Tuesday, December 9, 2008

EU/Canada Reach Landmark Aviation Agreement

The European Union and Canada have just reached an historic agreement on air transport services.  The new agreement, which is expected to come into effect during the first half of 2009, will grant parties' carriers the unlimited freedom to operate direct services between any point in Europe and any point in Canada.  It will also grant more freedoms for carriers on both sides to enter into code-share arrangements with other airlines.

More intriguing than what the agreement immediately grants is what it promises for the future.  Following the first phase of new rights in 2009, the agreement envisages three additional phases of liberalization which will ultimately allow each parties' investors to set up and control new airlines in each others' markets and full cabotage rights.  Though there is no set timetable in the agreement for the implementation of these phases, the second phase--which will begin once Canada allows European investors to own up to 49% voting equity in its carriers--will give Canadian cargo carriers full seventh-freedom rights.  The Canadian Government has already been under pressure from Air Canada to raise the foreign investment cap from its current 25%.  Now the EU has given it a further incentive to do so.

For more information on the new agreement and its history, visit the European Commission's Air Transport Portal here.


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