronistic, to say the least.
With this in mind, The Chamber believes that rights of establishment are the most effective way to immediately introduce significant new investment and competition into the market. The granting of rights of establishment will bring increased competition and choice as companies look to establish a Canadian presence.
This increased investment will inevitably bring increased employment, as the sector grows and foreign carriers establish operations in Canada they will, by definition, employ Canadians.
It seems clear that the approach to international aviation taken to date has failed and there is a new consensus developing on how to move forward. There are new markets and new sources for growth in a truly liberal aviation environment if policymakers begin to approach the issue with the primary focus being the importance of the airports and the businesses they serve rather than on an outdated, protectionist focus on protecting routes and services for national carriers.
The Blue Sky policy is a welcome recognition of this fact; it is now time for the federal government to put the policy into immediate action.
THE CHAMBER RECOMMENDS
That the federal government:
1. immediately pursue liberalization with other jurisdictions focusing on the key markets above;
2. review all existing agreements to determine which can be enhanced to Open Skies agreements in an expedited manner;
3. ensure that in all negotiations there is no requirement for reciprocity; and
4. immediately allow the establishment of foreign-owned but Canadian-domiciled carriers (the “right of establishment”) in Canada.
Copyright ©2007 BC Chamber of Commerce 