MONTREAL — Canadians could have more travel options when visiting Europe after the European Union and Canada reached a landmark deal to open up their air services markets to each other.EU Transport Commissioner Antonio Tajani says the pact will lead to more transatlantic trade and spur competition in the air services sector.
He says the deal, which removes restrictions on ownership and direct flights, makes "the EU-Canada market one of the most open in the world."
The first phase of the deal is expected to come into force in the first half of 2009 that will allow airlines based in the 27-member European Union bloc and those in Canada to operate direct flights between the two jurisdictions.
It removes restrictions on routes, prices and the number of flights allowed between the two sides.
It also foresees a phase-out of restrictions on investment and foreign ownership in airlines and could lead to European investors setting up airline operations in Canada.
Canada currently limits foreign ownership of airlines to 25 per cent. Raising that ceiling to 49 per cent could still take awhile.
Airline analyst Jacques Kavafian said the agreement won't mean much in the short-term since all profitable routes to Europe are already served from Canada.
Canadian airlines could face increased competition from European carriers but it's unlikely that Air Canada (TSX:AC.A) or WestJet (TSX:WJA) would suddenly expand their European interests unless as a defensive move on certain routes.
Kavafian said WestJet may be more interested in code sharing and marketing agreements with European carriers.
"It's going to help WestJet more than Air Canada," he said.
Air Canada said it will comment this afternoon once Transport Minister John Baird discusses the agreement at a news conference in Montreal.
WestJet spokeswoman Gillian Bentley said it will examine the agreement before commenting.
Source: The Canadian press
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