EU and Canada Make Air Travel Pact

Monday, January 19th, 2008

While airlines in the US and Australia grapple with strict government regulations on foreign ownership, Canada and the European Union are going ahead with an agreement that will make it easier for airlines from the two regions to operate on each others’ home turf.    

The deal says that previous restrictions for foreign airlines (a limit on the number of flights and minimum ticket prices) have been lifted.  Also, any and all routes between Canada and the EU are now open to any and all airlines that are headquartered in Canada or in the 27 member countries of European Union.   

Perhaps the most important aspect of the deal, at least as far as airlines are concerned, is the fact that all restrictions on investment and foreign ownership have been lifted.  Airlines from the European Union can now be headquartered in Canada (and vice versa) and can invest in Canadian airlines.  

This aspect of the agreement is the envy of the airline industry.  Australia’s Qantas is struggling to find a partner to merge with because Australian law says that 51% of the company’s stock must be held by Australians.  A super-merger with British Airways ahs run into trouble for that reason.  

In the US, things are even stricter.  Airlines can only be 25% foreign owned.  Even to make an alliance with British Airways, American Airlines had to testify before congress in order to receive permission.  

Passengers traveling between Canada and the EU will benefit from the agreement.  Transfer passengers, luggage and cargo will not be subject to any additional security checks once they arrive on the opposite continent.  This will be of greater benefit to Canadians, who will now be able to move around Europe as freely as citizens of EU member states.  It might even be worthwhile for fliers from the US to cross the border to the north and take advantage of the competitive pricing and convenience now afforded to Canadian airlines.