Canada “missing in action” on Aviation Free Trade

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16-Nov-2009 Canada fails to attend international aviation summit held in Canada.

Canada’s airports today expressed disappointment that the federal government failed to attend a weekend summit of world aviation leaders held in Montebello, Québec. The summit resulted in a promising multilateral statement on liberalizing the worldwide aviation industry, a statement to which Canada also is not a signatory.

“Just a couple of months ago with business leaders in New York, Prime Minister Stephen Harper boasted of Canada’s ‘unwavering commitment to free trade and open markets’. In aviation, we need this same commitment,” said CAC President and CEO Jim Facette in a letter to the Minister of Transport Infrastructure and Communities. “The world is moving forward on measures to improve the health and competitiveness of the worldwide airline industry, to the benefit of trade and tourism, but Canada risks lagging behind.”

At the weekend summit in Montebello, hosted by the International Air Transport Association (IATA), governments from around the world met to discuss liberalization of world air markets. Seven parties signed the multilateral statement, including Canada’s biggest trading and tourism partners, the European Union. The policy principles address three main areas:

  • Freedom to access capital markets: States agreed on principles that would open the possibility for airlines to access global capital markets. This would be achieved with an agreement not to exercise bilateral rights that could allow them to block international services from airlines with non-national ownership structures. States also agreed to consider the possibility of a multilateral agreement to waive ownership restrictions.
  • Freedom to do business: States agreed on principles that seek to reduce restrictions on market access and to expedite the further opening of markets in future bilateral negotiations.
  • Freedom to price services: States agreed on principles that would allow greater freedom to price airline services in line with market realities.
Airports have long contended that a liberalized approach to international air service would have a far greater economic benefit for Canada than maintaining a protectionist stance. Canada has recently negotiated several liberalized air agreements with important markets, such as South Korea and the European Union. However the government maintains a protectionist stance with key transit markets like the United Arab Emirates and Singapore – effectively limiting the ability of Canadians to benefit from improved access to markets in Asia and Africa.

“As we told attendees of the recent Open Skies Summit in Vancouver, in no other industry is such a high level of interference tolerated,” said Mr. Facette. “Can anyone imagine Ikea being told it cannot sell furniture in Canada because it is a Swedish company and the Swedes already sell too much furniture for a country its size? Canada doesn’t keep out Starbucks in order to protect Tim Horton’s, either.”